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Taxation & GST

Indian Economy

Useful for: UPSC Civil Services

हिंदी में पढ़ें

Overview

India’s tax system combines direct taxes on income with indirect taxes on consumption; GST unified most indirect taxes from 2017.

Key points

  • GST was introduced by the 101st Amendment (2016) and rolled out on 1 July 2017.
  • CGST and SGST apply to intra-state supply; IGST, collected by the Centre, applies to inter-state supply and imports.
  • The GST Council (Article 279A) is chaired by the Union Finance Minister and includes state finance ministers.
  • Alcoholic liquor for human consumption is outside GST.
  • Five petroleum products (crude oil, petrol, diesel, natural gas, aviation turbine fuel) will come under GST only from a date the Council recommends.
  • GST is a destination-based consumption tax.

Practice MCQs

  1. From the perspective of definition and scope, which one of the following statements about Taxation & GST is correct?

    1. The person legally depositing an indirect tax always bears its full economic burden.
    2. Taxation & GST is unrelated to institutions, processes or real-world applications.
    3. Taxation & GST has no exceptions or limitations in exam analysis.
    4. Direct taxes are imposed on income or profits, while indirect taxes are imposed on transactions/consumption subject to design.

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    Answer: (d) Direct taxes are imposed on income or profits, while indirect taxes are imposed on transactions/consumption subject to design.. Direct taxes are imposed on income or profits, while indirect taxes are imposed on transactions/consumption subject to design.

  2. Consider the following statements on Taxation & GST and National Income, focusing on definition and scope: 1. The person legally depositing an indirect tax always bears its full economic burden. 2. GDP directly measures income distribution and automatically shows whether every household is better off. Which of the statements given above is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2

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    Show answer

    Answer: (d) Neither 1 nor 2. Neither statement is correct; both are common misconceptions.

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