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Report No. 49

3. Constitutional provisions as to income-tax-Matters within competence of the Union.-

For a consideration of the first question,1 it is necessary to deal with the relevant provisions of the Constitution.

"Agricultural income", as defined by the Constitution,2 means agricultural income as defined for the purposes of the enactments relating to Indian income-tax. The Income-tax Act3 has an elaborate definition of "agricultural income", but it is not necessary to quote it here. Taxes on income other than agricultural income are within the exclusive competence of Parliament,4 and Parliament has also5 the residuary power of taxation, i.e., the power to levy any tax not mentioned in the State or the Concurrent List.

Taxes on income other than agricultural income are, under the scheme of distribution of revenues between the Union and the States,6 to be levied and collected by the Government of India and distributed between the Union and the States, in the manner provided in Article 270(2). For this purpose, "taxes on income" does not include a Corporation tax.7

Parliament has a power to impose surcharge on certain taxes, including a surcharge on the tax on income other than agricultural income.8

1. Para. 2, supra.

2. Article 366(1) of the Constitution. Also see Article 274.

3. Section 2(1), Income-tax Act, 1961. Also see section 145.

4. Constitution, Union List, entry 82.

5. Ibid., entry 97.

6. Constitution, Article 270(1).

7. Ibid., Article 270(4)(a).

8. Article 271.

The Proposal for inclusion of Agricultural Income in the Total Income for the purpose of determining the Rat of Tax under the Income-Tax Act, 1961 Back

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