What is are the most likely advantages of implementing lsquo Goods and Services Tax GST rsquo 1 It w...........

Economic and Social Issues Budgeting and Fiscal policy

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:

1 only

2 and 3 only

1 and 3 only

1, 2 and 3

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Explanation:

GST is a indirect tax for the whole nation, which will make India one unified common market. The removal of bundled indirect taxes such as VAT, CST, Service tax, CAD, SAD, and Excise will simplify the tax policy. It leads to removal of cascading effect of taxes i.e. removes tax on tax. So, Statement 1 is correct.

Due to effective taxation policies fiscal deficit may reduce which can improve imvestment climate which may indirectly reduce the Current Account Deficit (CAD) of India but that cannot be owned to GST. So, Statement 2 is incorrect.

Enormous increase the growth and size of economy of India cannot be implicated out of GST as of now. Hence statement 3 is incorrect.