Gst — Part 1 MCQs with Explanations

The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. In effect, GST is indirect tax provides revenue for the government. In India it is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017. It is an Indirect Tax which has replaced many Indirect Taxes in India.

India has chosen the Canadian model of dual GST. Only a handful of countries, such as India, Canada and Brazil, have a dual GST structure.

In India it is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In India GST model has 4 basic rate structure. They are 5%, 12%, 18% and 28%

Integrated goods and services tax (IGST) would mean the tax levied under IGST Act on the supply of any goods and / or services in the course of inter-state trade or commerce. Integrated GST shall also apply to import of goods and services into India.

There are three types of taxes : 1. State GST (SGST)/Union Territory GST (UTGST), 2. Central GST (CGST) and 3. Integrated GST (IGST)

In 2000, idea of adopting GST was first suggested by the Atal Bihari Vajpayee Government. In February 2006 - First announcement of GST was made by the Union Minister during the 2006-2007 budget, that it would be introduced on April 1, 2010.

Subsume means to absorb or include or place within something larger or more comprehensive group or class. With introduction of GST in India, It subsumed multiple indirect taxes of Center and State both.

When the place of supply of buyer as well as the location of the seller is in the same state, a seller must collect both SGST and CGST from the buyer. The SGST gets deposited with the state government, and CGST gets deposited with the central government.

As per section 9 (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent. , as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

Goods - HSN Code Service -SAC

PAN is mandatory to apply for GST registration (except for non-resident person who can get GST registration on the basis of other documents)

Businesses dealing only in goods can only opt for composition scheme. Services providers have been kept outside the scope of this scheme. However, restaurant sector taxpayers may also opt for the scheme. This holds true if your annual turnover is below Rs 1.5 crore. Earlier GST turnover threshold for obtaining the composition scheme was 1 crore which is now raised to 1.5 crore and in some states it is 75 lakhs.

A registered taxpayer, who is registered under the Composite Scheme will pay tax at a rate not more than 1% for manufacturer, 2.5% for restaurant sector and 0.5% for other suppliers of turnover.

Only a registered taxable person can collect GST. The taxable person must prominently indicate the GST amount on tax invoices.

Application for Registration (Other than a non-resident taxable person, a person supplying online information and data base access or retrieval services from a place outside India to a non-taxable online recipient referred to in section 14 of the Integrated Goods and Services Tax Act, a person required to deduct tax at source under section 51 and a person required to collect tax at source under section 52))

As per Section 25(6) of the CGST/SGST Act every person shall have a Permanent Account Number issued under the Income Tax Act,1961(43 of 1961) in order to be eligible for grant of registration. However as per the proviso to the aforesaid section 25(6), a person required to deduct tax under Section 51, may have, in lieu of a PAN, a Tax Deduction and Collection Account Number issued under the said Income Tax Act, in order to be eligible for grant of registration. Also, as per Section 25(7) PAN is not mandatory for a non- resident taxable person who may be granted registration on the basis of any other document as maybe prescribed.

GST registration is mandatory for E-commerce operator or aggregator

No, a Composition Dealer is not allowed to avail input tax credit of GST paid to their supplier.

Discounts given before or at the time of supply will be allowed as deduction from transaction value. Such discounts must be clearly mentioned on the invoice.

Banking companies or financial institutions have an option for claiming the ITC on the deposits and loans or advances to comply with actual rules or claim the 50% of the total ITC available in each month and the rest will lapse.

According to Rule 38 of Central Goods and Service Tax Act, Banks, financial institutions and non banking financial companies (NBFC) engaged in business of deposits, extending loans or advances have an option to avail an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month or to take Input tax credit only on purchases made for selling taxable or zero rated goods or services and leave out the tax paid on purchases made for exempted supplies. Option once exercised can not be changes during the financial year.

A registered person supplying exempt goods should issue "Bill of Supply" instead of tax invoice.

GST council introduced GSTR-3B form for filing returns for July and August 2017.

It has been decided that for subsequent months, i.e. October 2017 onwards, the amount of late fee payable, by a taxpayer whose tax liability for that month was „NIL‟, will be Rs. 20/- per day (Rs. 10/- per day each under CGST & SGST Acts) instead of Rs. 200/- per day (Rs. 100/- per day each under CGST & SGST Acts). For other taxpayers, whose tax liability for that month was not „NIL‟, late fee payable will be Rs. 50/- per day (Rs. 25/- per day each under CGST & SGST Acts) instead of Rs. 200/- per day (Rs. 100/- per day each under CGST & SGST Acts). Notification No. 64/2017-CT dated 15th November 2017 has already been issued in this regard.

Till now Canada only has dual GST model but now India also started to use dual-GST model.

France implemented GST in 1954.

India has the maximum tax slab (28%) compared to other countries.

Argentina has the second highest tax slab 27%

Finance Minister (currently Arun Jaitley) is the chairman of GST council

Amit Mitra (West Bengal Finance Minister) is the Finance Ministers Panel Chairman.

Telangana was the first state to pass the State GST Bill on 9th April, 2017 Assam was the first state to ratify the GST Bill on 12th August, 2016

GST will apply when turnover of the business exceeds Rs 20 lakhs (Limit is Rs 10 lakhs for the North Eastern States)

GST will apply when turnover of the business exceeds Rs 20 lakhs (Limit is Rs 10 lakhs for the North Eastern States)

At the 39th GST Council, the GST rate on mobile phones has been raised from 12 percent to 18 percent.

IGST is the correct answer to “Which of the following taxes will be levied on Imports of goods and services”. This question is standard in competitive examination syllabi for Gst.

20% is the correct answer to “Maximum rate prescribed under UTGST/SGST”. This question is standard in competitive examination syllabi for Gst.

Harmonised System of Nomenclature is the correct answer to “HSN Code Stands for”. This question is standard in competitive examination syllabi for Gst.

Services Accounting Code is the correct answer to “SAC Code Stands for”. This question is standard in competitive examination syllabi for Gst.