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2 Jul 2026ECONOMY3 questions

GST at Nine: Revenue Milestone Masks Structural Fault Lines

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Article summary

GST collections in June 2026 rose 14% year-on-year to ₹1.95 lakh crore, coinciding with the ninth anniversary of the Goods and Services Tax on July 1, 2026. However, tax analysts note that a disproportionate share of this buoyancy is driven by IGST on imports rather than domestic consumption, suggesting that household demand and domestic manufacturing have not kept pace. Structural issues — including the inverted duty structure that disadvantages domestic producers, unresolved Input Tax Credit (ITC) disputes, the compliance burden of multiple state registrations, and a fragmented dispute resolution mechanism — continue to impede the tax's transformative potential. GST was introduced on July 1, 2017, subsuming 17 central and state levies and 13 cesses under a unified framework anchored in the 101st Constitutional Amendment. For UPSC aspirants, this event is a live case study in cooperative federalism, fiscal architecture, and the gap between reform design and implementation outcomes.

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recallTests whether you read the article and retained key facts.
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applicationTests whether you can apply the concept to a new scenario.
1Q
analysisTests whether you can reason across multiple related facts.
1Q

Sample questions — answers revealed after test

ECONOMYRecallEasy

Q1. The 101st Constitutional Amendment Act, 2016, which provided the constitutional basis for GST in India, inserted which of the following set of articles into the Constitution?

AArticles 246A, 269A, and 279A
BArticles 246A, 268A, and 279A
CArticles 245A, 269A, and 280A
DArticles 246A, 269A, and 280A
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ECONOMYApplicationMedium

Q2. India's GST revenues for June 2026 showed 14% year-on-year growth, driven significantly by IGST collected on imports. An economist argues that this growth figure is a 'misleading headline indicator' of domestic economic health. Which of the following best explains the logical basis of this argument?

AIGST on imports is shared between the Centre and States in the ratio of 2:1, so states do not fully benefit from import-led revenue growth, masking fiscal stress at the sub-national level.
BIGST on imports is levied and collected by the Centre and can reflect rupee depreciation and commodity price inflation rather than genuine growth in domestic consumption or manufacturing output.
CImport-led IGST growth reduces the Input Tax Credit available to domestic manufacturers because importers can claim a larger share of the ITC pool, crowding out domestic producers.
DThe GST Council's recommendations on IGST apportionment are not binding per the Mohit Minerals (2022) ruling, so states can challenge the Centre's import revenue data, making the headline figure analytically unreliable.
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ECONOMYAnalysisHard

Q3. Consider the following statements about the GST Council and the constitutional architecture of GST in India: 1. The GST Council is a statutory body established under the Central Goods and Services Tax Act, 2017. 2. In the GST Council, the votes of States together carry twice the weight of the votes of the Centre. 3. The Supreme Court in Union of India v. Mohit Minerals (2022) held that recommendations of the GST Council are legally binding on both Parliament and State Legislatures. 4. Article 269A of the Constitution governs the levy and apportionment of IGST on inter-state supplies, including imports. How many of the above statements are correct?

AOnly one
BOnly two
COnly three
DAll four
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