What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'? 1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India. 2. It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign exchange reserves. 3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future. Select the correct answer using the code given below :
- (a) 1 only ✓ UPSC's answer
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Why the answer is (a)
• GST (2017) subsumed central excise, service tax, VAT, octroi, entry tax and other levies into one destination-based tax with input-tax credit across the chain, removing inter-State tax barriers and creating 'one nation, one market' (statement 1).
• Statements 2 and 3 are exaggerations: GST is a domestic indirect tax and has no direct bearing on the current account deficit or forex reserves, nor can it by itself make India overtake China.
• Hence 1 only, option (a).
Why the other options are wrong
- (b) 2 and 3 only
- Statements 2 and 3 overstate GST's effects.
- (c) 1 and 3 only
- Statement 3 is an exaggeration.
- (d) 1, 2 and 3
- Statements 2 and 3 are wrong.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2017, held on 18 June 2017. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.