Goods and Services Tax implementation benefits
Question
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.
Options
1 only
2 and 3 only
1 and 3 only
1, 2 and 3
Explanation
Statement 1 is correct: GST consolidates multiple indirect taxes (VAT, excise, service tax, etc.) into a single tax system, creating a unified market across India. Statement 2 is incorrect: While GST improves efficiency, it does not directly impact the Current Account Deficit significantly, which is primarily influenced by trade in goods and services at macro levels. Statement 3 is overstated and incorrect: GST may support long-term growth but cannot guarantee India will overtake China in the near future, as this depends on multiple factors beyond tax reform including demographics, technological advancement, and global market conditions. The most realistic advantage of GST is the creation of a seamless single market by eliminating tax barriers across states. > GST Advantage: GST creates a unified market by consolidating multiple taxes—this is its primary and proven advantage, not macroeconomic miracles. Answer: (a).
Question details
Year
2017
Paper
GS Paper 1
Question
Q81
Subject
Economy
Sub-topic
GST and tax reforms
Type
Statement-based
Difficulty
Medium
Nature
Current-affairs-linked
Source hint
Current Affairs 2017 - GST Implementation
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