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With reference to ‘Taxation regime in India’, which one of the following statements is correct regarding ‘Surcharge’?
- a)It is a form of a temporary tax levied by the government with specific purposes.
- b)The government can utilise the proceeds of surcharge for whichever purpose it deems fit.
- c)The 101st Constitutional Amendment Act gives the power to Central Government to ordinarily impose surcharge over and above the GST.
- d)The proceeds from surcharge mandatorily needs to be shared with State governments.
Correct answer is option 'B'. Can you explain this answer?
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With reference to ‘Taxation regime in India’, which one of the follow...
Option b is the correct answer.
- Option a is incorrect: Surcharge is an additional charge or tax. In simple words, a surcharge is a tax on tax. It is levied as a percentage on the income tax payable as per normal rates. In case no tax is due for a financial year, then no surcharge is levied. Unlike a cess, which is meant to raise revenue for a temporary need, surcharge is usually permanent in nature.
- Option b is correct: Parliament can impose a surcharge for ‘the purposes of the Union’. The exact import of this phrase is not clear, but it is logical that the Union can impose a surcharge only on its tax base. Unlike a cess, in the case of a surcharge, there is no need to stipulate the purpose at the time of levy and it is the discretion of the Union to utilise the proceeds of the surcharges for whichever purpose it deems fit.
- Option c is incorrect: Pursuant to Constitution (One Hundred and First Amendment) Act, 2016, a surcharge cannot ordinarily be imposed over and above the Goods and Service Tax.
- Option d is incorrect: The proceeds from surcharges need not be shared with State Governments. The concept of surcharge and the language for ‘purposes of the Union’ in Article 271 was interpreted to mean that surcharge proceeds are separate from income tax proceeds for the purposes of distribution and therefore it is not the obligation of Union to share proceeds from surcharge with the states.
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With reference to ‘Taxation regime in India’, which one of the follow...
Explanation:
Surcharge:
- Surcharge is an additional tax levied by the government on the existing tax liability of an individual or entity.
- It is imposed for specific purposes and is usually temporary in nature.
- The government can utilize the proceeds from the surcharge for any purpose it deems fit, as per the requirement of the specific surcharge.
101st Constitutional Amendment Act:
- The 101st Constitutional Amendment Act, which was passed in 2016, introduced the Goods and Services Tax (GST) in India.
- It gave the power to the Central Government to impose and collect the GST.
- However, the Act does not specifically mention the power to impose surcharge over and above the GST.
Correct Answer:
- Option 'B' is the correct answer as it states that the government can utilize the proceeds from the surcharge for whichever purpose it deems fit.
- This means that the government has the flexibility to allocate the funds generated from the surcharge to various purposes, depending on the needs and priorities of the country.
Other Options:
- Option 'A' is incorrect as surcharge is not always temporary and can be imposed for both temporary and permanent purposes.
- Option 'C' is incorrect as the power to impose surcharge is not specifically mentioned in the 101st Constitutional Amendment Act.
- Option 'D' is incorrect as there is no mandatory requirement to share the proceeds from surcharge with state governments. The utilization of the surcharge proceeds is at the discretion of the Central Government.
Surcharge:
- Surcharge is an additional tax levied by the government on the existing tax liability of an individual or entity.
- It is imposed for specific purposes and is usually temporary in nature.
- The government can utilize the proceeds from the surcharge for any purpose it deems fit, as per the requirement of the specific surcharge.
101st Constitutional Amendment Act:
- The 101st Constitutional Amendment Act, which was passed in 2016, introduced the Goods and Services Tax (GST) in India.
- It gave the power to the Central Government to impose and collect the GST.
- However, the Act does not specifically mention the power to impose surcharge over and above the GST.
Correct Answer:
- Option 'B' is the correct answer as it states that the government can utilize the proceeds from the surcharge for whichever purpose it deems fit.
- This means that the government has the flexibility to allocate the funds generated from the surcharge to various purposes, depending on the needs and priorities of the country.
Other Options:
- Option 'A' is incorrect as surcharge is not always temporary and can be imposed for both temporary and permanent purposes.
- Option 'C' is incorrect as the power to impose surcharge is not specifically mentioned in the 101st Constitutional Amendment Act.
- Option 'D' is incorrect as there is no mandatory requirement to share the proceeds from surcharge with state governments. The utilization of the surcharge proceeds is at the discretion of the Central Government.
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With reference to ‘Taxation regime in India’, which one of the following statements is correct regarding ‘Surcharge’?a)It is a form of a temporary tax levied by the government with specific purposes.b)The government can utilise the proceeds of surcharge for whichever purpose it deems fit.c)The 101st Constitutional Amendment Act gives the power to Central Government to ordinarily impose surcharge over and above the GST.d)The proceeds from surcharge mandatorily needs to be shared with State governments.Correct answer is option 'B'. Can you explain this answer?
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