UPSC Prelims 2006 · General Studies
Question 107: Economy and Social Development
Which one of the following is the correct statement? Service tax is a/an
AnswerThe answer is (b).
Service tax was levied on the value of services, and the burden passes on to the consumer, so it was an indirect tax. It was imposed by the Central Government (introduced in 1994), not by the States. Direct taxes, such as income tax and corporation tax, are paid by the person on whom they are levied. Service tax was later subsumed into GST from 1 July 2017.
Why each option is right or wrong
- (a) It is indirect, not direct.
- (b) Correct: an indirect tax levied by the Central Government.
- (c) It is neither direct nor a State levy.
- (d) It was levied by the Centre, not the States.
Worth knowing: Changed since: service tax was subsumed into GST on 1 July 2017, so it no longer exists as a separate levy.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2006, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.