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 the economy of India and will enable it to overtake China in the near future. Select the correct answer using the code given below:

QUESTION

Medium

Economy

Prelims 2017

What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’?

It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.
It will enormously increase the growth and size of the economy of India and will enable it to overtake China in the near future.

Select the correct answer using the code given below:

Select an option to attempt

Explanation

Statement 1 is Correct: Goods and Service Tax (GST) replaces multiple indirect taxes levied by central and state governments, creating a unified market. This can simplify tax compliance and potentially reduce the cost of goods and services for consumers.

Statement 2 is Incorrect: While GST can improve efficiency in tax collection, it's not a direct solution to the current account deficit, which is influenced by factors like trade balance and foreign investment.

Statement 3 is Incorrect: The impact of GST on economic growth is complex and depends on various other factors. It's unlikely to solely propel India's economy to overtake China's in the near future. Therefore, the most likely advantage of GST is 1 only.

Hence, option A is the correct answer.

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