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Legislative Powers Under Seventh Schedule**

Union List (List I)

List I of the Seventh Schedule enumerates subjects over which the Parliament of India has exclusive power to legislate. These subjects are considered to be of national importance, requiring uniform policy across the country. The most significant sources of revenue for the Central Government are derived from the taxing powers granted under this list.

A diagram showing the Parliament of India at the center with arrows pointing to key taxes under its control like Income Tax, Customs, and Corporation Tax, representing the Union List.

Income Tax (excluding agricultural income)

This is covered under Entry 82 of List I. It empowers the Parliament to levy a tax on all income, with the specific exclusion of agricultural income. This power is the basis for the Income Tax Act, 1961, which is the primary statute governing the taxation of income in India. The tax is levied on the total income of individuals, Hindu Undivided Families (HUFs), firms, and other associations of persons.

Corporation Tax

This is covered under Entry 85 of List I. Corporation tax is essentially a tax on the net profits or income of companies registered under the Companies Act or other foreign companies operating in India. While it is a form of income tax, the Constitution provides a separate entry for it. It is also governed by the provisions of the Income Tax Act, 1961, but the rates and specific provisions for companies are distinct from those for individuals.

Customs Duties

This is covered under Entry 83 of List I. Customs duties are taxes levied on goods imported into India from a foreign country or exported from India. The power to levy these duties is the basis for the Customs Act, 1962, and the Customs Tariff Act, 1975. Import duties are a significant source of revenue and are also used as a tool to protect domestic industries from foreign competition.

Excise Duties (on goods manufactured or produced in India, except alcoholic liquor for human consumption)

This is covered under Entry 84 of List I. An excise duty is a tax on the manufacture or production of goods within the country. Before the implementation of GST, the Union Excise Duty was a major source of revenue levied on a wide variety of goods. However, after the 101st Constitutional Amendment, the scope of this entry has been significantly curtailed. The Union can now levy excise duty only on:

All other goods are subject to GST.

GST on supplies in the course of inter-State trade or commerce

This power is derived from the newly inserted Article 246A and Article 269A of the Constitution. When a supply of goods or services takes place between two different states (e.g., from Maharashtra to Karnataka), it is treated as an inter-State supply. On such transactions, an Integrated Goods and Services Tax (IGST) is levied by the Central Government under the IGST Act, 2017. The revenue from IGST is later apportioned between the Centre and the destination State.

Taxes on capital value of assets of individuals and companies (excluding agricultural land)

This is covered under Entry 86 of List I. This entry allows the Parliament to levy a tax on the total value of assets (capital value) of individuals and companies. The primary example of a tax under this entry was the Wealth Tax, which was levied under the Wealth Tax Act, 1957. However, the Wealth Tax was abolished in India with effect from 1st April 2016.

Terminal taxes on goods or passengers carried by railways, sea or air

This is covered under Entry 89 of List I. Terminal taxes are taxes levied on goods or passengers that either enter or leave a particular city or region via specified modes of transport (rail, sea, or air). This is a tax on the movement itself and is collected at the terminal stations.


State List (List II)

List II enumerates subjects over which the State Legislatures have exclusive power. These taxes are crucial sources of revenue for state governments to meet their regional and local expenditure needs. The 101st Amendment has significantly altered the states' taxing powers by subsuming many of them into GST.

Agricultural Income Tax

This is covered under Entry 46 of List II. This entry gives state governments the exclusive power to levy tax on agricultural income. This is why agricultural income is explicitly excluded from the Centre's power under Entry 82 of List I and is not taxed under the central Income Tax Act, 1961. While states have the power, very few have actually levied a tax on agricultural income.

Taxes on lands and buildings

This is covered under Entry 49 of List II. This power is the basis for levying property tax on lands and buildings. This power is typically delegated by the states to local municipal bodies, and it forms a major source of revenue for municipalities.

Excise duties on alcoholic liquors for human consumption

This is covered under Entry 51 of List II. States have the exclusive power to levy excise duty on the manufacture of alcoholic liquor for human consumption. This is a major reason why alcohol is kept outside the GST regime, as it is a significant source of independent revenue for state governments.

GST on intra-State supply of goods and services

Derived from Article 246A, this power allows states to levy GST on all supplies of goods and services that take place within the boundaries of that state. This is known as State GST (SGST). When a transaction happens within a state, two taxes are charged: Central GST (CGST) by the Centre and SGST by the State. The base price for both taxes is the same.

Taxes on vehicles, animals, boats

Covered under Entry 57 and Entry 58 of List II, this empowers states to levy taxes on vehicles suitable for use on roads (Motor Vehicles Tax or Road Tax) and on animals and boats.

Taxes on consumption or sale of electricity

This is covered under Entry 53 of List II. States have the power to levy a tax on the consumption or sale of electricity, which is commonly known as an electricity duty. This is another item that is kept outside the purview of GST.

Taxes on luxuries, entertainments, amusements, betting and gambling

This is covered under Entry 62 of List II. This gave states the power to levy Entertainment Tax, Luxury Tax, etc. While most of these have been subsumed into GST, the power of states to levy these taxes remains for items not covered by GST. For example, entertainment tax can still be levied by local bodies on events not covered under GST.

Taxes on advertisement other than newspapers

Covered under Entry 55 of List II, this allows states to tax advertisements. However, this power is restricted as it cannot be levied on advertisements published in newspapers or broadcast on radio/television, as that falls under Union jurisdiction. Taxes on hoardings and billboards are levied under this entry, often by local bodies.

Taxes on the entry of goods into a local area for consumption, use or sale therein

This is covered under Entry 52 of List II. This was the source of power for levying Entry Tax or Octroi. This tax has been subsumed into GST, but the constitutional entry remains.

Taxes on the consumption or sale of goods other than alcoholic liquor for human consumption

This refers to Entry 54 of List II, which was the source of power for states to levy Value Added Tax (VAT) or Sales Tax on the sale of goods within the state. After the 101st Amendment, the scope of this entry has been restricted. States can now levy VAT under this entry only on the sale of:


Concurrent List (List III)

The Concurrent List contains subjects on which both the Parliament and State Legislatures can make laws. As a general principle, this list does not contain any direct tax-levying entries to avoid fiscal conflict. However, it does contain entries related to the machinery of taxation and duties.

Stamp duties (except duties on documents specified in the Union List)

The power related to stamp duties is uniquely divided.

This complex division means that while the Indian Stamp Act, 1899, is a central act governing the procedural aspects, the rates charged for property registration and other such documents are determined by individual state stamp acts.