In India, the revenue collected from agricultural income tax is allocated to which level of government?
Show answer & explanation
Correct answer: A
Explanation
Solution: The correct answer is State Governments.
Explanation:
☛ Under the Seventh Schedule of the Constitution of India, Taxes on agricultural income is included under Entry 46 of the State List (List II).
☛ Therefore, the power to levy, collect, and retain revenue from agricultural income tax lies entirely with the State Governments.
☛ In contrast, Entry 82 of the Union List (List I) empowers the Central Government to levy Taxes on income other than agricultural income.
☛ Under Section 10(1) of the Income-tax Act, 1961, agricultural income is completely exempt from Central income tax.
Extra Exam-Relevant Facts:
☛ Article 366(1): Specifies that "agricultural income" means agricultural income as defined for the purposes of enactments relating to Indian income-tax.
☛ K.N. Raj Committee (1972): Recommended the introduction of an Agricultural Holding Tax (AHT) on agricultural wealth and income.
☛ Article 246: Deals with the distribution of legislative powers between the Parliament and State Legislatures across the Union, State, and Concurrent lists.
☛ Residuary Powers (Article 248): The power to make laws and levy taxes on subjects not mentioned in the Concurrent List or State List rests exclusively with the Parliament.
Important One-Liners for Upcoming Exams:
☛ Which Entry of the State List deals with taxes on agricultural income? → Entry 46
☛ Which Entry of the Union List empowers the Centre to tax income other than agriculture? → Entry 82
☛ Which Section of the Income-tax Act, 1961 provides tax exemption for agricultural income? → Section 10(1)
☛ Which committee was formed in 1972 regarding the taxation of agricultural wealth and income? → K.N. Raj Committee
☛ Under which Article are the Union, State, and Concurrent lists detailed? → Article 246