Part XII - Finance & Property • Article

Article 288 Simplified: Exemption from taxation by States in respect of water or electricity in certain cases

Article 288 exempts water and electricity generated, stored, or distributed by inter-state river valley projects (like those created by Parliament) from state taxes. A state cannot levy new taxes on these shared resources unless the law is reserved for the President of India's consideration and receives their explicit assent.

Official Text

(1) Save in so far as the President may by order otherwise provide, no law of a State in force immediately before the commencement of this Constitution shall impose, or authorise the imposition of, a tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any authority established by any existing law or any law made by Parliament for regulating or developing any inter-State river or river-valley. Explanation.—The expression “law of a State in force” in this clause shall include a law of a State passed or made before the commencement of this Constitution and not previously repealed, notwithstanding that it or parts of it may not be then in operation either at all or in particular areas. (2) The Legislature of a State may by law impose, or authorise the imposition of, any such tax as is mentioned in clause (1), but no such law shall have any effect unless it has, after having been reserved for the consideration of the President, received his assent; and if any such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority, the law shall provide for the previous consent of the President being obtained to the making of any such rule or order.

Simple Meaning

Explain Like Ten

When electricity or water comes from big river dams that serve more than one state, local states can't just tax them. If they want to, they must ask the President of India for permission first.

Student Mode

Article 288 governs state taxation of inter-state water and power resources. Clause (1) protects water and electricity stored, generated, or distributed by inter-state river valley authorities (created by Parliament) from pre-constitutional state taxes, unless the President orders otherwise. Clause (2) mandates that any new state law imposing such a tax must be reserved for the President's consideration and receive presidential assent to be valid.

Example

If a state government wants to levy a water cess or power generation tax on an inter-state river valley project that supplies water/power to multiple states, it cannot do so under its regular legislative powers. The state bill must be sent to the President of India. If the President gives assent, only then does the tax become valid.

Key Takeaway

States cannot tax water or electricity from inter-state river valley projects without the President's approval.

FAQs

What is the purpose of Article 288?

To prevent conflict between states over shared water and power resources. Since river valley projects serve multiple states, allowing one state to tax the water or power unilaterally could lead to unfair costs and disputes.

Whose assent is required for a new state law taxing inter-state river water?

The President of India.

Quiz

Under Article 288, whose assent is mandatory for a State law to tax water/electricity from an inter-state river valley authority?

Answer: The President

Article 288 applies to authorities established for regulating:

Answer: Inter-State rivers or river-valleys