Explanation:

Exemption of Central Property from State Taxation: o The property of the Centre is exempted from all taxes imposed by a state or any authority within a state like municipalities, district boards, panchayats and so on. Hence statement 1 is correct. o But, the Parliament is empowered to remove this ban. o The corporations or the companies created by the Central government are not immune from state taxation or local taxation. The reason is that a corporation or a company is a separate legal entity. • Exemption of State Property or Income from Central Taxation o The property and income of a state is exempted from Central taxation. Such income may be derived from sovereign functions or commercial functions. o But the Centre can tax the commercial operations of a state if Parliament so provides. o Notably, the property and income of local authorities situated within a state are not exempted from the Central taxation. Hence statement 2 is not correct. o Similarly, the property or income of corporations and companies owned by a state can be taxed by the Centre.