Q. With reference to the Goods and Services Tax (GST) in India, consider the following statements:
1.GST is based on the Value Added Tax (VAT) method and inherits its key benefits such as avoiding the cascading effect.
2.GST replaced only central indirect taxes like service tax and CENVAT, while state-level taxes remained outside its ambit.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- GST is a VAT-based tax, applied at multiple stages of value addition, and it prevents cascading of taxes by providing input tax credit.
- GST subsumed both central and state
- Central Taxes merged: CENVAT, service tax, etc.
- State Taxes merged: State excise, VAT/sales tax, octroi, entry tax, luxury tax, etc.
Source- TMH Indian Economy by Ramesh Singh
