Sixtieth Amendment of the Constitution of India

The Sixtieth Amendment of the Constitution of India (1988), officially titled The Constitution (Sixtieth Amendment) Act, 1988, revised the fiscal framework governing taxes on professions, trades, callings and employments by amending Article 276 of the Constitution. The amendment raised the ceiling limit on the profession tax from ₹250 to ₹2,500 per person per annum, and omitted the obsolete proviso that had permitted higher rates of taxation under pre-Constitution arrangements. It was enacted to modernise a revenue provision that had remained unchanged since 1949, aligning it with inflationary trends, income growth, and the States’ fiscal needs.

Background and rationale

Under the Constitution, Article 276 empowers State Legislatures to levy taxes on professions, trades, callings and employments. This tax, often called the “profession tax”, is a minor but symbolically significant source of revenue for States and local bodies.
Clause (2) of Article 276 originally set a maximum limit of ₹250 per annum per individual, irrespective of income level. This ceiling, fixed during the framing of the Constitution, was based on 1949 economic conditions. Over the decades, however, inflation, urbanisation, and rising income levels rendered this amount nominal and regressive, as even high-income professionals paid the same flat ceiling rate.
By the mid-1980s, several State Governments formally represented to the Centre that the ceiling should be revised upward to reflect changing economic realities and to provide supplementary revenue streams for local development. The Central Government, acknowledging these demands, introduced the Sixtieth Amendment Bill to update the ceiling and remove the now-redundant proviso.

Legislative process and enactment

The Constitution (Sixtieth Amendment) Bill, 1988 (Bill No. 100 of 1988) was introduced in the Lok Sabha on 22 August 1988 by Ajit Kumar Panja, Minister of State in the Department of Revenue, Ministry of Finance. The Statement of Objects and Reasons attached to the Bill outlined three key considerations:

1. The ₹250 ceiling had been fixed in 1949 and was now anachronistic.
2. The ceiling had become regressive, as it applied equally to high-income and low-income earners.
3. Raising the ceiling would assist State Governments in mobilising additional revenue.

The Bill proposed to amend Clause (2) of Article 276, substituting “two hundred and fifty rupees” with “two thousand and five hundred rupees,” and omitting the proviso that had allowed continuation of higher pre-constitutional rates until Parliament provided otherwise.
The Bill was debated and passed by the Lok Sabha on 30 November 1988, and by the Rajya Sabha on 6 December 1988, both without amendment. It received Presidential assent from R. Venkataraman on 20 December 1988, and came into effect on the same date.

Constitutional changes introduced

The Sixtieth Amendment made the following specific modifications to Article 276:

• Clause (2): The phrase “two hundred and fifty rupees” was substituted with “two thousand and five hundred rupees.”
• Proviso: The earlier proviso, which had allowed States or local bodies to levy higher rates prevailing before the Constitution’s commencement, was deleted, as it had outlived its purpose.

After the amendment, Clause (2) of Article 276 reads as follows:

“The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed two thousand and five hundred rupees per annum.”

Fiscal and administrative significance

The Sixtieth Amendment was primarily a revenue rationalisation measure, intended to strengthen the fiscal autonomy of the States within the federal framework. Its major implications include:

• Enhanced revenue potential: The tenfold increase in the ceiling enabled States to raise greater resources without requiring central transfers.
• Modernisation of taxation policy: The revision reflected economic realities after four decades of growth, aligning the Constitution’s fiscal provisions with contemporary income structures.
• Improved equity: The earlier ₹250 ceiling had become regressive, as it imposed the same burden on high- and low-income earners. The higher limit allowed for more differentiated rate structures.
• Simplification of law: Deletion of the proviso removed an archaic clause that had permitted disparate rates under old provincial laws, thereby standardising the framework across the country.

In practice, the profession tax remains a State subject, often administered by local bodies under enabling State laws. Several States subsequently enacted or amended their Profession Tax Acts to levy the tax up to the new ceiling, typically adopting slab-based systems that charge higher-income earners proportionally more.

Context within Indian fiscal federalism

The Sixtieth Amendment must be viewed in the broader continuum of post-Independence fiscal adjustments balancing the revenue powers of the Union and the States. While the Constitution restricts States from imposing income tax (except on agricultural income), Article 276 gives them a limited, non-income-based taxing power.
This tax, though modest in yield, holds symbolic and practical importance:

• It provides a direct, visible fiscal link between citizens and subnational governments.
• It supplements municipal and local finance, often earmarked for civic infrastructure.
• It reinforces the principle of fiscal decentralisation, consistent with the Directive Principles encouraging local self-government (Article 40).

The amendment thus represented a careful calibration of constitutional federalism—updating State revenue authority without altering the fundamental tax distribution between levels of government.

Key features of the Sixtieth Amendment

Long-term relevance

The Sixtieth Amendment remains in force and continues to define the upper limit of professional tax across India. While the ₹2,500 ceiling has not been revised since 1988, its introduction provided lasting flexibility for States to restructure subnational taxation systems.
Modern fiscal studies have noted that the profession tax, though minor in overall budgetary contribution, plays a vital complementary role in local revenue diversification and encourages fiscal responsibility at the State and municipal levels.
The amendment also serves as a precedent illustrating how incremental constitutional revisions—focused on technical financial provisions—can materially strengthen the economic viability of the federal system without altering political balances.