Question

Which one of the following statements regarding the levying, collecting and distribution of income tax is correct?

• A. The Union levies, collects and distributes the proceeds of income tax between itself and the states
• B. The Union government levies, collects and keeps all the proceeds of income tax to itself
• C. The Union government levies and collects the taxes but all the proceeds are distributed among the states
• D. Only the surcharge levied on income tax is shared between the Union and the states

Answer 1

The correct option is A The Union levies, collects and distributes the proceeds of income tax between itself and the states

The Indian Constitution has divided certain powers between the Union and States which includes taxation powers as well. As per article $270$ of the constitution, all incomes other than agricultural income are liable to be taxed which is to be levied and collected by the Union and distributed between the Union and the States.