Q. Consider the following statements regarding the inter-governmental tax immunity in India:
1.The property of the Union is exempt from all taxes imposed by a State or any authority within a State, unless Parliament by law provides otherwise.
2.The property and income of a State are exempt from Union taxation, but the Union can tax the income of a State derived from a trade or business if Parliament so provides by law.
3.The property of the Union exempt from state tax includes only immovable property like land and buildings and does not include movable property like vehicles or aircraft.
Which of the statements given above are correct?
Answer: A
Notes:
Explanation:
Statement 1: Correct. Under Article 285, Union property is immune from state/local taxes.
Statement 2: Correct. Under Article 289, the immunity for states is not absolute; commercial activities can be taxed by the Union if a law is made.
Statement 3: Incorrect. The term property under Article 285 is used in a very wide sense and includes both movable and immovable property (lands, buildings, chattels, shares, etc.).
