Economics · Economy
Consider the following statements with reference to the concept of 'Inverted Duty Structure' under indirect taxation: Statement I: An inverted duty structure arises when the tax rate applicable on inputs exceeds the tax rate imposed on the finished output. Statement II: Such a structure necessarily enhances domestic value addition by lowering the relative cost of locally manufactured goods. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect but Statement II is correct.
- 2Statement I is correct but Statement II is incorrect.✓
- 3Both Statement I and Statement II are correct but Statement II does not explain Statement I.
- 4Both Statement I and Statement II are correct and Statement II explains Statement I.
Correct answer
Statement I is correct but Statement II is incorrect.
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