Question

Prior to the amendment in 2000, which tax was levied and collected by the Union but distributed between the Union and the States in India?

• A. Central Sales Tax
• B. Consignment Taxes
• C. Income Tax
• D. None of the above

Hint:

Think about Article 270 of the Constitution as it stood before the year 2000.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
We need to find which tax, before the year 2000, was collected fully by the central government but then split and given to both the Centre and the States.

Step 2: Key Formula or Approach:
Look at Article 270 of the Constitution as it stood before the 80th Amendment Act of 2000. This article dealt with one specific tax that had to be shared with the states through the Finance Commission's award.

Step 3: Detailed Explanation:
Article 270, in its original form, covered taxes on income other than agricultural income.
The Union government collected this tax, kept a small part as a collection charge, and handed over the rest to the States in a ratio fixed by the Finance Commission.
Central Sales Tax works differently, it is collected and retained entirely by the exporting state, so it was never shared this way.
Consignment tax was only a proposal and was never implemented as an actual shared tax.
In the year 2000, the 80th Constitutional Amendment Act replaced this narrow scheme with a wider system, where a large pool of central taxes, not just income tax, gets shared with the states.

Step 4: Final Answer:
Before the 2000 amendment, it was Income Tax that the Union collected and then distributed between itself and the States.