With reference to taxation in India, consider the following statements regarding the powers of taxation of states and centre:
1. While centre can levy taxes on production, tax on sale / purchase of goods has to be levied by States
2. While only states can levy taxes on farm income, only centre can levy taxes on non-farm income
Which among the above is / are correct statements?

Answer: [C] Both 1 & 2

The center can levy taxes on production (excise duty) whereas, the tax on sale or purchase of goods has to be levied by the States. Similarly, only the States can levy the taxes on agricultural incomes and only Central  governments can levy taxes on non-agricultural incomes.  {Kindly note that first statement is related to indirect taxes, while second statement pertains to direct taxes (income tax)}

This question is a part of GKToday's Integrated IAS General Studies Module