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CDS 2024 · PYQ · Economy / Centre-State Tax Sharing · hard

Which of the following components of Central Government taxes on petroleum products is/are not shareable with the States? 1. Basic Excise Duty 2. Additional Excise Duty 3. Special Additional Excise Duty

  1. A.1 and 2 only
  2. B.1, 2 and 3
  3. C.3 only
  4. D.2 and 3 only✓ Correct

Explanation

Under the Indian fiscal framework, the Basic Excise Duty levied on petroleum products forms part of the divisible pool of central taxes and is shared with the States as per the Finance Commission's formula. However, Additional Excise Duty (AED) and Special Additional Excise Duty (SAED), as well as cesses and surcharges levied on petrol and diesel, are NOT part of the divisible pool and are retained entirely by the Centre. Hence components 2 and 3 are not shared with the States, while Basic Excise Duty (component 1) is.
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