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Constitution of India · Part XII: Finance, Property, Contracts and Suits · Miscellaneous Financial Provisions

Article 287: Exemption from taxes on electricity

In plain words

Unless Parliament provides otherwise, no State law can tax the consumption or sale of electricity consumed by the Government of India, or used in building, maintaining or running a railway by the Government of India or a railway company. A State law taxing electricity sales must make the price to these buyers lower by the amount of the tax than the price to other large consumers.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

Save in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the consumption or sale of electricity for "sale or purchase of goods takes place" (w.e.f. 16-9-2016). (whether produced by a Government or other persons) which is—

(a) consumed by the Government of India, or sold to the Government of India for consumption by that Government; or

(b) consumed in the construction, maintenance or operation of any railway by the Government of India or a railway company operating that railway, or sold to that Government or any such railway company for consumption in the construction, maintenance or operation of any railway, and any such law imposing, or authorising the imposition of, a tax on the sale of electricity shall secure that the price of electricity sold to the Government of India for consumption by that Government, or to any such railway company as aforesaid for consumption in the construction, maintenance or operation of any railway, shall be less by the amount of the tax than the price charged to other consumers of a substantial quantity of electricity.

Source: India Code (Legislative Department), the official text of the Constitution of India. As amended up to the Constitution (One Hundred and Sixth Amendment) Act, 2023. Text as on 10 September 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the article 287