Q. Consider the following statement regarding the financial powers of the parliament and state legislatures:
1. Parliament as well as state legislatures can make laws governing goods and services tax.
2. A State legislature can impose tax on the consumption or sale of electricity.
3. The property of the union and state is exempted from state taxation and Union taxation respectively.
Which of the statements given above is/are correct?
Exp) Option d is the correct answer.
Statement 1 is correct. The 101st Constitutional Amendment Act of 2016 has made a special provision with respect to goods and services tax. It has conferred concurrent power upon Parliament and State Legislatures to make laws governing goods and services tax.
Statement 2 is correct. A state legislature can impose tax on the consumption or sale of electricity. But no tax can be imposed on the consumption or sale of electricity which is (a) consumed by the Centre or sold to the Centre; or (b) consumed in the construction, maintenance or operation of any railway by the Centre.
Statement 3 is correct. The property of union is exempted from all taxes by a State or by any authority within a state except Parliament may be law otherwise provide. Conversely, the property and income of state shall be exempt from Union taxation except if the state enters into trade or business other than the trade or business declared by Parliament shall not be exempt from Union taxation.
