Assertion (A): GST is expected to make Indian products and services more competitive in the domestic and international markets.
Reason (R): GST has lowered the cost of production of goods and services.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Assertion (A): GST is expected to make Indian products and services more competitive in the domestic and international markets. — True. Indian goods and services can be sold at lower prices at home and abroad.
Reason (R): GST has lowered the cost of production of goods and services. — True. Under GST, tax is paid only on the value added at each stage, with credit for tax paid at the earlier stage, so taxes no longer pile up on taxes.
Why R explains A?
A product becomes competitive when it can be sold at a lower price. GST lowers the cost of production, so firms can charge less, and Indian products gain ground in the domestic and international markets.
NCERT (2026-27): “Box 5.3: GST: One Nation, One Tax, One Market … 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. …” “… GST has simplified the multiplicity of taxes on goods and services. The laws, procedures and rates of taxes across the country are standardised. It has facilitated the freedom of movement of goods and services and created a common market in the country. It is aimed at reducing the cost of business operations and cascading effect of various taxes on consumers. It has also reduced the overall cost of production, which will make Indian products/services more competitive in the domestic and international markets. …” |