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 :
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Answer: A. Statement 1 is correct: GST subsumed many central and state taxes (excise, service tax, VAT, entry tax and others), creating one common national market. Statement 2 is wrong: GST is a domestic indirect tax; it has no direct link to the Current Account Deficit or forex reserves. Statement 3 is wrong: GST may add modestly to growth, but claiming it will 'enormously' grow the economy and help India overtake China is an exaggeration. So 1 only.
Watch for: Watch for extreme words like 'drastically' and 'enormously'; they usually mark the wrong statements.
Why the other options are wrong
- B. Wrong because GST does not directly affect CAD or forex reserves.
- C. Wrong because statement 3 is an overstated claim.
- D. Wrong because statements 2 and 3 are false.
Source to check: GST Council website (gstcouncil.gov.in), GST FAQs; Constitution (One Hundred and First Amendment) Act, 2016; Economic Survey 2016-17, Volume 1, Chapter 13 'One Economic India: For Goods and in the Eyes of the Constitution'
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.