Indian Polity · Polity
In India, which of the following statements is correct about the financial relation between the Center and the States?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1States have the authority to impose taxes on defense, currency, and foreign trade.
- 2The Union Government collects certain taxes and distributes revenues between the Union and the States based on the recommendations of the Finance Commission.✓
- 3The States have no role in the allocation of taxes and resources, and all funds are directly managed by the Union.
- 4The Union Government has exclusive control over all types of taxation, including state taxes.
Correct answer
The Union Government collects certain taxes and distributes revenues between the Union and the States based on the recommendations of the Finance Commission.
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