Goods and Services Tax (GST)

81) 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:

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Solution: (a) 1 only


The aim of GST is to replace multiple taxes collected by multiple authorities and  create a single market in India.

It may reduce the fiscal deficit in the long-run and may place CAD favourably due to better foreign investment climate owing to an improved tax structure. But, the word ‘drastically’ is extreme and so the statement is incorrect.