What does Article 268 of the Indian Constitution primarily deal with?

Correct — C. Article 268 deals with duties levied by the Union but collected and appropriated by the States.

Its subject is the stamp duties mentioned in the Union List. The Union levies them, and the State in which they are leviable collects them and keeps the proceeds, which never enter the Consolidated Fund of India. In a Union territory the Government of India collects them.

Why the others are wrong

• (a)
  Service tax levied by Union and collected by States — Service tax had its own Article, 268A, inserted in 2003 and omitted by the 101st Amendment in 2016 when GST arrived. It was never the subject of Article 268.
• (b)
  Income tax levied and collected by States — Income tax, other than on agricultural income, is levied and collected by the Union and shared with the States under Article 270. It is not a State-collected duty.
• (d)
  Excise duties on medicinal products collected by States — Excise on medicinal and toilet preparations was in Article 268 as enacted, but the 101st Amendment (2016) omitted it when GST came in. Stamp duties are what the Article covers now.

Part XII has several ways of dividing tax money between the Union and the States. Three sit side by side.

Article 268: the Union levies, the States collect and keep.
Article 269: the Union levies and collects, but assigns the proceeds to the States.
Article 270: the Union levies and collects, then shares the proceeds with the States.

The 101st Amendment (2016), which brought in GST, cut Article 268 down to stamp duties and omitted Article 268A.

Key facts

• Article 268: stamp duties mentioned in the Union List are levied by the Union but collected and kept by the States (by the Union in Union territories).
• Proceeds of Article 268 duties do not form part of the Consolidated Fund of India.
• The 101st Amendment (2016) omitted excise on medicinal and toilet preparations from Article 268 and omitted Article 268A (service tax).
• Article 270 governs the sharing of Union taxes, such as income tax, between the Union and the States.

Common traps

• Choosing the medicinal-excise option because it sat in Article 268 until the 101st Amendment removed it.
• Confusing Article 268 with Article 268A, the omitted service-tax Article.

No directly related past PYQ was found.