The Indian Constitution provides a detailed framework for managing financial resources, government property, trade regulations, and public services between the Centre and States.
👉 Part XII (Articles 264 to 300A) of the Indian Constitution deals with:
- Finance (Articles 264-291)
- Government Property (Articles 294-298)
- Trade & Commerce (Articles 301-307)
- Right to Property (Article 300A)
I. Financial Provisions (Articles 264-291)
These articles define how revenue and financial responsibilities are distributed between the Centre and States.
1. Distribution of Tax Revenue
| Article | Provision |
|---|---|
| Article 268 | Certain duties are collected by the Centre but assigned to States. |
| Article 269 | Taxes on inter-state trade go to the Centre but are distributed among States. |
| Article 270 | Income tax and corporate tax are shared between Centre and States. |
| Article 271 | The Centre can levy surcharge on certain taxes. |
| Article 272 | Taxes like excise duties are shared between Centre and States. |
✅ Goods and Services Tax (GST):
- Implemented in 2017, replacing indirect taxes like VAT, excise, and service tax.
- GST revenue is shared between the Centre and States.
2. Grants-in-Aid and Financial Assistance
| Article | Provision |
|---|---|
| Article 275 | The Centre provides Grants-in-Aid to States for welfare programs. |
| Article 280 | Finance Commission recommends how financial resources are distributed. |
| Article 282 | The Centre and States can grant funds for public purposes. |
✅ Finance Commission (Article 280):
- Formed every 5 years to decide revenue-sharing formulas.
- Recommends financial grants to weaker states.
3. Borrowing Powers of Centre and States
| Article | Provision |
|---|---|
| Article 292 | The Central Government can borrow money from anywhere. |
| Article 293 | State Governments can borrow within India, but need Centre’s permission if they owe money to the Centre. |
II. Government Property (Articles 294-298)
Defines ownership and management of government assets.
| Article | Provision |
|---|---|
| Article 294 | Transfer of government property from British India to the Indian Government after independence. |
| Article 295 | Property of princely states merged into India belongs to the Central or State Government. |
| Article 296 | Property without legal heirs belongs to the Government. |
| Article 297 | Resources in the territorial waters, continental shelf, and exclusive economic zones belong to the Union. |
| Article 298 | The Centre and States can acquire, hold, and sell property. |
✅ Public Sector Enterprises (like ONGC, Indian Railways) are owned and managed under Article 298.
III. Trade, Commerce, and Services (Articles 301-307)
These articles regulate trade and commerce between states and define government control over economic activities.
1. Freedom of Trade and Commerce
| Article | Provision |
|---|---|
| Article 301 | Trade, commerce, and movement of goods should be free across India. |
| Article 302 | Parliament can impose restrictions on trade for the public interest. |
| Article 303 | The Centre cannot favor one state over another in trade. |
| Article 304 | States can impose reasonable taxes on goods coming from other states. |
✅ Example:
- A State cannot completely ban a product from another State, but it can levy taxes on it.
- GST has made inter-state trade easier by removing multiple state-level taxes.
IV. Right to Property (Article 300A)
✅ Originally a Fundamental Right (Article 31) but was removed in 1978.
✅ Now a Legal Right under Article 300A.
✅ The Government cannot take away property without legal authority.
Challenges in Financial and Trade Relations
❌ Unequal financial distribution – Some states get more funds than others.
❌ Inter-state trade disputes – Some states impose unnecessary restrictions.
❌ Property disputes – Conflicts over government land ownership.
MCQs on Finance, Property, Trade, and Services
1. Which Article allows the Centre to collect certain taxes but assigns them to States?
A) Article 268
B) Article 270
C) Article 280
D) Article 293
Answer: A) Article 268
2. Which Article deals with the Finance Commission?
A) Article 275
B) Article 280
C) Article 292
D) Article 301
Answer: B) Article 280
3. Under which Article can the Central Government borrow money?
A) Article 275
B) Article 280
C) Article 292
D) Article 301
Answer: C) Article 292
4. Which Article guarantees freedom of trade across India?
A) Article 275
B) Article 280
C) Article 301
D) Article 310
Answer: C) Article 301
5. Which Article states that government property without legal heirs goes to the state?
A) Article 294
B) Article 295
C) Article 296
D) Article 297
Answer: C) Article 296
6. Which of the following is a legal right under Article 300A?
A) Right to Vote
B) Right to Equality
C) Right to Property
D) Right to Freedom of Speech
Answer: C) Right to Property
7. Which Article allows Parliament to impose restrictions on trade?
A) Article 301
B) Article 302
C) Article 303
D) Article 304
Answer: B) Article 302
8. Which Article deals with Grants-in-Aid to states?
A) Article 275
B) Article 280
C) Article 292
D) Article 301
Answer: A) Article 275
9. Which Constitutional Amendment introduced GST in India?
A) 100th Amendment
B) 101st Amendment
C) 102nd Amendment
D) 103rd Amendment
Answer: B) 101st Amendment
10. Which Article allows the Centre and States to acquire and sell property?
A) Article 294
B) Article 295
C) Article 296
D) Article 298
Answer: D) Article 298
Conclusion
✅ Finance (Articles 264-291) – Manages tax collection, revenue sharing, and financial grants.
✅ Property (Articles 294-298) – Defines ownership and management of government assets.
✅ Trade & Services (Articles 301-307) – Ensures free trade across India with some restrictions.
✅ Right to Property (Article 300A) – Now a legal right, not a fundamental right.
Would you like a mind map or more MCQs on this topic? 😊