Protection of the States’ Interest in Financial Matters

To protect the interest of states in the financial matters, the following bills can be introduced only on recommendation of president:

• A bill which imposes or varies any tax or duty in which states are interested;
• A bill which varies the meaning of the expression ‘agricultural income’ as defined for the purposes of the enactments relating to Indian income tax;
• A bill which affects the principles on which moneys are or may be distributable to states; and
• A bill which imposes any surcharge on any specified tax or duty for the purpose of the Centre.

Here, the expression “tax or duty in which states are interested” means: (a) a tax or duty the whole or part of the net proceeds whereof are assigned to any state; or (b) a tax or duty by reference to the net proceeds whereof sums are for the time being payable, out of the Consolidated Fund of India to any state.