Q. With reference to the distribution of taxing powers under the Indian Constitution, consider the following statements:
1.Both the Parliament and the State Legislatures can levy taxes on all subjects in the Concurrent List.
2.A State Legislature can impose tax on sale or consumption of electricity used by the Railways, subject to Presidential assent.
3.The power to impose gift tax and wealth tax lies with the Parliament under the residuary powers of taxation.
Which of the statements given above is/are correct?
Answer: D
Notes:
Explanation:
- While Concurrent List includes 3 taxation subjects, both the Parliament and State Legislatures can levy, but not always collect or appropriate, such taxes. Also, taxation is generally treated more restrictively than other legislative powers in Concurrent List. In fact, most taxes are excluded from the Concurrent List—only a few exist (e.g., stamp duties, succession duties on non-agricultural property).
- No tax can be imposed by the State on electricity consumed or sold to the Centre or Railways for their operation/maintenance, even if the bill is reserved for the President. This is a prohibition, not a conditional allowance.
- Gift tax, wealth tax, and expenditure tax are examples of residuary taxes, and the power to legislate on residuary subjects, including taxation, lies with the Parliament.
Source: Laxmikant (polity)
