Goods and Services Tax likely to be levied in India is not a
- A.gross value tax
- B.value-added tax
- C.consumption tax
- D.destination-based tax
Correct answer
Explanation
The correct answer is A, gross value tax. GST is charged only on the value added at each stage, with credit for tax already paid, so it is not levied on the gross value again and again.
GST came into force on 1 July 2017 after the 101st Constitutional Amendment of 2016. At each stage of supply a business collects tax on its sale but deducts the input tax credit for the tax paid on its purchases, so in effect only the value added at that stage is taxed. This removed the cascading, or tax-on-tax, effect of older indirect taxes. The final burden falls on the consumer, and the tax revenue goes to the State where the goods or services are consumed.
Option B is wrong because GST is a value-added tax by design, through input tax credit. Option C is wrong because the tax is finally borne by the consumer, making it a consumption tax. Option D is wrong because GST accrues to the State of consumption, not the State of production, which makes it destination-based.
Exam tip: GST, 101st Amendment, in force from 1 July 2017, destination-based tax on value added.
Practice Questions
View allUBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
Read the full explanation →In India, the term 'hot money' is used to refer to
- A.Currency + Reserves with the RBI
- B.Net GDR
- C.Net Foreign Direct Investment
- D.Foreign Portfolio Investment
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Hot money is foreign capital that flows in quickly to earn short-term returns and can leave just as quickly, and in India this describes portfolio investment in shares and bonds.
Read the full explanation →Which one of the following statements is correct with respect to the composition of national income in India?
- A.The share of manufacturing sector has declined.
- B.The share of services sector has increased sharply.
- C.The share of agriculture has remained static.
- D.The share of services sector has declined.
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Since independence, and especially since the reforms of 1991, the services sector has grown faster than the rest of the economy and now produces more than half of India's gross value added.
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