Indian Economy Textbook Questions – Fiscal Federalism · Finance Commission · Devolution of Taxes · Union–State Relations (Part 1)
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8th Chavan, 10th Pant, 12th Rangarajan, 16th Panagariya.
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Indian Economy Textbook Questions – Fiscal Federalism · Finance Commission · Devolution of Taxes · Union–State Relations (Part 1) – 18 questions, subject: Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.
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1.
In which list of the Seventh Schedule is Corporation tax placed?
Correct Answer: B [Union List]
Explanation:
Union List entry 85.
2.
Who has the power to tax agricultural income?
Correct Answer: C [State Government]
Explanation:
State List entry 46; non-agricultural income tax is Union List entry 82.
3.
Which Article provides for the divisible pool of Union taxes?
Correct Answer: D [Article 270]
Explanation:
268 = levied by Union, collected by States; 269 = assigned to States; 280 = Finance Commission.
4.
Who constitutes the Finance Commission?
Correct Answer: A [President]
Explanation:
Article 280(1): the President, once every five years.
5.
In which year was the Act laying down the qualifications of Finance Commission members passed?
Correct Answer: C [1951]
Explanation:
Finance Commission (Miscellaneous Provisions) Act 1951.
6.
Who was the Chairman of the First Finance Commission?
Correct Answer: D [K.C. Neogy]
Explanation:
Set up 1951; award period 1952–57. Santhanam 2nd, Rajamannar 4th.
7.
Who chaired the 15th Finance Commission?
Correct Answer: B [N.K. Singh]
Explanation:
Set up 27.11.2017; period 2020-21 and 2021–26.
8.
What is “vertical devolution” in tax sharing?
Correct Answer: A [Sharing between the Union and the States]
Explanation:
Sharing among the States is horizontal devolution.
9.
What share of the divisible pool goes to States under the 16th Finance Commission?
Correct Answer: D [41%]
Explanation:
The 15th Commission's 41% continues; 42% = 14th.
10.
Who set up the Rajamannar Committee (1969)?
Correct Answer: C [Government of Tamil Nadu]
Explanation:
Chief Minister M. Karunanidhi's government; report on 27.5.1971.
11.
Match the tax with its Seventh Schedule entry:
| a. Customs duty | 1. State List 45 |
| b. Capitation tax | 2. Union List 82 |
| c. Land revenue | 3. Union List 83 |
| d. Income tax (non-agricultural) | 4. State List 61 |
Correct Answer: B [3 4 1 2]
Explanation:
Customs Union 83; capitation tax State 61; land revenue State 45; income tax Union 82.
12.
Which of the following statements are correct?
- Residuary powers rest with Parliament (Article 248).
- The ceiling on profession tax is ₹2,500 a year (Article 276).
- Property tax on lands and buildings is in the Union List.
Correct Answer: D [1, 2 only]
Explanation:
Tax on lands and buildings is State List entry 49, collected by local bodies.
13.
Which Article keeps surcharges on Union taxes wholly for the Union?
Correct Answer: A [Article 271]
Explanation:
Article 271; so surcharges are not part of the divisible pool.
14.
Which statements about Union grants to States are correct?
- Grants under Article 275 are statutory grants.
- Centrally Sponsored Schemes are funded under Article 282.
- For core schemes the Union : State sharing for general States is 60 : 40.
Correct Answer: C [1, 2, 3]
Explanation:
All three are correct; 60 : 40 applies to "core schemes" (2016 Cabinet decision).
15.
Match the body with its Article:
| a. Finance Commission | 1. Article 315 |
| b. Union Public Service Commission | 2. Article 280 |
| c. Election Commission | 3. Article 243-I |
| d. State Finance Commission | 4. Article 324 |
Correct Answer: B [2 1 4 3]
Explanation:
Finance Commission 280; UPSC 315; Election Commission 324; State Finance Commission 243-I.
16.
Which statements about the Finance Commission are correct?
- Its recommendations are laid before Parliament with an explanatory memorandum (Article 281).
- Its recommendations are binding on the Union Government.
- It has five members including the Chairman.
Correct Answer: D [1, 3 only]
Explanation:
The recommendations are advisory; the government may accept or modify them.
17.
Who chaired the 14th Finance Commission?
Correct Answer: B [Y.V. Reddy]
Explanation:
Kelkar 13th, Rangarajan 12th, Singh 15th.
18.
Match the Finance Commission with its Chairman:
| a. 8th | 1. Arvind Panagariya |
| b. 10th | 2. Y.B. Chavan |
| c. 12th | 3. C. Rangarajan |
| d. 16th | 4. K.C. Pant |
Correct Answer: C [2 4 3 1]
Explanation:
8th Chavan, 10th Pant, 12th Rangarajan, 16th Panagariya.
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