Statement 1 is true: GST is a comprehensive indirect tax that subsumed various central and state taxes, including Central Sales Tax (CST). CST was levied on inter-state sales of goods and was a significant burden for businesses due to its cascading effect. With GST, the inter-state supply of goods and services is subject to Integrated GST (IGST), which is designed to be destination-based and eliminate cascading taxes like CST. Statement 2 is true: For the successful implementation of GST, which taxes both goods and services concurrently by both the Centre and States, constitutional amendments were required. These amendments empowered the States to levy tax on services and the Centre to levy tax on the manufacturing of goods, which was previously not the case comprehensively. The GST framework taxes supply of both goods and services, requiring both Centre and States to have the power to tax both.
Goods and Services Tax (GST) is the next logical step towards comprehensive indirect tax reforms in the country. Consider the following statements with respect to GST: With the introduction of GST, the burden of Central Sales Tax (CST) will be removed. For introduction of GST at State level, States should be given the power to levy tax on services. Which of the above statements is/are true ?
Asked in PPSC CS Prelims 2013 · Topic: Fiscal Policy & Revenue (Taxation System in India: Direct, Indirect taxes, and Tax Reforms (including GST))
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