Which of the following statements about India Goods and Services Tax (GST) is not correct?

Introduction / Context:
The Goods and Services Tax, commonly called GST, is a major tax reform in India that replaced many earlier indirect taxes levied by the central and state governments. Examinations often test basic facts about GST, including whether it is a direct or indirect tax and what it replaced. This question asks which statement about GST is not correct.

Given Data / Assumptions:

• GST is levied on the supply of goods and services in India.
• It replaced several indirect taxes such as excise duty, service tax, and value added tax.
• Direct taxes, such as income tax, are levied directly on income or profits of individuals and companies.
• Indirect taxes are levied on transactions in goods and services and are generally collected from consumers through intermediaries.
• GST was designed to simplify the indirect tax structure and create a unified national market.

Concept / Approach:
GST is clearly defined as an indirect tax. It is imposed on the supply of goods and services, collected by businesses from consumers, and then remitted to the government. It subsumes many earlier indirect taxes at both central and state levels, including luxury tax in many cases. It does not replace or function as a direct tax on income such as personal income tax or corporate tax. Therefore, any statement that refers to GST as a direct tax is incorrect.

Step-by-Step Solution:
Step 1: Identify the nature of GST. It is levied on transactions in goods and services and is collected at each stage of the supply chain.Step 2: Recognise that this structure is characteristic of an indirect tax, not a direct tax on income or profits.Step 3: Examine option a, which states that GST will replace luxury tax. This is broadly consistent with GST aim of subsuming earlier indirect taxes.Step 4: Examine option c, which states that GST will replace multiple taxes with a single comprehensive tax, which is correct.Step 5: Examine option d, which correctly states that GST is an indirect tax.Step 6: Observe that option b calls GST a direct tax on income of individuals and firms, which contradicts the basic definition of GST and is therefore not correct.

Verification / Alternative check:
Official descriptions of GST specify that it is an indirect tax on the supply of goods and services. It is collected at multiple stages with provision for input tax credit and is designed to avoid cascading. Direct taxes such as personal income tax and corporate tax continue to be levied separately and were not replaced by GST. Exam oriented reference books clearly list GST under indirect taxes and distinguish it from direct taxes in India tax structure.

Why Other Options Are Wrong:
Here, wrong means not the answer to the question which asks for the statement that is not true. Options a, c, d, and e are broadly correct statements about GST. Option a is correct because GST subsumed several earlier indirect taxes, including luxury tax. Option c is correct because GST replaced multiple overlapping indirect taxes with a single system. Option d correctly identifies GST as an indirect tax. Option e correctly notes that GST aims to create a unified national market by subsuming different state level taxes. Only option b incorrectly labels GST as a direct tax on income.

Common Pitfalls:
Some students confuse direct and indirect taxes because both are ways for the government to raise revenue. They may also assume that any major tax reform changes the entire tax structure, including direct taxes. To avoid this confusion, it is important to remember that GST belongs to the category of indirect taxes and coexists with direct taxes such as income tax and corporate tax, which were not replaced by GST.

Final Answer:
The statement that is not true is that GST is a direct tax that is levied directly on the income of individuals and firms.