Q. Consider the following statements:
1.The introduction of the Goods and Service Tax (GST) has reduced urban local bodies (ULBs) tax revenue.
2.Cities in India contribute around 66% of India’s GDP.
3.The Finance Commission is established under Article 110 of the Indian Constitution.
How many of the statements given above are correct?

[A] Only one

[B] Only two

[C] All three

[D] None

Answer: B

Explanation –

Statements 1 and 2 are correct. The implementation of GST has absorbed various local taxes such as octroi and entry taxes, which were significant sources of revenue for ULBs. This absorption has adversely affected the finances of local governments. Cities play a crucial role in India’s economy, contributing approximately 66% of the country’s GDP.

Statement 3 is incorrect. The Finance Commission is established under Article 280 of the Indian Constitution.

Source: The Hindu