Economics • Indian EconomyEasy
What is the primary purpose of the 'Goods and Services Tax (GST)' introduced in India through constitutional amendment?
A. To levy a direct progressive income tax on all agricultural landholdings across states
B. To replace multiple indirect taxes levied by the center and states with a unified destination-based consumption tax✓ Correct Answer
C. To impose uniform export duties on manufactured industrial goods shipped to foreign markets
D. To finance local municipal bodies through direct property and professional tax collections
💡 Solution & Explanation
The Goods and Services Tax amalgamated various central and state indirect levies such as excise duty, service tax, and value-added tax into a single comprehensive destination-based tax to eliminate cascading tax burdens. It was introduced via the 101st Constitutional Amendment Act, 2016, establishing the GST Council under Article 279A. Interstate trade under GST is governed by the Integrated Goods and Services Tax mechanism.
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