Budgeting and Fiscal policy

Indian Economic System(UPPCS)

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Indian Economy - Understanding the basics of Indian economic system

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Consider the following statements

Article 270 of the Indian Constitution outlines the distribution of net tax proceeds between the Union government and the States.
Currently, the share of States from the divisible pool (vertical devolution) stands at 41% as per the recommendation of the 15th Finance Commission.
Cess and surcharge, collected by the Union government, are not part of the divisible pool and therefore not shared with the States.

How many of the statements given above is/are correct?

Only One

Only Two

All Three

None

Explanation:

All statements are correct.

Article 270 of the Constitution outlines the distribution of net tax proceeds between the Union government and the States.
Currently, the share of States from the divisible pool (vertical devolution) stands at 41% as per the recommendation of the 15th Finance Commission.
Cess and surcharge collected by the Union government is estimated at around 23% of its gross tax receipts for 2024-25, which does not form part of the divisible pool and hence not shared with the States.

Hence option 3rd is correct.

By: Shubham Tiwari

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