UPSC Previous Year Question | Prelims GS | 2017

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:

  1. 1 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

Correct Answer

1 only

Explanation

GST's primary and most defensible advantage is unifying multiple indirect taxes into a single tax system, creating one common national market (statement 1 correct). Claims about drastically reducing the Current Account Deficit or India 'overtaking China' are exaggerated and unsubstantiated (statements 2 and 3 incorrect).

Topics: economy, goods and services tax, gst advantages, tax reforms