Part XII: Finance, Property, Contracts and Suits
Articles 264–300A · Part XII covers the Union and States' finances — taxation, the government's own bank accounts (Consolidated and Contingency Funds), borrowing, and government contracts and lawsuits. It also contains Article 300A — the only remnant of the right to property after it was removed as a Fundamental Right in 1978.
The provisions in this Part cited most often
With landmark Supreme Court cases that shaped how they're actually applied.
No tax without authority of law
A foundational fiscal-rights protection: no tax can be levied or collected except under the authority of a law — the government can't simply demand money without Parliament or a State Legislature having passed a valid law for it.
Right to property
After the 44th Amendment (1978) removed property from Part III's Fundamental Rights, this Article was added to Part XII to preserve it as an ordinary legal/constitutional right — you still can't be deprived of property except by authority of law, but you can no longer go straight to the Supreme Court under Article 32 over it.
All of Articles 264–300A
Grouped by subject so related provisions stay together — every article number in this Part is covered below.
Interpretation
Defines 'Finance Commission' for this Part.
Taxes not to be imposed save by authority of law
No tax can be levied or collected except under a validly enacted law.
Consolidated Funds and public accounts
All government revenue flows into the Consolidated Fund; other public moneys go into the public account.
Contingency Fund
A standing reserve for unforeseen emergency expenditure, spent first and authorised by the Legislature afterward.
Duties levied by Union but collected by States
Certain duties the Union sets by law, but states collect and keep entirely.
(Repealed) Service tax
Absorbed into GST by the 101st Amendment, 2016.
Taxes levied and collected by Union but assigned to States
The Union collects, then assigns proceeds to states by formula.
Levy and collection of GST on inter-State trade
Handles Integrated GST (IGST) on cross-state transactions, apportioned per Parliament's law.
Taxes levied and distributed between Union and States
The general tax-devolution formula, recommended by the Finance Commission — covers most central taxes.
Surcharge on certain duties and taxes
Union surcharge revenue isn't shared with states, unlike the underlying tax.
(Repealed) Taxes distributable between Union and States
Simplified into Article 270's unified formula by the 80th Amendment, 2000.
Grants in lieu of export duty on jute
A historical grant to Assam, Bihar, Odisha and West Bengal for jute export duty.
Prior Presidential recommendation for state-affecting tax Bills
Bills affecting tax revenue states have a stake in need the President's recommendation before introduction.
Grants from the Union to certain States
Need-based grants-in-aid, including mandatory Scheduled Tribe welfare funding.
Taxes on professions, trades, callings and employments
The basis for state 'Professional Tax', capped at ₹2,500/year.
Savings
Grandfathered pre-1950 state/local taxes even where later reclassified under the Union List.
(Repealed) Agreements with Part B States
Became irrelevant once the Part B States classification was abolished in 1956.
Calculation of 'net proceeds'
The CAG's certification of net tax proceeds is final, keeping the figure independent of government control.
Goods and Services Tax Council
The joint Union-State body recommending GST rates and rules, chaired by the Union Finance Minister.
Finance Commission
Appointed every 5 years to recommend Union-State tax revenue distribution.
Recommendations of the Finance Commission
Must be laid before Parliament with a memorandum on action taken.
Expenditure defrayable by the Union or a State
Lets governments make grants for a public purpose even outside their normal legislative subject-matter.
Custody of Consolidated and Contingency Funds
Regulated by Parliament's law or, until then, Presidential rules.
Custody of suitors' deposits and other moneys received by public servants and courts
Court deposits and similar moneys are routed through the public account, not held informally.
Exemption of Union property from State taxation
States generally can't tax Union government property.
Restrictions on taxing sale/purchase of goods
States can't tax genuinely out-of-state or import/export transactions.
Exemption from taxes on electricity
Protects Union and railway electricity consumption from state electricity tax.
Exemption from state taxation of inter-State river authority water/electricity
Protects multi-state river valley authorities from individual-state taxation.
Exemption of State property from Union taxation
The mirror of Article 285 — though Parliament can tax a state's genuinely commercial trade.
Adjustment for certain expenses and pensions
A cost-sharing mechanism, with arbitration by a Chief-Justice-appointed arbitrator if needed.
Annual payment to certain Devaswom Funds
A fixed annual payment from Kerala and Tamil Nadu to specific temple endowment funds.
(Repealed) Privy purse sums of Rulers
Abolished along with the whole privy purse system by the 26th Amendment, 1971.
Borrowing by the Government of India
The Union can borrow on the Consolidated Fund's security, limited only by Parliament's own law.
Borrowing by States
States need Union consent to borrow further if they have any outstanding Union-connected debt.
Succession to property from British-era government
Colonial-era Crown property and obligations transferred automatically to the Union/states in 1950.
Succession to property from former princely states
The parallel succession rule for property from India's former princely states.
Property accruing by escheat, lapse or bona vacantia
Ownerless property (like an estate with no heirs) vests in the state or Union.
Offshore resources vest in the Union
Minerals and resources in territorial waters, the continental shelf and the EEZ belong to the Union, not coastal states.
Power to carry on trade, etc.
The government's power to run businesses, hold property, and make contracts.
Contracts
Government contracts must be made in the President's/Governor's name; officials aren't personally liable.
Suits and proceedings
The government can sue and be sued, typically as 'Union of India' or the relevant State.
Right to property
No person can be deprived of their property except by authority of law — a legal right (not a Fundamental Right) since the 44th Amendment.
Related rights categories
Quick answers about this Part
Since property isn't a Fundamental Right anymore, does that mean the government can take it freely?
What's the difference between the Consolidated Fund and the Contingency Fund?
This is a plain-language guide to Part XII of the Constitution of India for general educational purposes, not a substitute for the bare text of the Constitution or professional legal advice. Article numbering and content reflect amendments up to 2026; always cross-check the authoritative text at india.gov.in or legislative.gov.in before relying on it for a legal matter.