Under Part XIII, Article 306 of Indian Constitution, now repealed, was a transitional provision meant for certain states listed under Part B of the First Schedule. These were mostly princely states or regions with unique fiscal systems prior to the Constitution’s commencement. 306 article granted them limited authority to impose taxes or duties on trade and commerce between themselves and other states .

This exception was not permanent . Article 306 of the Indian Constitution was structured to ensure a smooth transition toward a unified economic system . It recognized the practical challenges in immediately enforcing uniform trade rules across newly joined territories .

However, with the aim of integrating India’s economy, the Constitution (Seventh Amendment) Act, 1956 repealed this article. Today, article 306 of Indian Constitution explanation stands as an example of how temporary constitutional provisions can support long-term national unity in trade, commerce, and governance. Explore in-depth analysis of other Constitutional Articles.

Article 306 Of Indian Constitution

Power of certain States in Part B of the First Schedule to impose restrictions on trade and commerce.

Omitted by the Constitution (Seventh Amendment) Act, 1956, s. 29 and Sch. (w.e.f. 1-1-1956). 

Notwithstanding anything in the foregoing provisions of this Part or in any other provisions of this Constitution, any State specified in Part B of the First Schedule which before the commencement of this Constitution was levying any tax or duty on the import of goods into the State from other States or on the export of goods from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State, continue to levy and collect such tax or duty subject to the terms of such agreement and for such period not exceeding ten years from the commencement of this Constitution as may be specified in the agreement:

⁠Provided that the President may at any time after the expiration of five years from such commencement terminate or modify any such agreement if, after consideration of the report of the Finance Commission constituted under article 280, he thinks it necessary to do so.

Note: "The information provided above has been sourced from the official website, i.e., Indian Code. While the content has been presented here for reference, no modifications have been made to the original laws and orders" 

Free Download 5 Key takeaways on Article 306 of Indian Constitution PDF

Article 306 of Constitution of India, though now repealed, was created to support certain Part B states—like Hyderabad, Jammu & Kashmir, and others—during India's post-independence integration. These states had their own trade practices and taxation systems before becoming part of the Indian Union.

Original Purpose:
The purpose of article 306 was to let these states continue levying trade-related duties temporarily if they had such laws before the Constitution began.

Conditions:
This continuation was only possible under an agreement with the central government, and that agreement could not exceed ten years.

Presidential Power :
After five years the President of India based on the Finance Commission’s advice had the authority to revise, modify or end such agreements . This safeguard ensured federal oversight .

Repeal:
The Constitution (Seventh Amendment) Act, 1956, repealed this article. The removal was meant to ensure equality in trade rules and eliminate fragmentation in the national market.

Current Status:
As per Indian Kanoon and official legal portals, Article 306 of Indian Constitution is no longer in force. Its repeal marked a move toward a unified trade and economic structure across all Indian states.

Article 306 Of Indian Constitution Landmark Cases 

Due to the early repeal of Article 306, there are no prominent Supreme Court cases or landmark judgments that directly interpret it. The article’s use was highly limited, and its application was more administrative than judicial. However, it remains relevant in the context of understanding article 306 and 307 of Indian Constitution, as both relate to transitional provisions in Part XIII, which governs trade, commerce, and intercourse in the country.

Though Article 306 of Indian Constitution is no longer active it holds historical and legal value . It reflects the Constitution’s flexible approach to uniting various princely states and regions with pre-existing legal systems . Its main goal was to prevent disruption in trade during India’s transition into a unified republic .

306 article helped ensure that these states could continue functioning without sudden changes in their trade taxation systems . At the same time it laid a timeline for phasing out such practices through central agreements and oversight .

The article’s significance lies in how it supported a temporary economic arrangement while promoting the long-term goal of national economic integration . Its repeal via the Seventh Amendment was a step toward that vision reinforcing a single market and equal trade opportunities among all states .

In the broader context of article 306 and 307 of Indian Constitution, it showed that India’s federalism included built-in mechanisms for both transition and transformation, ultimately strengthening national unity .

Article 306 Of Indian Constitution Developments and Amendments

Article 306 of Indian Constitution was repealed by the Constitution (Seventh Amendment) Act, 1956 . This amendment was a major legal development that restructured India’s state boundaries and governance models. It also removed certain temporary and redundant constitutional provisions including art 306 of Indian Constitution .

The repeal of 306 article aligned with India’s vision of a common market . It eliminated the power of Part B states to levy special taxes on goods from other states . This change brought these states in line with the trade freedoms guaranteed under Articles 301 to 303.

The amendment also empowered the Parliament and President to ensure that all trade restrictions across the country followed a unified policy. No further extensions of trade privileges under Article 306 were granted after 1956.

Over time, India's legal framework has evolved through policies like GST, which fulfill the dream of one nation, one market . In this broader transformation, the removal of Article 306 of Constitution of India was a key milestone .

This repeal showcases how the Indian Constitution has phased out temporary compromises to ensure long-term economic unity, fairness and federal balance.

Conclusion

Article 306 of Indian Constitution was a product of necessity. It temporarily protected the economic systems of certain Part B states that were in the process of fully integrating into the Indian Union. It provided them space to continue old trade practices under strict conditions and within a set time limit.

However, the framers of the Constitution also recognized the importance of a unified economic framework. As a result, Article 306 included built-in limitations—like the need for central government agreement and Presidential oversight, and a maximum duration of ten years.

The repeal of 306 article in 1956 was a natural progression toward removing economic fragmentation. It helped fulfill the objective of creating a free and fair market for all Indian states under the same legal standards.

Though no longer in effect, article 306 of Indian Constitution explanation teaches us how transitional constitutional tools can support larger national goals. Its life cycle—from enforcement to repeal—shows how India has used constitutional flexibility to guide its economic and political unity.

In summary, Article 306 of Constitution of India played a small but essential role in shaping the country's federal trade structure, and its removal marked a step toward greater national integration.