- Statement 1 is true: India follows a 'Dual GST' model. For intra-state supply, both Central GST (CGST) and State GST (SGST) or Union Territory GST (UTGST) are levied concurrently. For inter- state supply, Integrated GST (IGST) is levied, which has components of both Central and State tax and is administered by the Centre. This represents a concurrency of indirect taxes. - Statement 2 is true: Before GST, taxes like Central Excise Duty and Service Tax were primarily production-based or origin-based. VAT was also partially origin-based. GST is a destination-based consumption tax, meaning the tax is levied and accrues to the state where the goods or services are finally consumed, replacing the previous production-based system. - Statement 3 is true: The destination principle means that in inter-state trade (cross-border within India), the tax revenue goes to the consuming state, not the producing state. This principle benefits states with higher consumption relative to production, which are often states that are less industrialized or might be considered 'poorer' in terms of manufacturing base, while states with a large manufacturing base might see some revenue shift towards consuming states.
With reference to GST, which of the following statements are true? 1. GST is based on a system of concurrency of indirect taxes, where every transaction attracts central as well as state GST 2. GST replaced a production-based taxation system by a consumption-based tax system 3. It brings destination principle for cross- border trading for which the poorer and consuming states are benefiting at the expense of more affluent and industrialized ones
Asked in OPSC CS Prelims 2022 · Topic: Fiscal Policy & Revenue (Taxation System in India: Direct, Indirect taxes, and Tax Reforms (including GST))
More Economic Development questions
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