What is the significance of clause (2) in relation to the exemption of state property and income from Union taxation?
The significance of clause (2) in relation to the exemption of state property and income from Union taxation is that it specifies that the Union may impose or authorize the imposition of certain taxes on specific trades, businesses, and operations conducted by or on behalf of a State government. This means that while the state's property and income are generally exempt from Union taxation (as per clause 1), there might be exceptions if the Parliament declares such activities to be incidental to the ordinary functions of the Government, as per clause (3).