Allocation of Taxing Powers

• Exclusive Powers: The Parliament has exclusive power to levy taxes on subjects in the Union List (13 categories), while state legislatures have exclusive power to levy taxes on subjects in the State List (18 categories).

• Concurrent Powers: The 101st Amendment Act of 2016 introduced a special provision allowing both the Parliament and state legislatures to legislate on goods and services tax (GST).

• Residuary Powers: Parliament has the residuary power of taxation, meaning it can levy taxes not specified in any of the three lists.

Distribution of Tax Revenues

• 80th Amendment Act: Gave effect to the 10th Finance Commission's recommendations, allocating 29% of central taxes and duties to the states.

• 101st Amendment Act: Introduced a new tax regime (GST) and conferred concurrent taxing powers to the Centre and states for levying GST on goods and services.

• Changes in Service Tax: The Amendment deleted Article 268-A and Entry 92-C (both concerning service tax), previously levied by the Centre but collected and appropriated by both the Centre and states.

Distribution of Non-Tax Revenues

• Centre: Major sources include posts and telegraphs, railways, banking, broadcasting, coinage and currency, central public sector enterprises, and others.

• States: Major sources include irrigation, forests, fisheries, state public sector enterprises, and others.

Grants-in-Aid to the States

• Statutory Grants: Article 275 allows Parliament to provide grants to states needing financial assistance. Different sums may be allocated to different states based on the Finance Commission's recommendations.

• Discretionary Grants: Article 282 permits the Centre and states to grant funds for any public purpose, even if it is outside their legislative competence. The Centre provides discretionary grants to states under this provision.