Which one of the following has the largest contribution to the Gross Tax Revenue of Government of India in 2019-20 (BE)?
- (a)Goods and Services Tax
- (b)Corporation Tax
- (c)Customs
- (d)Union Excise Duties
Correct — B, Corporation Tax. In the Budget Estimates for 2019-20 the Centre's gross tax revenue was put at about 24.61 lakh crore rupees, and corporation tax at 7.66 lakh crore rupees was the largest single head within it. Goods and Services Tax came next at about 6.63 lakh crore, taxes on income other than corporation tax at 5.69 lakh crore, union excise duties at 3 lakh crore and customs at about 1.56 lakh crore.
- (a)Goods and Services Tax — GST was the second largest head at that estimate, not the first. The figure in the Union Budget covers only the Centre's share — central GST, the Centre's part of integrated GST and the compensation cess — rather than all GST collected in the country.
- (c)Customs — Customs was the smallest of the major heads, at about 1.56 lakh crore rupees, a consequence of successive tariff reductions since the 1990s.
- (d)Union Excise Duties — Union excise duties, at 3 lakh crore rupees, now fall largely on petroleum products, since most other goods moved into GST in 2017.
Gross tax revenue is the total the Centre collects before its share is transferred to the States under the Finance Commission's formula. It splits into direct taxes — corporation tax and personal income tax, paid by the person on whom they are levied — and indirect taxes such as GST, customs and excise, which are collected from one party and borne by another.
The reason GST feels like it should top the list is that the phrase usually calls up all-India collections, whereas the Union Budget line is only what accrues to the Centre. Corporation tax is also constitutionally a Union tax, levied and collected by the Centre. Anchored to the 2020 exam this ordering was current; it no longer is. The latest receipts budget shows personal income tax overtaking corporation tax — about 12.35 lakh crore rupees against 9.87 lakh crore in the 2024-25 actuals — so the single largest head today is the tax on individual incomes.
- Budget Estimates 2019-20 put gross tax revenue at about 24.61 lakh crore rupees.
- Corporation tax 7.66 lakh crore, GST 6.63 lakh crore, taxes on income 5.69 lakh crore, union excise 3 lakh crore and customs about 1.56 lakh crore.
- The GST figure in the Union Budget is only the Centre's share, not all-India collections.
- Corporation tax and income tax are direct taxes; GST, customs and excise are indirect.
- In the 2024-25 actuals personal income tax at about 12.35 lakh crore rupees has overtaken corporation tax at about 9.87 lakh crore.
Figures from the Receipts Budget 2019-20. The same ordering is what the official key to the CDS 2020-II paper endorses.
- Reading the Budget's GST line as all-India GST collections.
- Carrying a 2019-20 ordering forward as if it were current; income tax has since moved to the top.
- Confusing gross tax revenue with the Centre's net tax revenue, which is what remains after devolution to the States.
A ranking item on budget heads, sometimes asked for the largest and sometimes for the full descending order. Learning the order rather than the numbers covers both.
Corporation tax
- (a) is levied and appropriated by the States
- (b) is levied by the Union and collected and appropriated by the States
- (c) is levied by the Union and shared by the Union and the States
- (d) is levied by the Union and belongs to it exclusively
Answer(d) is levied by the Union and belongs to it exclusively
Where the tax itself sits in the constitutional scheme. Corporation tax being levied by the Union and belonging to it exclusively is why it appears as a Union Budget head at all.
As per the Budget Estimates of 2019–20, the following are some of the important sources of tax receipts for the Union Government: 1. Corporation Tax 2. Taxes on Income other than Corporation Tax 3. Goods and Services Tax 4. Union Excise Duties Which one of the following is the correct descending order of the foresaid tax receipts as a percentage of GDP?
- (a) 1, 2, 3, 4
- (b) 1, 3, 2, 4
- (c) 3, 2, 1, 4
- (d) 2, 4, 3, 1
Answer(b) 1, 3, 2, 4
The same Budget Estimates asked as a full ranking rather than for the top head alone. That paper's official key puts corporation tax first and GST second, which independently confirms the ordering used here.
- practice — not a real PYQ
Which one of the following is a direct tax levied by the Union Government?
- (a)Goods and Services Tax
- (b)Customs duty
- (c)Corporation tax
- (d)Union excise duty
Answer(c) Corporation tax — it is levied on company profits and borne by the company itself, which is what makes it direct.
- practice — not a real PYQ
Gross tax revenue of the Union Government differs from its net tax revenue by
- (a)the amount devolved to the States
- (b)the interest paid on public debt
- (c)the subsidy bill
- (d)receipts from disinvestment
Answer(a) the amount devolved to the States — the share transferred under the Finance Commission's formula.