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CA Foundation · Business Economics · Indian Economy

Which of the following best describes the main objective of the Goods and Services Tax (GST) framework in India?

GST aims to replace many central and state indirect taxes with one unified, destination-based consumption tax. Through input tax credit it removes cascading, meaning tax charged on tax, and creates a common national market. It is not an income tax or an import-only duty.

  1. ATo tax only the final retail sale of goods at a single point
  2. BTo replace multiple indirect taxes with a unified, destination-based consumption tax and reduce cascadingCorrect
  3. CTo tax only income earned by businesses
  4. DTo impose duties only on imported goods

Explanation

GST subsumed many central and state indirect taxes and is a destination-based tax on consumption of goods and services. Input tax credit removes the cascading (tax on tax) effect. It is not a tax on income and not limited to imports or a single retail point.

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