Q. With reference to the Goods and Services Tax (GST), consider the following statements:
1.In GST, exporters don’t pay taxes on their output but are entitled to refunds on the taxes they paid on their inputs.
2.The GST is levied on manufacture and sale of goods only.
3.Under the GST regime, goods and services are classified into different tax slabs based only on their essential nature.
How many of the statements given above are correct?
Answer: A
Notes:
Explanation –
Statement 1 is correct. In GST, exports are zero-rated, which means that exporters don’t pay taxes on their output but are entitled to refunds on the taxes they paid on their inputs.
Statements 2 and 3 are incorrect. GST is levied on the supply of goods and services, not just manufacture and sale. While the essential nature of goods and services is a factor in their tax classification under GST, it’s not the sole determinant. Other factors like economic utility, luxury vs. necessity, revenue potential, and social considerations also influence the tax slabs assigned to different goods and services.
Source: Forum IAS
