Which of the following statements about the introduction of GST in India is NOT correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Under GST, tax is charged on the full value at each stage of supply.
Under GST, the tax paid at one stage is set off at the next stage, so only the value added at each stage is taxed. Taxing the full value at every stage was the old system, which caused cascading.
Option (1) GST is a destination based consumption tax on goods and services. — True. The tax is collected where the good or service is consumed.
Option (2) GST covers the supply of both goods and services in the country. — True. It is a tax on the supply of goods and services.
Option (3) GST has been operational across the country from 1 July 2017 onwards. — True. It started on 1 July 2017.
Option (4) Under GST, tax is charged on the full value at each stage of supply. — False. GST is a tax on value addition at each stage, with credit for tax paid earlier.
NCERT (2026-27): “Box 5.3: GST: One Nation, One Tax, One Market Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/ service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. …” “… Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply. …” |