Exemption of Union Property from State Taxation
Official heading: “Exemption of property of the Union from State taxation”
- Source edition
- The Constitution of India (as on 1 May 2026)
- Source locator
- Part XII, Article 285, printed page 168
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1. In One Sentence
Exempts property of the Union from all taxes imposed by a State or local authority, save to the extent Parliament permits by law.
2. What It Means in Everyday Language
Article 285 embodies the doctrine of intergovernmental tax immunity: the property of the Central Government is immune from taxation by States and local municipal bodies.
Clause (1) provides that property belonging to the Union of India is exempt from all taxes imposed by a State or by any authority within a State (such as municipal property taxes, water taxes, or conservancy charges), unless Parliament passes a law explicitly permitting such taxation.
Clause (2) provides a grandfather exception: if a specific Union property was already liable to a local tax immediately before 26 January 1950, that pre-existing tax can continue to be levied until Parliament by law otherwise provides.
In landmark rulings, the Supreme Court has clarified that Article 285 protects property owned directly by the Union (e.g., railway tracks, central government office buildings, post offices), but does NOT protect separate statutory government corporations or public sector undertakings (like Air India, BHEL, or nationalized banks), whose property is legally distinct from the Union.
3. Practical Illustrative Example
A municipal corporation demands property tax on a Central Government railway station and a cantonment headquarters building.
4. Important Limits, Qualifications & Exceptions
Article 285 protects central sovereign assets from decentralized state taxation.
- Complete property immunity: Union property cannot be taxed by States, municipalities, or panchayats.
- Parliamentary override power: Parliament can pass a statute permitting local taxation of specified Union assets.
- Corporate distinction: Government companies and statutory corporations do not enjoy Article 285 tax immunity.
5. Operative Constitutional Text
6. Sources & Historical Assembly Deliberations
Assembly quotations are withheld until wording, dates, and attribution have been checked against the primary record.
- •Government of India (Legislative Department, Ministry of Law and Justice) • Part XII, Article 285, printed page 168 • Human source-link check pending
Primary PDF accessed and transcribed with AI assistance on 14 October 2026. Formatting and amendment annotation markers are omitted; operative wording is retained. This is not human legal review. Later amendments and commencement notifications have not been comprehensively checked.