Double Taxation and the 'Not a Tax' Provision
constitutional general beginner reform_ideaSo you guys must have noticed this 'not a tax' provision in the Constitution. Article 268 says, "The taxes levied by the [Centre] on goods and services, but not the taxes levied by the States, are 'not a tax' as per the Constitution." It was a clever way to balance Centre-State relations back in the day. But in 2025, when we have GST and a unified tax code, this provision is just a relic of the past.
Think about it, when GST was implemented, the Centre and States merged their tax revenue into one unified pool. Now, is it really fair to say that GST is not a tax because it's levied by the Centre, but not a 'tax' when levied by the States? In reality, it's the same GST, and this 'not a tax' distinction is starting to look like a historical anomaly.
Doston, let's talk about 'Not a Tax' provision. It's related to double taxation. Article 6 of the DTAA (Double Taxation Avoidance Agreement) provides relief from double taxation where government imposes tax both in the country of residence and the country of source (income). If tax is deducted at source, it can be claimed as credit or deduction in the country of residence. Bhai, it's essential to understand when to apply 'Not a Tax' provision to avoid double taxation!