In India, which one of the following taxes is levied by the state governments in their own domain rather than exclusively by the Union Government?

Introduction / Context:

This question explores the division of taxing powers between the Union and the states in India. Different types of taxes are assigned to different levels of government by the Constitution, often with detailed entries in the Union and State Lists. Knowing which taxes are levied by the Union and which by the states is fundamental to understanding Indian fiscal federalism and is frequently tested in examinations.

Given Data / Assumptions:

• The question asks specifically about a tax levied by state governments.
• The options list various taxes such as excise duty on liquor, capital gains tax, customs duty and corporation tax.
• Some of these taxes are well known to fall under Union jurisdiction.
• The reference is to the general assignment of powers, not to special surcharges or shared revenues.

Concept / Approach:

The Constitution assigns excise duties on alcoholic liquor for human consumption and on certain other goods to the states, while most other major taxes like customs duty, income tax and corporation tax are levied by the Union Government. Capital gains tax is a part of income tax, and customs duty is exclusively a Union subject. Corporation tax on company profits is also levied by the Union. Therefore, the only tax in the given options that is clearly levied by state governments is excise duty on liquor for human consumption.

Step-by-Step Solution:

Verification / Alternative check:

Examining the entries in the Seventh Schedule of the Constitution and standard tax manuals reveals that excise duties on alcoholic liquor and certain other items are within state jurisdiction. Meanwhile, entries related to customs, income tax and corporation tax appear in the Union List. This structural allocation confirms that excise duty on liquor is the tax levied by states in the list provided.

Why Other Options Are Wrong:

Capital gains tax is part of the Union income tax law and is assessed and collected by the central authorities.

Customs duty on imports and exports is entirely a Union subject and is administered by the central Board of Indirect Taxes and Customs.

Corporation tax on company profits is imposed by the Union Government under central legislation and is not levied by individual state governments.

Service tax historically was a Union levy and has now been subsumed into the Goods and Services Tax framework, where the central and state shares are determined under a separate constitutional and statutory arrangement, but as a simple label it does not represent a pure state levy.

Common Pitfalls:

Students sometimes confuse the place where tax is collected with the authority that levies it. For example, even if a customs office is physically located in a state, customs duty remains a central tax. Another pitfall is to assume that any tax on companies must be a state tax because companies operate locally. In reality, the Constitution assigns such broader base taxes to the Union, while states rely more on excise duties, state GST, stamp duties and certain other levies.

Final Answer:

In India, the tax levied by state governments among the given options is excise duty on liquor for human consumption.