# Power to Levy Taxes
## Constitutional Basis
Article 265 of the Constitution of India lays down:
> "No Tax shall be levied or collected except by Authority of law"
This means every tax must have a backing law passed by the legislature.
## Who Has the Power?
The Constitution of India gives the power to levy and collect taxes (both Direct + Indirect) to:
- Central Government
- State Government
## Article 246 & Seventh Schedule
The Parliament and State Legislatures are empowered to make laws on matters given in the Seventh Schedule by virtue of Article 246.
The Seventh Schedule contains three lists:
| List | Power |
|---|---|
| Union List (List I) | Parliament has exclusive power to make laws on matters here |
| State List (List II) | State Legislatures have exclusive power to make laws on matters here |
| Concurrent List (List III) | Both Parliament & State Legislatures have power to make laws on matters here |
## Income Tax — Specific Entry
Entry No. 82 of the Union List (List I) in the Seventh Schedule to Article 246 gives the power to make laws on:
> "Taxes on Income other than Agricultural Income"
### Important Implications
- Income Tax → Central Government's exclusive power
- Agricultural Income → NOT covered under Entry 82, hence Central Govt cannot levy tax on it (this is why Agricultural Income is exempt under Section 10(1) of Income Tax Act)