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CA Foundation · Business Economics · Indian Economy

The Goods and Services Tax (GST) in India is best described as:

GST is a destination-based, multi-stage indirect tax where input tax credit allows set-off of tax paid on inputs, so tax falls on value addition. It is not a single-point manufacturing tax, not limited to foreign trade, and not a direct tax on income.

  1. AA single-point tax levied only at the manufacturing stage
  2. BA tax levied only on imports and exports
  3. CA direct tax levied on the income of companies
  4. DA destination-based, multi-stage indirect tax with input tax credit on value additionCorrect

Explanation

GST is levied at each stage of supply and the tax paid on inputs can be set off against output tax, so only value addition is effectively taxed. It is destination-based, meaning tax accrues where goods or services are consumed. It is not a direct tax nor limited to manufacturing or trade.

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