SSC Selection Post 2025 PYQ — Question 15

Correct Answer

To ensure uniform tax across states

Explanation

The Goods and Services Tax (GST) Act was enacted primarily to replace the complex web of multiple indirect taxes (such as VAT, excise duty, and service tax) with a single, unified tax structure across India. The core objective was to implement the vision of "One Nation, One Tax, One Market." By consolidating various central and state-level taxes, GST eliminates the "cascading effect" of taxes (tax on tax), thereby reducing the overall cost of goods and services and streamlining the interstate trade process.

Key Points

GST is a destination-based consumption tax, meaning the tax revenue goes to the state where the product is consumed rather than where it is produced.

It significantly simplified the tax compliance process through a centralized digital portal (GSTN), which helps in tracking transactions and reducing tax evasion.

It promotes economic integration by removing trade barriers between states, facilitating the seamless flow of goods and services throughout the country.

Additional Facts

GST in India is governed by the GST Council, which is chaired by the Union Finance Minister and includes representatives from all state governments, ensuring cooperative federalism in tax decision-making.

The implementation of GST was a major fiscal reform that transitioned India into a more structured and formal economy.

Important Questions

Question: What is the main benefit of GST regarding the 'cascading effect' of taxes?

Answer: GST eliminates the cascading effect by allowing seamless input tax credit across the supply chain, ensuring that tax is paid only on the value added at each stage.

Question: Is GST considered a direct tax or an indirect tax?

Answer: GST is an indirect tax, as the burden of the tax is ultimately borne by the final consumer, not the business entity collecting it.