| List I | List II |
| a) Excise duty | i.) Manufacturing of goods |
| b) Multiple excise structure | ii.) Regressive in nature |
| c) Cascading effect | iii.) Different interpretation on tax payable |
The question asks to match indirect tax issues from List I with their descriptions or characteristics from List II. We need to understand each term in List I and find its most appropriate match in List II.
Based on this analysis, the correct matches are:
This corresponds to option B.
B) a-i, b-iii, c-ii
The question asks to identify the tax mechanism introduced to prevent the cascading effect. The cascading effect, also known as 'tax on tax', occurs when a tax is levied on a product or service at each stage of production and distribution, without allowing for credit for the tax paid at previous stages. This increases the final price for the consumer and distorts economic activity.
Correct Option: A) Value Added Tax was introduced to prevent the cascading effect by allowing businesses to claim credit for the tax paid on inputs against the tax payable on outputs, thereby taxing only the value added at each stage.
The question asks about the context in which the term 'Base Erosion and Profit Shifting' (BEPS) is often seen in the news. This requires knowledge of international taxation and economic terms relevant to multinational corporations.
B) curbing of the tax-evasion by multinational companies. The term Base Erosion and Profit Shifting (BEPS) directly relates to strategies employed by multinational corporations to reduce their tax liabilities by shifting profits from higher-tax jurisdictions to lower-tax ones. International initiatives, led by organizations like the OECD and G20, aim to curb these practices to ensure that profits are taxed where economic activities generating them occur. Therefore, BEPS is fundamentally about addressing aggressive tax planning by multinational companies.
The question asks to identify a tax that is levied on the value added at each stage of production, rather than on the final product. We need to evaluate each option based on its definition and how it is applied.
Correct Option: B) Value added tax is a tax on the value additions at each stage of production rather than on the finished goods. It is designed to tax consumption and is collected incrementally throughout the production process.
The question asks to identify the most likely advantages of implementing Goods and Services Tax (GST) in India. We need to evaluate each statement based on the known objectives and expected outcomes of GST.
Based on the evaluation, only statement 1 is a likely and direct advantage of GST.
Correct Option: A) 1 only
The question asks for the full form of "VAT" in the context of the Indian economy. This is a direct recall question related to common economic and taxation terms.
VAT stands for Value Added Tax, which was an indirect tax levied on goods and services at each stage of production and distribution, based on the value added at that stage. It was replaced by the Goods and Services Tax (GST) in India from July 1, 2017.
A) Value Added Tax — This is the correct full form of VAT. It was a consumption tax charged on the value added to a product or service at each stage of its production and distribution.