Question

Income tax is imposed by :

• A. State Government
• B. Central Government
• C. Municipal Corporation
• D. Constitution of India

Hint:

Income tax is a direct tax on income that comes under the Union List. Parliament makes the law and the Centre collects it.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
In India, the power to levy different taxes is divided between the Centre and the States. The Constitution lists the subjects in the Seventh Schedule.

Step 2: Key Rule:
Tax on income other than agricultural income is in the Union List (Entry 82). Only Parliament can make laws on it.
Parliament has made the Income-tax Act, 1961, and the Central Government collects the tax through the Central Board of Direct Taxes (CBDT) and the Income Tax Department.

Step 3: Check option (A).
The State Government taxes subjects such as agricultural income and land revenue. It has no power over non-agricultural income tax. So (A) is wrong.

Step 4: Check option (B).
The Central Government imposes and collects income tax under the Income-tax Act. So (B) is CORRECT.

Step 5: Check options (C) and (D).
A Municipal Corporation levies local taxes like property tax and water tax, not income tax. So (C) is wrong.
The Constitution only gives the power to levy the tax. It does not impose the tax itself. The tax is imposed through the Act. So (D) is wrong.

Final Answer:
Income tax is imposed by the Central Government, option (B).