Economics • Indian EconomyHard
In analyzing the structural composition of Punjab's state tax revenue, what role do Goods and Services Tax compensation cess phase-outs play in shaping fiscal autonomy?
A. They expose structural vulnerabilities in state-level revenue collection, necessitating aggressive expansion of own-tax revenue bases like stamp duty and excise✓ Correct Answer
B. They grant the state government unlimited borrowing powers without parliamentary oversight
C. They replace all state-levied taxes with a single flat agrarian surcharge collected at mandis
D. They eliminate the need for fiscal deficit targets under the state Fiscal Responsibility and Budget Management Act
💡 Solution & Explanation
The cessation of GST compensation grants forces states like Punjab to rely more heavily on internal revenue sources such as state excise, stamp duty, and registration fees to maintain fiscal balance. Borrowing powers remain subject to constitutional and statutory ceilings. State excise and other local levies continue alongside GST mechanisms. Fiscal Responsibility targets remain legally binding under state fiscal legislations.
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