What is/are the most likely advantages of imple- menting ‘Goods and Services Tax (GST)’? 1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India. 2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves. 3. It will enormously increase the growth and size of the economy of India and will enable it to overtake China in the near future. Select the correct answer using the code given below :

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YESPYQ · Accepted Answer

Correct answer: 1 only. Statement 1 is correct : One of the primary objectives of the Goods and Services Tax (GST) is to replace multiple indirect taxes like VAT, service tax, excise duty, etc., that were levied by both the central and state governments. By creating a uniform tax structure, GST promotes the creation of a single national market, eliminating the cascading effect of taxes and simplifying the tax system. Statement 2 is incorrect : GST is a domestic tax reform aimed at simplifying the indirect tax structure within India. It primarily affects internal trade and taxation and does not have a direct impact on the Current Account Deficit (CAD), which is influ- enced by factors like imports, exports, remittances, and foreign investments. While improved efficiency might contribute indi- rectly to exports, the effect on CAD would not be drastic. Statement 3 is incorrect : While GST is expected to boost eco- nomic growth by improving tax compliance, reducing logistics costs, and promoting ease of doing business, claiming that it will enormously grow the economy to the extent that

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