constituent assembly of india debates (proceedings)- volume vii

Central revenue and the subventions to some of the Provinces were fixed by an Order-in-Council, which,
subject to a modification during the war, continued till 15th August,1947.
Present Constitutional Position
11. Under the Government of India Act. 1935, which is the starting point of our enquiry, the taxing
jurisdictions of the Central and Provincial Legislatures are entirely separate. But, while the Provinces
retain the whole of the net proceeds of all taxes levied by them, the Central Government has to give
away either in part or in whole the net proceeds of some of the taxes levied by it.
12. The taxes, the net proceeds of which are to be given away wholly to the Provinces, if levied, are -
(1) Federal Estate and Succession duties.
(2) Federal Stamp duties,
(3) Terminal Taxes on goods and passengers carried by Railway or Air
(4) Taxes on Railway fares and freights.
The Centre can levy a surcharge on those taxes entirely for its own purposes. None of
these taxes has in fact been levied, except that the Federal Stamp duties continue to be
levied under the old laws, the duties however being collected and retained by the
Provinces.
13. The Federal Taxes, the net proceeds of which are to be shared with the Provinces, fall into two
groups: -
(1) taxes, the sharing of the net proceeds of which has been made obligatory by the
Constitution viz., income-tax and jute export duty.
(2) taxes, the sharing of the net proceeds of which has been left to be determined by the
Federal Legislature viz., Central Excises including duty on salt, and export duties except on
jute and jute products. The Central Legislature has levied certain taxes under these heads,
but has not provided for giving any share to the Provinces.
14. Besides providing for giving away the net proceeds of taxes in whole or in part to the Provinces,
the Constitution also provides for fixed grants-in-aid to some Provinces.
15. There is also a general provision for giving grants to Provinces at the discretion. of Central
Government either for general or specific purposes.
16. Two tables showing the Constitutional position in respect of the revenues of the Federal and
Provincial Governments respectively under the Government of India Act,1935, will be found in Appendix
I. We are indebted to Mr. Myanmar's commentary on the Government of India Act, 1935,for these
tables.
Review of Finances of Provinces and the Centre
17. Two tables giving the financial position of the Provinces and the Centre during the year 1937-38