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Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax. 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. In view of our large and fast growing economy, it addresses to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments. Some of the major taxes that were levied by Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/ Gambling, State Cesses on goods etc. These have been subsumed in GST. Five petroleum products have been kept out of GST for the time being but with passage of time, they will get subsumed in GST. State Governments will continue to levy VAT on alcoholic liquor for human consumption. Tobacco and tobacco products will attract both GST and Central Excise Duty. Under GST, there are 6 (six) standard rates applied i.e. 0%, 3%,5%, 12%,18% and 28% on supply of all goods and/or services across the country. GST is the biggest tax reform in the country since independence and was rolled out on the mid-night of 30 June/1 thly, 2017 during a special midnight session of the Parliament. The 101 Constitution Amendment Act received assent of the President of India on 8 September, 2016. The amendment introduced Article 246A in the Constitution cross empowering Parliament and Legislatures of States to make laws with reference to Goods and Service Tax imposed by the Union and the States. Thereafter CGST Act, UTGST Act and SGST Acts were enacted for GST. 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 83 reducing the cost of business operations and cascading effect of various taxes n Go on consumers. It has also reduced the overall cost of production, which will h e make Indian products/services more competitive in the domestic and E nm international markets. It will also result into higher economic growth as GDP o n is expected to rise by about 2%. Compliance will also be easier as all tax payment o B related services like registration, returns, payments are available online y d through a common portal www.gst.gov.in. It has expanded the tax base, e introduced higher transparency in the taxation system, reduced human t interface between Taxpayer and Government and is furthering ease of doing business. 1. Explain why public goods must be provided by the government. e ? i 2. Distinguish between revenue expenditure and capital expenditure. r 3. ‘The fiscal deficit gives the borrowing requirement of the government’. x Elucidate. E 4. Give the relationship between the revenue deficit and the fiscal deficit. 5. Suppose that for a particular economy, investment is equal to 200, government purchases are 150, net taxes (that is lump-sum taxes minus transfers) is 100 and consumption is given by C = 100 + 0.75Y (a) What Reprint 2026-27