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Answer:
tax shall be levied and collected by the Union and is distributed by the Union and States . The revenue which shall be transferred to the Sates is unconditional and the States shall be free to use their income as and when they like. In spite of the large transfer, the fact remains that States are not happy and the main reason being that due to political reasons, the States do not make adequate efforts to impose more tax. The tax proceeds shall not form a part of consolidated fund of India but shall be distributed among States.
Supreme Court gave a judgment with regard to income tax and said that the income tax attributable to Union territories forms a part of the Consolidated Fund of India. It is not necessary to make any distribution of income tax with respect to Union territories as those territories are centrally administered through the President.
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