The main purpose of the Goods and Services Tax (GST) compensation fund is
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → To compensate states for the loss of revenue due to the implementation of GST.
After the introduction of GST, many states faced a shortfall in their tax revenues because several indirect taxes were subsumed under a single tax system. To ensure that states do not suffer financially during this transition, the GST compensation fund was created to make good the revenue loss for a specified period.