Economics · Taxation
Consider the following statements with reference to the Inverted Duty Structure in indirect taxation: Statement-I: An inverted duty structure exists when the applicable tax rate on intermediate inputs exceeds the tax rate levied on the finished output. Statement-II: Such a tax configuration necessarily encourages domestic value addition by lowering the effective cost of locally manufactured final goods relative to imports. Which one of the following is correct with respect to the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement-I is incorrect, but Statement-II i s correct
- 2Statement-I is correct, but Statement-II is inco rrect✓
- 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 inco rrect
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