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 :

The correct answer is A, 1 only. The main and certain advantage of GST is that it subsumes many indirect taxes into one and creates a common national market. GST came into force on 1 July 2017 under the 101st Constitutional Amendment. It replaced central levies such as central excise duty, service tax and additional customs duties, and state levies such as VAT, entry tax, entertainment tax and octroi. Being a destination-based tax with input tax credit across the chain, it removes the cascading of tax on tax and the barriers at state borders, so goods move more freely across India. Statement 2 is wrong because the current account deficit depends mainly on trade in goods and services, oil prices and remittances; a domestic indirect tax does not drastically reduce it or build forex reserves. Statement 3 is wrong because GST may add to growth over time, but no tax reform by itself makes an economy overtake China in the near future. So options B, C and D, which include statement 2 or 3, are wrong. Exam tip: GST = 101st Amendment, in force 1 July 2017; GST Council under Article 279A; one nation, one market.