The Constitution of India
Article 277
Savings
Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.
Why this exists
When the Constitution created a fresh division of taxing powers between the Union and the States (through the Union, State, and Concurrent Lists), some taxes that states or local bodies were already collecting might technically now fall under the Union's exclusive power. Article 277 was a transitional 'savings' provision to prevent sudden disruption of existing revenue streams for states and local bodies, avoiding administrative chaos and revenue loss during the shift to the new constitutional scheme.
How courts read it
Courts have generally read Article 277 narrowly, as a transitional saving clause rather than a fresh source of taxing power. Judgments have emphasized that the tax must have been 'lawfully levied' immediately before the Constitution commenced, and that the protection lasts only until Parliament legislates on the subject; once Parliament acts, the saving ends. Courts have also clarified that new taxes introduced after the commencement date cannot claim protection under this Article, even if similar to pre-existing ones.
Common misconceptions
- Myth: Article 277 lets states create new taxes on subjects reserved for the Union.
Fact: It only protects taxes that were already being lawfully collected immediately before the Constitution commenced (26 January 1950); it does not allow new state-level taxes on Union List subjects afterward. - Myth: This protection lasts forever.
Fact: The Article itself says the arrangement continues only 'until provision to the contrary is made by Parliament by law' — so Parliament can end it anytime through legislation.