In India, Corporation Tax also called corporate tax is imposed by which level of government on the profits of companies?

Introduction / Context:
This question relates to the structure of taxation in India and asks who levies corporation tax, also known as corporate tax. Understanding which level of government has the power to impose this tax is important for civics, economics, and public finance. Many competitive examinations test such constitutional and fiscal distributions of power between the Union and the states.

Given Data / Assumptions:

• The tax mentioned is Corporation Tax or corporate tax.
• It applies to profits or income of companies.
• Options list different layers of government in India.
• We assume existing constitutional provisions regarding taxation powers.

Concept / Approach:
Under the Constitution of India, certain taxes are assigned to the Union government and others to the states or local bodies. Corporation tax on company profits is a Union subject and is levied by the Central Government through the Income Tax Act. States do not have independent power to levy corporation tax, although they share in the proceeds through mechanisms recommended by the Finance Commission. Local governments collect property tax and other local levies, not corporation tax.

Step-by-Step Solution:
Step 1: Identify that corporation tax relates to company incomes and is part of the direct tax system. Step 2: Recall that the Income Tax Department under the Central Government administers both personal income tax and corporate tax. Step 3: Recognise that states in India cannot frame their own separate corporate income tax laws for companies. Step 4: Select Central Government as the correct answer and discard State Government, Local Government, and None.

Verification / Alternative check:
Verification can be obtained by reading the Union List in the Seventh Schedule of the Constitution, which assigns taxes on income other than agricultural income to the Union. Standard economics textbooks and competitive exam guides also state clearly that corporate tax in India is a Union levy collected by the Central Government and later shared with states as per formulae recommended by the Finance Commission.

Why Other Options Are Wrong:
State Governments have significant tax powers, including state goods and services tax, excise on certain items, and stamp duties, but they do not levy corporation tax on company profits. Local Governments such as municipalities and panchayats focus on property tax, local user charges, and small local levies, not company income taxes. The option None is incorrect because corporation tax does exist and is actively collected.

Common Pitfalls:
A frequent mistake is to confuse who imposes the tax with who ultimately benefits from the revenue. Because states receive a share of central taxes, some learners assume that they impose the tax. Another pitfall is mixing up corporate tax with professional tax or value added taxes. A clear understanding of which taxes belong to the Union List, which to the State List, and which are shared helps avoid these errors in exam settings.

Final Answer:
Central Government