Part XII · Miscellaneous Financial Provisions

Article 289 Exemption of property and income of a State from Union taxation.

This article exempts State property from Union taxes. The property and income of a State are exempt from Union taxation. Trade or business of the State is not exempt if Parliament so provides by law. The Union cannot tax a State as it would tax a citizen.

1. (1) The property and income of a State shall be exempt from Union taxation.
2. (2) Nothing in clause (1) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied for the purposes of such trade or business, or any income accruing or arising in connection therewith.
3. (3) Nothing in clause (2) shall apply to any trade or business, or to any class of trade or business, which Parliament may by law declare to be incidental to the ordinary functions of Government.

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