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Home› UPSC CSE› Prelims GS Paper I› 2011 questions› Question 98

UPSC CSE Prelims

Subject: Economy Chapter: Tax Structure In India

2011 PYQ

Question 98

Which one of the following is not a feature of "Value Added Tax"?

Choose one answer AIt is a multi-point destination-based system of taxation BIt is a tax levied on value addition at each stage of transaction in the production-distribution chain CIt is a tax on the final consumption of goods or services and must ultimately be borne by the consumer DIt is basically a subject of the Central Government and the State Governments are only a facilitator for its successful implementation

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Correct answer: D

Correct Option: D Explanation: Value Added Tax collects tax incrementally on value added in the distribution chain, with input-tax credits, and the burden generally falls on final consumers. Option-wise Analysis: A: Incorrect - This describes destination-oriented multistage consumption taxation. B: Incorrect - Correct VAT design taxes value addition at each stage, reducing cascading. C: Incorrect - VAT is generally borne by consumers ultimately, as with a consumption tax. D: Correct - Indian state VAT was administered by States, not centrally imposed with States merely facilitating. Review Note: The 2011 question predates the introduction of India’s GST in 2017; read “VAT” in the then-applicable state VAT context.

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