Question

The largest chunk of revenue for the Union government comes from

• A. Income Tax
• B. Central Excise
• C. Corporation Tax
• D. Customs Duty

Answer 1

The Correct Option is B

Step 1: Understand the question
The question asks about the largest chunk of revenue for the Union Government of India. Government revenue comes from two main sources: tax revenue (direct and indirect taxes) and non-tax revenue. Among these, tax revenue has traditionally been the most important contributor.

Step 2: Revenue structure in India
- Direct taxes include income tax, corporation tax, etc.
- Indirect taxes (before the introduction of GST) included customs duties, central excise duties, and service tax.
- Historically, **Central Excise Duty** on goods like petroleum, tobacco, and manufactured products contributed the largest share of the Union Government’s revenue.

Step 3: Why Central Excise was the largest
Excise duty was levied on the manufacture of goods produced within the country. Since India has a very large base of domestic production and consumption, excise collections provided a steady and significant share of revenue. It outstripped customs (which depended on imports) and even direct taxes for many years until structural changes like GST were introduced later.

Step 4: Final justification
Therefore, in the context of the question, the largest chunk of Union Government revenue has traditionally come from Central Excise.

Final Answer: The correct option is (B) Central Excise.