What is/are the most likely advantages of implementing ‘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 economy of India and will enable it to overtake China in the near future.
Select the correct answer using the code given below:
Answer & explanation
Answer: (a) 1 only
Only the first statement describes what GST does: it merged many central and state indirect taxes into one tax, so goods and services move across India as in a single market. GST is a tax reform, so claims of a sharply lower current account deficit or of overtaking China are exaggerations.
- ✓ 1. GST amalgamated a large number of central and state taxes and cesses into one tax that applies throughout the country, with one rate for one type of goods or service.
- ✗ 2. The current account deficit depends on trade, oil prices, capital flows and similar factors. NCERT lists GST's expected gains as more revenue, less tax evasion and one national market; it does not list a fall in the deficit.
- ✗ 3. No official source promises that GST will enormously raise growth or let India overtake China. A tax reform can help growth only indirectly; the claim is too strong.
Remember · GST (operational 1 July 2017): one destination-based indirect tax replacing many central and state levies, meant to create 'one nation, one tax, one market'.
📘 Read it in NCERT: Class 12 Introductory Macroeconomics, Ch 5 (practise this chapter) · Class 11 Indian Economic Development, Ch 3 (practise this chapter)
Sources
- NCERT Class 12 · Introductory Macroeconomics, Chapter 5 “It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses.”
- NCERT Class 11 · Indian Economic Development, Chapter 3 “This has led to introduction of GST in India. This is expected to generate additional revenue for the government, reduce tax evasion and create ‘one nation, one tax and one market’.”
Question and answer: UPSC's official GS Paper I (2017, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·