Which one of the following taxes is not included in the Central Pool to be shared with the States according to the recommendations of Finance Commission of India?
- A.Personal Income Tax
- B.Corporate Profit Tax
- C.Surcharge and Cess
- D.Excise Duties
Correct answer
Explanation
The correct answer is C, Surcharge and Cess. Under Article 270 of the Constitution, the taxes levied and collected by the Union, such as income tax, corporation tax, Union excise duties and the central GST, form a divisible pool that is shared with the States on the recommendation of the Finance Commission. The Constitution itself keeps cesses and surcharges out of this pool, so the Centre keeps their whole proceeds. Article 271 allows Parliament to levy surcharges on certain taxes for the purposes of the Union. This is why the Centre's growing reliance on cesses and surcharges is a frequent point of debate in Centre-State finance. Option A is wrong because personal income tax is a core part of the shared pool. Option B is wrong because corporation tax has been part of the divisible pool since the 80th Amendment of 2000. Option D is wrong because Union excise duties are also shared with the States. Exam tip: divisible pool, Article 270; surcharge, Article 271; cess and surcharge are never shared with the States.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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