Question

What does Article 268 of the Indian Constitution primarily deal with?

• A. Service tax levied by Union and collected by States
• B. Income tax levied and collected by States
• C. Stamp duties levied by Union but collected by States
• D. Excise duties on medicinal products collected by States

Answer 1

Answer:

C. Stamp duties levied by Union but collected by States

Overview of Article 268

• Constitutional Provision: Article 268 falls under Part XII of the Indian Constitution, which deals with Finance, Property, Contracts, and Suits.
• Core Subject: It specifies duties levied by the Union but collected and appropriated by the States.
• Mechanism: These duties are defined under the Union List but the administrative machinery for collection lies with the State governments.
• Revenue Allocation: The proceeds of such duties (within any State) do not form part of the Consolidated Fund of India; instead, they are assigned to that State.

Key Examples

• Stamp Duties: Stamp duties on bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies, and receipts.
• Excise Duties: Duties of excise on medicinal and toilet preparations containing alcohol or opium, Indian hemp, and other narcotic drugs.

Relevant Constitutional Context

• Distinction: Unlike Article 269 (which covers taxes levied and collected by the Union but assigned to the States) or Article 270 (which covers taxes levied and collected by the Union and distributed between the Union and the States), Article 268 focuses on State collection.
• Amendment Impact: The 101st Constitutional Amendment Act (GST) has significantly impacted the landscape of indirect taxation, although specific provisions regarding these legacy duties remain historically significant for understanding federal fiscal relations.