The Constitution of India
Article 271
Surcharge on certain duties and taxes for purposes of the Union
Notwithstanding anything in articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in those articles by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.
Why this exists
Articles 269 and 270 set up a system where many important taxes collected by the Union are shared with the states through the Finance Commission's formula. Article 271 was designed as a safety valve for the Union: it lets Parliament raise extra revenue quickly for national needs (like emergencies or special projects) without having to divide that additional amount with the states, since a surcharge is treated as separate from the base tax that falls under the sharing rules.
Common misconceptions
- Myth: All money from surcharges is eventually shared with the states like normal tax revenue.
Fact: Article 271 says surcharge proceeds go entirely to the Union's Consolidated Fund of India, not to the shared pool used to distribute taxes among states. - Myth: Article 271 allows surcharges on any tax at all.
Fact: The Article specifically applies to duties or taxes mentioned in Articles 269 and 270, not to every possible tax.