Goods and Services Tax (GST) is
Select all that apply.
2 marksIndian EconomyIndian public finance and the Union BudgetThe Goods and Services TaxModerateabout 2 min
GATE 2021 Question 26: Indian public finance and the Union Budget
Answer and worked solution
Answer: (A) and (C) and (D)
(A) is correct: GST is explicitly designed as a destination-based tax — the tax revenue accrues to the state where the good or service is ultimately consumed, not where it is produced or sold from. This is one of GST's defining structural features, intended to prevent producing states from capturing tax revenue at the expense of consuming states.
(B) is incorrect: this directly contradicts (A) — GST is NOT origin-based; describing it as an 'origin based tax assigned to the State of origin' is the opposite of its actual design.
(C) is correct: GST is a tax on consumption/transactions (indirect), not directly on income or wealth (direct) — it's collected from sellers but its burden is passed to the final consumer through prices.
(D) is correct: GST is widely described as a modernized, unified value-added tax — it subsumed most of India's earlier indirect taxes (excise duty, service tax, VAT, etc.) into a single VAT-style structure with input tax credits at each stage of the value chain.
Therefore the correct statements are (A), (C), and (D).
The trap: A;B;C;D
(A) and (B) directly contradict each other (destination-based vs origin-based), so a student who isn't confident about GST's specific design might select both without noticing they can't both be true simultaneously — the correct approach requires knowing specifically that GST was structured as destination-based, a deliberate policy choice explained in its design rationale.
Indian public finance and the Union Budget has come up 80 times in 6 exams since 2011.
What this question tests
This question is on The Goods and Services Tax, part of Indian public finance and the Union Budget in Indian Economy.
India's unified indirect tax: objectives, structure and rates.
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Question from the GATE 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.