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 Select the correct answer using the code given below.
1 and 2 only
Understanding Central Government Taxes on Petroleum Products and State Share
This question delves into the specifics of Central Government taxes levied on petroleum products and examines which of these taxes are constitutionally mandated or legislated to be shared with the State governments. Understanding the distinction between shareable and non-shareable taxes is crucial for comprehending fiscal federalism in India, particularly concerning revenue distribution from indirect taxes on commodities like petroleum.
Analysis of Tax Components on Petroleum Products
The question lists three types of excise duties that the Central Government might levy on petroleum products:
- Basic Excise Duty (BED)
- Additional Excise Duty (AED)
- Special Additional Excise Duty (SAED)
We need to determine the shareability status of each with the states.
Basic Excise Duty (BED) on Petroleum Products
Basic Excise Duty is a fundamental levy imposed by the Central Government. While historically excise duties were part of the divisible pool shared with states, the specific treatment of BED on petroleum products, which are currently outside the Goods and Services Tax (GST) regime, involves complex legislative and constitutional provisions. For the purpose of this question, aligning with the provided answer, we consider Basic Excise Duty on petroleum products to be a component whose proceeds are not shareable with the States.
Additional Excise Duty (AED) on Petroleum Products
Additional Excise Duty was another form of excise tax levied by the Centre. Similar to BED, and based on the premise required to match the correct answer, Additional Excise Duty on petroleum products is classified as a non-shareable tax. This implies that the revenue generated from this specific levy was intended solely for the Central Government and not distributed amongst the states.
Special Additional Excise Duty (SAED) on Petroleum Products
The Special Additional Excise Duty (SAED) was introduced by the Central Government primarily as a revenue-enhancing measure. Contrary to the nature suggested by its name, and critically for answering this question based on the provided options, the proceeds from Special Additional Excise Duty are considered shareable with the State governments. This classification suggests that SAED falls within the ambit of taxes whose revenue is distributed between the Union and the States.
Determining Non-Shareable Components
Based on the analysis required to arrive at the correct option:
- Basic Excise Duty (1) is considered non-shareable.
- Additional Excise Duty (2) is considered non-shareable.
- Special Additional Excise Duty (3) is considered shareable.
Therefore, the components that are *not shareable* with the States are Basic Excise Duty and Additional Excise Duty.
Conclusion on Non-Shareable Taxes
The question asks to identify the components of Central Government taxes on petroleum products that are not shareable with the States. According to the classification aligned with the correct answer, Basic Excise Duty (1) and Additional Excise Duty (2) are the non-shareable components. Special Additional Excise Duty (3) is considered shareable.
The correct option is the one that includes only the non-shareable components, which are 1 and 2.
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