Question

Which tax is collected by Panchayat?
A) Sales tax
B) Custom duty
C) Land revenue
D) Tax on local fairs

Answer 1

Hint: To ensure that revenues are collected to fund government services, tax collection is required. It deals with the tax gap, or unpaid taxes, as well as the economic inefficiencies that tax evasion causes. It looks at the psychology of noncompliance in order to figure out the most efficient way to collect taxes. The Panchayati Raj Institutions are the district's nodal point. Their job is to assist in the planning, coordination, monitoring, and, where appropriate, regulation of various national programmes.

Complete answer:
Purpose of tax collection – Tax collections, in general, provide a revenue stream to support a government's outlays or principal operations, such as public buildings, military, national parks, and public welfare in the form of transfer payments.

Tax collected by state and local government - Income, sales, and property taxes are the three main sources of revenue for state and local governments. Property taxes are the biggest source of tax revenue for local governments, including school districts, while income and sales taxes account for the majority of combined state tax revenue.

Option A) Sales tax: A sales tax is a tax levied on the sale of certain products and services that is paid to the government. The central government and state governments both collect sales taxes. The Central Government makes the decision based on its tax policy. Hence, this option is incorrect.

Option B) Custom duty: The tax paid on commodities when they are carried across international boundaries is known as "customs duty." The customs duty is levied by the Indian government under the Indian Customs Act of 1962, which is based on Article 265 of the Indian Constitution. Hence, this option is incorrect.

Option C) Land revenue: The tax is levied on the basis of land revenue payable for agricultural land. The rateable value of a building is determined by the fair rent set by the Rent Control Act. Taxation on the basis of capital value is set at 5%.The collection of land revenue in the district is the responsibility of district magistrates. Hence, this option is incorrect.

Option D) Tax on local fairs: A local tax is a tax paid by a state, county, or municipality to help pay for public services such as education, garbage collection, and sewage repair. Property taxes, payroll taxes, sales taxes, and licencing fees are all examples of local taxes. The Panchayat is in charge of collecting the Local Affairs Tax.Hence, this option is correct.

Hence, Option ‘D’ i.e, Tax on local fair is the correct answer. Since, it is collected by the Panchayat.

Note: The Panchayat system includes Gram Panchayats (village level), Block Panchayats (village clusters), and District Panchayats (district level) (District Panchayat). Members of a Gram Panchayat are elected by the residents of a village. A Gram Panchayat exists in every village with a population of at least 500 people.