UPSC Prelims 2010 · General Studies
Question 145: Economy and Social Development
Consider the following statements : In India, taxes on transactions in Stock Exchanges and Futures Markets are
- 1.levied by the Union
- 2.collected by the States
Which of the statements given above is/are correct ?
AnswerThe answer is (a).
Taxes on transactions in stock exchanges and futures markets (other than stamp duty) are in the Union List, so only the Union can levy them; statement 1 is right. They are also collected by the Union, not by the States, so statement 2 is wrong. The States collect only those Union-levied duties that the Constitution specifically assigns to them, such as stamp duties under Article 268. Remember: Union List taxes are levied and collected by the Union unless the Constitution says otherwise.
- 1. Taxes on stock exchange and futures transactions are on the Union List.
- 2. The Union collects them; they are not assigned to the States for collection.
How you could have got this
- If you were sure statement 1 is correct, (b) and (d) go: each of them leaves 1 out.
What you needed to know: Taxes on stock exchange and futures transactions are on the Union List.
- Then, if you were sure statement 2 is not correct, (c) goes: it includes 2.
What you needed to know: The Union collects them; they are not assigned to the States for collection.
Only (a) is left. This one needs every statement.
This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Right: the Union levies these taxes; the States do not collect them.
- (b) States do not collect these taxes.
- (c) Statement 2 is wrong, so 'both' fails.
- (d) Statement 1 is correct, so 'neither' fails.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2010, General Studies, Series A. The paper on upsc.gov.in.