Choose the correct option.

Assertion: GST is free from the cascading tax effect.

Reason: The final price of goods increased unnecessarily after the introduction of GST.

Both the Assertion and the Reason are correct, and the Reason is the correct explanation of the Assertion.

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Both the Assertion and the Reason are correct, but the Reason is not the correct explanation of the Assertion.

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The Assertion is true, but the Reason is false.

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Both the statements are false.

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Solution

The correct option is C The Assertion is true, but the Reason is false.
Goods and Services Tax (GST) simplified the indirect tax system of India. Different indirect taxes were merged into GST. Earlier, the indirect tax system had different levels. Due to this, the final price of goods got unnecessarily higher than what was supposed to be. However, the introduction of GST solved the problem of the cascading tax effect. GST is charged on value addition and not the entire value of output. Due to this, the final price of goods became cheaper.

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