Financial Relations between Centre and the States:

1. Taxes levied by the Centre and collected by the States: Stamp duty, the taxes on the production of medicines and cosmetic preparations.

2. Taxes levied and collected by the Centre but distributed among the States: Taxes included in this category are duties on the succession of property other than agricultural land, estate duty except that on agricultural land terminal taxes on goods or passengers carried by air, sea or railways, taxes on railways freights and fares, taxes on newspapers, taxes on inter-state trade or commerce, etc. But such taxes concerning the Union territories are taken by the Centre.

3.Taxes levied and collected by the Centre and distributed between the Centre and the States: Income tax, excise duties other than those on medicine and toilet preparations.

4. Grants-in-Aid to the States: (i) The states of Assam, Bihar, West Bengal and Orissa are given grants in lieu of export duty on jute and jute products.

(ii) Such sum as Parliament may by law provide shall be changed on the Consolidated Fund of India.

(iii) Such sum as for the purpose of raising the level of administration of the tribal area.

5. Appointment of the Finance Commission: The President is empowered to appoint a Finance Commission after 5 years or earlier as he deemes necessary. It will make the recommendation of taxes between the union and the states.