Question

Which one of the following is the main source of revenue in the states?

• A. Property Tax
• B. Excise Duty
• C. Sales Tax
• D. None of the above

Answer 1

Answer: (C)

Sales Tax

States collect revenue within its territory on the subjects under List II or State List of Seventh schedule of the Constitution. Excise duty comes under Union List whereas Property tax is generally levied by local authorities and not state government. So, the main source of revenue in the states is the sales tax which is a consumption tax imposed by the government on the sale of goods and services. It is the tax imposed on the sale and purchase of goods within the state and different states have different sales tax laws for their states.

It is levied by the Government. Sales tax is charged at both the levels of Legislation, Central and State. The tax imposed by the Central Government is known as the Central Sales Tax, whereas tax imposed by the states is called Sales Tax.