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What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?
- a)To increase the direct tax base of India.
- b)To replace multiple central and state taxes with a single tax.
- c)To exclusively tax luxury goods and services.
- d)To implement a progressive tax system based on income.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
What was the main purpose of introducing the Goods and Services Tax (G...
GST was introduced to overhaul the taxation system by replacing several existing central and state taxes with a single unified tax.
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What was the main purpose of introducing the Goods and Services Tax (G...
Introduction
The Goods and Services Tax (GST) was introduced by the Modi government in India with the aim of simplifying the existing tax structure and creating a unified tax system. The main purpose of implementing GST was to replace multiple central and state taxes with a single tax, bringing about a more efficient and transparent taxation system.
Explanation
1. Simplification of tax structure: One of the key objectives of introducing GST was to simplify the complex tax structure in India. Before the implementation of GST, there were multiple taxes levied by both the central and state governments, such as excise duty, service tax, value-added tax (VAT), etc. These taxes had different rates, exemptions, and procedures, leading to confusion and inefficiency. GST aimed to streamline this system by replacing all these taxes with a single tax, making compliance easier for businesses and taxpayers.
2. Creation of a unified market: Another important purpose of implementing GST was to create a unified market across the country. The previous tax structure resulted in fragmented markets due to barriers created by state borders. Different tax rates and procedures in each state made interstate trade cumbersome and increased the cost of doing business. GST aimed to eliminate these barriers by providing a uniform tax rate across the country and simplifying the compliance process. This resulted in the creation of a common market, promoting ease of doing business and fostering economic growth.
3. Transparency and accountability: GST brought about greater transparency and accountability in the tax system. The single tax rate and simplified procedures made it easier for businesses and taxpayers to understand and comply with the tax laws. The introduction of an online portal for registration, filing returns, and making payments made the entire process more transparent. This helped in reducing tax evasion and increasing tax compliance, leading to a broader tax base and improved revenue collection for the government.
4. Boost to the economy: By replacing multiple taxes with a single tax, GST eliminated the cascading effect of taxes, also known as the "tax on tax" system. This led to a reduction in the overall tax burden on businesses, making them more competitive. Lower tax costs and the ease of doing business resulting from GST implementation attracted investments and stimulated economic growth. GST also facilitated the free flow of goods and services across state borders, reducing logistics costs and improving overall efficiency in the supply chain.
Conclusion
The main purpose of introducing the Goods and Services Tax (GST) by the Modi government was to replace multiple central and state taxes with a single tax, simplifying the tax structure and creating a unified market. GST aimed to bring transparency, accountability, and efficiency to the tax system, boost the economy, and promote ease of doing business in India.
The Goods and Services Tax (GST) was introduced by the Modi government in India with the aim of simplifying the existing tax structure and creating a unified tax system. The main purpose of implementing GST was to replace multiple central and state taxes with a single tax, bringing about a more efficient and transparent taxation system.
Explanation
1. Simplification of tax structure: One of the key objectives of introducing GST was to simplify the complex tax structure in India. Before the implementation of GST, there were multiple taxes levied by both the central and state governments, such as excise duty, service tax, value-added tax (VAT), etc. These taxes had different rates, exemptions, and procedures, leading to confusion and inefficiency. GST aimed to streamline this system by replacing all these taxes with a single tax, making compliance easier for businesses and taxpayers.
2. Creation of a unified market: Another important purpose of implementing GST was to create a unified market across the country. The previous tax structure resulted in fragmented markets due to barriers created by state borders. Different tax rates and procedures in each state made interstate trade cumbersome and increased the cost of doing business. GST aimed to eliminate these barriers by providing a uniform tax rate across the country and simplifying the compliance process. This resulted in the creation of a common market, promoting ease of doing business and fostering economic growth.
3. Transparency and accountability: GST brought about greater transparency and accountability in the tax system. The single tax rate and simplified procedures made it easier for businesses and taxpayers to understand and comply with the tax laws. The introduction of an online portal for registration, filing returns, and making payments made the entire process more transparent. This helped in reducing tax evasion and increasing tax compliance, leading to a broader tax base and improved revenue collection for the government.
4. Boost to the economy: By replacing multiple taxes with a single tax, GST eliminated the cascading effect of taxes, also known as the "tax on tax" system. This led to a reduction in the overall tax burden on businesses, making them more competitive. Lower tax costs and the ease of doing business resulting from GST implementation attracted investments and stimulated economic growth. GST also facilitated the free flow of goods and services across state borders, reducing logistics costs and improving overall efficiency in the supply chain.
Conclusion
The main purpose of introducing the Goods and Services Tax (GST) by the Modi government was to replace multiple central and state taxes with a single tax, simplifying the tax structure and creating a unified market. GST aimed to bring transparency, accountability, and efficiency to the tax system, boost the economy, and promote ease of doing business in India.
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What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer?
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What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer?.
What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What was the main purpose of introducing the Goods and Services Tax (GST) by the Modi government?a)To increase the direct tax base of India.b)To replace multiple central and state taxes with a single tax.c)To exclusively tax luxury goods and services.d)To implement a progressive tax system based on income.Correct answer is option 'B'. Can you explain this answer?.
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