The question asks to identify the type of tax that Goods and Services Tax (GST) falls under. To answer this, one needs to understand the fundamental difference between direct and indirect taxes and how GST operates.
Correct Option: B) Indirect tax
GST is a consumption tax levied on the supply of goods and services. It is collected by the seller from the buyer and then paid to the government. The final burden of the tax falls on the consumer, making it an indirect tax.
The question asks for the effective date of the introduction of Goods and Services Tax (GST) in India. This is a factual question related to Indian economic reforms and taxation.
Correct Option: B) 1 July 2017 is the correct date when GST was introduced in India.
The question asks about the event on which Goods and Services Tax (GST) is levied. Understanding the fundamental principle of GST in India is key to answering this question. GST is a consumption-based tax and is levied at the point of supply.
C) Supply of goods or services. GST is a destination-based consumption tax levied on the "supply" of goods or services or both. The term "supply" is a wide concept under GST and includes all forms of supply such as sale, transfer, barter, exchange, license, rental, lease, or disposal.
The question asks about the fundamental principle upon which Goods and Services Tax (GST) is based. Understanding the nature of GST, particularly how it is levied and collected, is key to identifying the correct principle.
Correct Option: D) Destination-based consumption taxation
GST is fundamentally a consumption tax, meaning the tax burden ultimately falls on the end consumer of goods and services. It is also destination-based, which implies that the tax revenue accrues to the state or country where the goods or services are consumed, rather than where they are produced or originated. This prevents double taxation and ensures fairness in interstate and international trade.
The question asks for the biggest expected advantage of GST (Goods and Services Tax) for consumers. To answer this, we need to understand the fundamental principles and objectives of GST, particularly how it affects the tax structure and pricing for end consumers.
Correct Option: D) Reduction in overall tax burden by removing cascading
This is the primary and most significant advantage of GST for consumers. By allowing Input Tax Credit (ITC) at every stage of the supply chain, GST eliminates the 'tax on tax' effect (cascading effect) that was prevalent under the previous indirect tax regime. This reduction in the effective tax burden on goods and services is intended to lead to lower prices for the end consumer, making products more affordable.
The question asks to identify the term that describes the 'tax on tax' phenomenon, which the Goods and Services Tax (GST) aims to eliminate. This phenomenon leads to an increase in the final price of goods and services due to taxes being levied on previously taxed values at different stages of production and distribution.
D) Cascading effect — This term accurately describes the 'tax on tax' phenomenon where taxes are levied on a value that already includes previous taxes, leading to a cumulative increase in the final price. GST was specifically designed to eliminate this effect through the mechanism of input tax credit.