Consider the following statements about GST -
1. Both Central and State taxes will be collected at the point of supply.
2. The Central and State GST will be charged on the manufacturing cost.
Which of the above statements are correct?
Explanation:
For Central and State Governments-
o Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.
o Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure.Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.
o Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.
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By: Yachna