Taxation: UPSC Previous Year Questions (Indian Economy)
1 previous year UPSC Prelims question on Taxation (Indian Economy). Choose an option to see the answer and explanation.
Explanations state facts as of the year each question was asked; words like “recently” refer to that year.
Showing 1–1 of 1 question
UPSC 1999Indian Economy · Taxation
Q1. Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct?
Explanation
The Union Government levies and collects income tax and shares its proceeds with the states based on the recommendations of the Finance Commission. This ensures a balanced revenue-sharing mechanism between the Union and State Governments to promote equitable development. The Constitution of India, under Article 270, mandates the sharing of income tax between the Union and States, excluding specific surcharges which are retained by the Union. As per Finance Commission recommendations, the distribution formula considers parameters such as population, area, and fiscal discipline to ensure fair allocation. This practice is pivotal for fostering fiscal federalism in India.
Answer key for these questions
Q
UPSC year
Correct answer
1
1999
(a) The Union levies, collects and distributes the proceeds of income tax between itself and the states
Frequently asked questions
How many previous year UPSC questions are there on Taxation?
This page covers 1 previous year UPSC Prelims GS Paper-I questions on Taxation (Indian Economy), asked from 1996 to 2025. Each has the correct answer and an explanation.
How should I use previous year UPSC questions for Prelims?
Attempt each question first, then open the answer and read the explanation for every option. Repeat by chapter, and track which statements UPSC reuses across years. Previous year questions show the exam pattern and difficulty level.
Which years are covered for Taxation?
Questions on Taxation (Indian Economy) are available for 15 years, from 1996 to 2025. Use the Year filter to practise a single paper.
