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Goods and Services Tax (GST) was introduced as a part of indirect tax reforms in India.

Which of the following are the salient features of the GST?

1. GST is applicable on the manufacture of goods or on sale of goods or on the provision of services.

2. GST is applicable to the supply of goods or services.

3. GST is based on the principle of destination-based consumption taxation.

4. GST is levied at rates decided by GST Council.

Select the correct answer using the code given below:


1. 1 and 4 only
2. 2 and 3 only
3. 2, 3 and 4 only
4. 1, 3 and 4 only

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Correct Answer - Option 3 : 2, 3 and 4 only

The correct answer is 2, 3 and 4 only.

  • Goods and Services Tax (GST) is an indirect tax that has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
  • The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017.
  • It is levied on the supply of goods and services not on the manufacture of goods or on sale of goods or on the provision of services.
    • Hence, statement 1 is incorrect while 2 is correct.
  • GST is a single domestic indirect tax law for the entire country.
  • It is based on the principle of destination-based consumption taxation.
    • Hence, statement 3 is correct.
  • Dual GST: GST is to be levied by the Centre i.e: Central GST (CGST) and that to be levied by the States is called State GST (SGST).
  • GST Council: It is to be formed by the President to administer & govern GST. 
    • Its Chairman is the Union Finance Minister of India with ministers nominated by the state governments as its members.
    • Tax rates are decided by GST Council.
    • Here, the centre will have 1/3rd voting power and the states have 2/3rd.
    • Hence, statement 4 is correct.

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