Question
Download Solution PDFWhich 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?
This question was previously asked in
CDS-II (General Knowledge) Official Paper (Held On: 01 Sept, 2024)
Answer (Detailed Solution Below)
Option 3 : Surcharge and Cess
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UPSC CDS 01/2025 General Knowledge Full Mock Test
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Detailed Solution
Download Solution PDFThe correct answer is Surcharge and Cess.
Key PointsExplanation of Taxes Shared with States
- Personal Income Tax: This tax is levied on the income of individuals and is included in the central pool of taxes that are shared with the states as per the recommendations of the Finance Commission of India.
- Corporate Profit Tax: This tax is imposed on the profits earned by companies and is also included in the central pool for distribution among the states.
- Surcharge and Cess: These are additional charges on basic tax liabilities, collected for specific purposes. They are not shared with the states and are retained by the Central Government. Hence, statement 3 is correct.
- Excise Duties: These are taxes on the manufacture of goods within the country and are part of the central pool to be shared with the states.
Additional Information
- Finance Commission of India: Established under Article 280 of the Indian Constitution, the Finance Commission is tasked with defining the financial relations between the central government and the individual state governments.
- Central Pool of Taxes: This refers to the collection of various taxes by the central government, which is then distributed to the states based on the recommendations of the Finance Commission.
- Surcharge: An additional charge or tax charged on an existing tax. The central government uses surcharges to generate additional revenue.
- Cess: A form of tax levied by the government for a specific purpose. For example, education cess, health cess, etc. The revenue generated from cess is earmarked for specific purposes and is not shared with the states.
- Article 270: This article of the Indian Constitution specifies which taxes are to be distributed between the central and state governments, excluding surcharges and cesses.
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