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 the 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
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
▶ Answer & Explanation
Correct answer: A. 1 only
The primary aim of GST is to consolidate multiple indirect taxes levied by the Centre and States into a single tax, thereby creating a unified national market. This integration is expected to reduce cascading effects of taxes, improve ease of doing business, and boost economic growth. While GST can indirectly influence the current account deficit by impacting trade and competitiveness, it is not its direct or primary intended consequence, nor is it guaranteed to drastically reduce it. Similarly, while economic growth is expected, directly overtaking China's economy is an exaggerated claim and not a direct, certain outcome of GST implementation alone.
Source: UPSC gs1 2017