Question
Which tax is levied by the Central Government but collected and appropriated by the States?
Solution
- This is based on the division of financial powers under the Indian Constitution (Seventh Schedule).
- Stamp Duties on documents  (except those specified in the Union List) fall under the State List . However, Stamp Duties on certain financial instruments  (like cheques, bills of exchange, etc.) are levied under the Union List (Article 268) . As per Article 268, these duties are levied by the Centre but collected and appropriated by the States  in which they are levied.
- Corporation Tax is levied and collected by the Centre.
- Taxes on Agricultural Income are levied and collected by States.
- Professional Tax is levied and collected by States (subject to a ceiling).
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