Consider the following statements regarding the taxation powers of the Central and State Governments:
1. The Constitution of India grants exclusive power to the Centre to levy taxes on the income of individuals, associations, and firms.
2. States are allowed to levy sales tax on the sale of goods, but the Centre can levy a similar tax on services.
3. The Centre can levy taxes on the property of the States without their consent.

Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, and 3

Question

Consider the following statements regarding the taxation powers of the Central and State Governments:
1. The Constitution of India grants exclusive power to the Centre to levy taxes on the income of individuals, associations, and firms.
2. States are allowed to levy sales tax on the sale of goods, but the Centre can levy a similar tax on services.
3. The Centre can levy taxes on the property of the States without their consent.

Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, and 3

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: According to Article 246 and Entry 82 of the Union List, the Centre has the exclusive authority to levy taxes on income, including income of individuals, associations, and firms. This power is exercised through the Income Tax Act.

Statement 2 is correct: Under the Seventh Schedule, States have the power to levy sales tax on goods, while the Centre can levy taxes on services. This is the basis for the Goods and Services Tax (GST) system, which is a unified tax on goods and services in India. Before GST, the Centre had a separate tax on services (Service Tax), and the States levied taxes on the sale of goods.

Statement 3 is incorrect: According to Article 289 of the Constitution, the Centre cannot levy taxes on the property of the States without their consent. The property of a State is immune from taxes levied by the Centre, except in certain cases specified by law.

Taxation Powers of Central and State Governments

Distribution of Taxation Powers

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M Question 1	⏱ 0
Consider the following statements regarding the taxation powers of the Central and State Governments: 1. The Constitution of India grants exclusive power to the Centre to levy taxes on the income of individuals, associations, and firms. 2. States are allowed to levy sales tax on the sale of goods, but the Centre can levy a similar tax on services. 3. The Centre can levy taxes on the property of the States without their consent. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2, and 3

Taxation Powers of Central and State Governments

Distribution of Taxation Powers

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