Q. Which among the following sentences is / are correct ?
Answer: The Union Levies, collects and distributes the proceeds of income tax between itself and states
Notes: The correct answer is the first statement: "The Union levies, collects, and distributes the proceeds of income tax between itself and states." In India, the Constitution allows the Union government to levy income tax, and the proceeds are shared with states through the Finance Commission. The distribution is based on criteria like population and revenue needs. The second statement is incorrect because the Union does not distribute income tax solely among states. The third statement is misleading as the Union retains a portion of the income tax. The fourth statement is also incorrect. while surcharges can be distributed, income tax proceeds are shared as a whole.