Which of the following is a tax exclusively imposed and collected by the States? (A) Income Tax (B) Corporation Tax (C) GST (D) Land Revenue

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Keywords: Tax, States, exclusively imposed, collected.

Required Approach: Factual

Points to Remember:

  • The division of tax powers between the Union and States in India.
  • The key characteristics of different taxes in India.
  • The constitutional provisions related to taxation.

Introduction:

India operates a federal system of governance, where tax powers are divided between the Union (Central Government) and the States. The Constitution of India, specifically Articles 265 to 289, outlines the principles of taxation and the distribution of tax powers. Understanding which taxes are exclusively levied and collected by the States is crucial for comprehending India’s fiscal federalism. This question tests knowledge of the specific tax powers vested with the States.

Body:

Understanding Tax Distribution in India:

The Indian Constitution divides taxes into three categories:

  1. Union Taxes: Taxes exclusively levied and collected by the Union Government. Examples include income tax (on individuals and corporations), customs duties, and excise duties.

  2. State Taxes: Taxes exclusively levied and collected by the State Governments. Examples include land revenue, stamp duty, and state GST (SGST).

  3. Concurrent Taxes: Taxes that can be levied by both the Union and the States. In case of conflict, Union laws prevail. GST is a prime example of a concurrent tax, with the Centre collecting the Integrated GST (IGST) and States collecting the SGST.

Analysis of Options:

(A) Income Tax: This is primarily a Union tax, although some aspects related to agricultural income are under state jurisdiction.

(B) Corporation Tax: This is a Union tax.

(C) GST (Goods and Services Tax): This is a concurrent tax. While States collect SGST, it’s a shared tax system and not exclusively a State tax.

(D) Land Revenue: This is a tax exclusively levied and collected by the State Governments. It is a significant source of revenue for many states, particularly those with substantial agricultural land. The power to levy and collect land revenue is explicitly granted to the States under the Constitution.

Conclusion:

The correct answer is (D) Land Revenue. Land revenue is a tax exclusively imposed and collected by the States in India. While other taxes like GST involve State participation, only land revenue falls entirely under the State’s purview. Strengthening the States’ capacity to effectively collect and utilize land revenue is crucial for improving their fiscal autonomy and promoting balanced regional development. A robust and transparent land revenue system, coupled with efficient tax administration, contributes significantly to good governance and sustainable development at the State level, aligning with the principles of cooperative federalism enshrined in the Indian Constitution.

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