Statement 1 says stamp duties on financial transactions are "levied and collected by the State Government". This is not entirely accurate. While states levy and collect stamp duties on documents covered under the State List (Entry 63), for financial instruments listed in the Union List (Entry 91), the rates of stamp duty are fixed by the Union, the duty is levied by the Union Government, but collected and appropriated by the states (Article 268). Since "financial transactions" includes instruments under the Union List, the statement that states levy them is incorrect. Statement 2 says they are "appropriated by the Union Government". This is incorrect. According to Article 268, duties mentioned in the Union List are appropriated by the States, and duties in the State List are also appropriated by the States. Thus, both statements are incorrect.
Consider the following statements: In India, stamp duties on financial transactions are levied and collected by the State Government appropriated by the Union Government. Which of these statements is/are correct?
Asked in UPPCS Prelims 2003 · Topic: The Centre-State Relations (Financial Relations: Allocation of Revenue, Taxation Powers, and Grants-in-Aid)
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