UPSC Prelims 1995 · General Studies

Question 46: Economy and Social Development

Corporation tax

ais levied and appropriated by the States

bis levied by the Union and collected and appropriated by the States

cis levied by the Union and shared by the Union and the States

dis levied by the Union and belongs to it exclusively

AnswerThe answer is (d).

In 1995 corporation tax was levied and collected by the Union and kept by it, outside the divisible pool of taxes shared with States. Only income tax other than on agricultural income, and Union excise duties, were shared. So the answer given is that the Union keeps it exclusively. Remember: before 2000, corporation tax belonged exclusively to the Union.

Why each option is right or wrong

(a) Corporation tax is a Union tax under the Union List, not a State tax.
(b) The Union collects it and keeps it; States do not collect and appropriate it.
(c) In 1995 it was not shared with States, though it is part of the shareable pool today.
(d) Right as of 1995: levied by the Union and kept by it.

Worth knowing: Dated: the Eightieth Amendment (2000) made all Union taxes, including corporation tax, shareable, so corporation tax now goes into the pool shared with States.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 1995, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.