Consider the following statements: In India, stamp duties on financial transactions are 1. levied and collected by the State Government 2. appropriated by the Union Government. Which of these statements is/are correct?

Stamp duties on instruments such as bills of exchange, cheques, promissory notes, insurance policies and transfer of shares are covered under Article 268 of the Constitution as duties levied by the Union but collected and appropriated by the States. That means the Union levies these specific stamp duties while the proceeds are collected/assigned to the respective State(s) and do not form part of the Consolidated Fund of India [2]. Therefore statement (1) (levied and collected by the State Government) is incorrect, and statement (2) (appropriated by the Union Government) is also incorrect. Correct choice: Neither 1 nor 2.

Sources

1. [1] Laxmikanth, M. Indian Polity. 7th ed., McGraw Hill. > Chapter 15: Centre State Relations > II Distribution of Tax Revenues > p. 153
2. [2] https://fincomindia.nic.in/constitutional-provisions