251. (1) Taxes on income other than agricultural income shall be levied and collected by the Government of India and distributed between the Union and the States in the manner provided in clause (2) of this article.
(2) Such percentage, as may be prescribed, of the net proceeds in any financial year of any such tax, except in so far as those proceeds represent proceeds attributable to States for the time being specified in Part II of the First Schedule or the taxes payable in respect of Union emoluments, shall not form part of the revenues of India, but shall be assigned to the States within which that tax is leviable in that year, and shall be distributed among those States in such manner and from such time as may be prescribed.
(3) For the purposes of clause (2) of this article, in each financial year such percentage as may be prescribed of so much of the net proceeds of taxes on income as does not represent the net proceeds of taxes payable in respect of Union emoluments shall be deemed to represent proceeds attributable to States for the time being specified in Part II of the First Schedule.
(4) In this article-
(a) “Taxes on income” includes any sum levied by the Government of India in lieu of any tax on income as referred to in clause (a) of the proviso to article 266 of this Constitution but does not include a corporation tax;
(b) “Prescribed” means-
(i) Until a Finance Commission has been constituted, prescribed by the President by order, and
(ii) After a Finance Commission has been constituted, prescribed by the President by order after considering the recommendations of the Finance Commission.
(c) “Union emoluments” includes all emoluments and pensions payable out of the revenues of India in respect of which income-tax is chargeable.