Pollution Tax and Subsidies — Policy Reforms

Entry	Year	Description	Impact
42nd Amendment Act	1976	Inserted Article 48A (Protection and improvement of environment and safeguarding of forests and wild life) and Article 51A(g) (Fundamental Duty to protect and improve the natural environment) into the Constitution.	Provided a strong constitutional mandate for environmental protection, guiding subsequent legislation and policy, including the development of environmental fiscal instruments.
Finance Act, 2010	2010	Introduced the 'Clean Energy Cess' (later renamed 'Clean Environment Cess') on coal, lignite, and peat, with proceeds directed to the National Clean Energy Fund (NCEF).	Marked India's first significant central pollution tax, aiming to internalize the environmental costs of fossil fuels and fund clean energy initiatives. This cess was later subsumed under the GST Compensation Cess in 2017.
GST (Compensation to States) Act	2017	Subsumed the Clean Environment Cess into the GST Compensation Cess, with the revenue still intended for environmental purposes, though the direct link to NCEF was diluted.	Integrated a key pollution tax into the broader GST framework, impacting its visibility and direct earmarking for environmental projects, while still providing a revenue stream for states' compensation and potentially environmental initiatives.