The Constitution of India
Article 274
Prior recommendation of President required to Bills affecting taxation in which States are interested
(1) No Bill or amendment which imposes or varies any tax or duty in which States are interested, or which varies the meaning of the expression “agricultural income” as defined for the purposes of the enactments relating to Indian income-tax, or which affects the principles on which under any of the foregoing provisions of this Chapter moneys are or may be distributable to States, or which imposes any such surcharge for the purposes of the Union as is mentioned in the foregoing provisions of this Chapter, shall be introduced or moved in either House of Parliament except on the recommendation of the President.
(2) In this article, 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.
Why this exists
India's Constitution set up a federal system where the Union collects certain taxes but shares the proceeds with States. To protect this fiscal balance and prevent Parliament from unilaterally rewriting how money flows to States without executive oversight, the Constitution makers required that such tax bills first get the President's recommendation. This gives the Union executive—informed by bodies like the Finance Commission—a chance to review the fiscal implications for states before the Bill is even introduced, ensuring coordination between the Union and States on shared revenue matters.
Common misconceptions
- Myth: Article 274 lets the President block any tax law Parliament wants to pass.
Fact: It only requires the President's prior recommendation before such a Bill can be *introduced*—it doesn't give the President a general veto over tax policy or over Bills unrelated to shared state revenues. - Myth: This Article applies to all tax laws.
Fact: It applies only to specific categories: taxes whose proceeds are shared with States, the definition of agricultural income for income-tax purposes, distribution principles under this Chapter, and related Union surcharges—not to every tax Bill Parliament considers.