Question

Assertion (A): GST is an indirect tax.

Reason (R): GST was launched in India to eliminate multiple indirect taxes.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Explanation:

Both statements are true, there is no direct cause-and-effect connection. GST is defined as an indirect tax since it shifts the economic burden from businesses to end users, but its initial establishment in India was intended to eliminate a chaotic web of overlapping central and state levies. As a result, the administrative policy goal driving the unified tax does not explain the basic economic reason why the tax method is classified as an indirect levy.