17.Goods and Services Tax Flashcards

1
Q

What are the two types of taxes based on their application?

A

Origin-based tax and destination-based tax.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Where is origin-based tax levied?

A

Origin-based tax is levied where goods or services are produced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Where is destination-based tax levied?

A

Destination-based tax is levied where goods and services are consumed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What concern arises with destination-based tax?

A

States that produce more but consume less are concerned about losing money because states with higher consumption receive more tax revenue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What was the initial reaction of some states to the implementation of Goods and Services Tax (GST)?

A

Some states were not in favor of accepting GST because they believed they would lose money due to its destination-based nature.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How did the Government of India address the concerns of the states?

A

The government assured to compensate the states by implementing a GST Compensation Cess.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the purpose of the Goods and Services Tax (Compensation to States) Act, 2017?

A

The act was enacted to levy Compensation Cess to provide compensation to the states for the loss of revenue due to the implementation of GST.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When did the implementation of the Central Goods and Services Tax Act (CGST) come into force?

A

The CGST provisions came into force on July 1, 2017.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How long was the Compensation Cess supposed to be applicable?

A

The Compensation Cess was to be applicable for a period of five years or as prescribed by the GST Council.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the concept of Revenue Neutral Rate?

A

The concept of Revenue Neutral Rate means that the tax rate under GST should be designed in a way that tax collection remains neutral or does not decrease.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What was the taxation scenario before the implementation of GST?

A

Both the central government and state governments had the freedom to impose taxes as per their discretion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the purpose of the National Anti-Profiteering Authority (NAPA)?

A

The purpose of NAPA is to ensure that any reduction in tax rates or benefit of input tax credit is passed on to the recipients by reducing prices accordingly.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What has been the experience in many countries after the introduction of GST?

A

Despite the availability of input tax credit and the potential to reduce prices, there has been a noticeable increase in inflation and commodity prices.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Why did prices not decrease as expected after the introduction of GST?

A

Suppliers were not passing on the benefits to consumers, engaging in illegal profiteering.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Who established the National Anti-Profiteering Authority (NAPA)?

A

The Central Government constituted the National Anti-Profiteering Authority.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the role of the National Anti-Profiteering Authority (NAPA)?

A

NAPA examines whether the benefits of input tax credit or reduction in tax rates have resulted in a corresponding reduction in prices for consumers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the GST Network (GSTN)?

A

The GST Network (GSTN) is a government enterprise that provides IT infrastructure and services for the implementation of GST in India.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the purpose of the Goods and Services Tax Network (GSTN)?

A

The GSTN has built an Indirect Taxation platform for GST to assist taxpayers in preparing, filing returns, making payments, and complying with indirect tax requirements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the three types of taxes in GST?

A

The three types of taxes in GST are Integrated GST (IGST), State GST (SGST), and Central GST (CGST).

20
Q

What is Integrated GST (IGST)?

A

IGST is levied on the inter-state trade of goods and services. It is collected by the Central Government but shared between the Centre and states/Union Territories.

21
Q

How is the revenue distribution determined under IGST?

A

More share of revenue is given to the states that manufacture the goods compared to those consuming them.

22
Q

What is the applicability of State GST (SGST)?

A

SGST is applicable to intra-state (within the state) trade of goods and services.

23
Q

Give an example of SGST calculation.

A

For intra-state movement of goods in West Bengal attracting 12% GST, SGST and CGST will be 6% each.

24
Q

What is the scope of Central GST (CGST)?

A

CGST, similar to SGST, is applicable only on intra-state trade of goods and services.

25
Q

What is Union Territory GST (UTGST)?

A

UTGST is applicable in Union territories, but CGST will also be charged in addition to UTGST.

26
Q

Give an example of UTGST and CGST calculation.

A

For the movement of goods within any Union Territory attracting 12% GST, UTGST and CGST will be 6% each.

27
Q

What is the difference between packed items and loose products in terms of GST?

A

GST rates are higher for packed items, while there is no GST on loose products (with some exceptions) as they are mainly consumed by the poor.

28
Q

What is an Electronic Way Bill (E-Way Bill)?

A

An E-Way Bill is a receipt or document issued by a carrier containing details and instructions related to the shipment of goods, including origin, destination, consignor, consignee, and route.

29
Q

How does the Electronic Way Bill (E-Way Bill) work?

A

It is a digital compliance mechanism where the person responsible for moving goods uploads the necessary information before the goods’ transportation commences and generates an e-way bill on the GST portal.

30
Q

How is administrative control over taxpayers divided based on turnover?

A

90% of taxpayers with a turnover below Rs 1.5 crore are handled by the State Government, while the remaining 10% are handled by the Central Government. Taxpayers with a turnover above Rs 1.5 crore are divided equally between the Central and State Governments.

31
Q

What are the threshold limits for service providers to register for GST?

A

The threshold limit for service providers is Rs 20 lakh, except for states like Manipur, Mizoram, Nagaland, and Tripura, where the limit is Rs 10 lakh.

32
Q

What are the threshold limits for suppliers of goods to register for GST?

A

The threshold limit for suppliers of goods is Rs 40 lakh, except for specific states/regions such as Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, and Uttarakhand, where the limit is Rs 20 lakh.

33
Q

How does GST remove double taxation?

A

GST eliminates double taxation by replacing multiple taxes with a single comprehensive tax system.

34
Q

What were the taxes applicable under the old indirect tax system?

A

Under the old indirect tax system, the car manufacturing unit had to pay central excise duty, state taxes (VAT/CST), and Octroi tax on the entry of commodities.

35
Q

Can you provide an example of how taxes were calculated under the old indirect tax system?

A

Yes, for a car sale in Maharashtra, the car manufacturing unit had to pay central excise duty, VAT, and Octroi tax, all of which were added to the cost of the car.

36
Q

How did the effect of tax on tax occur in the old indirect tax system?

A

The cost of the car, along with the excise tax, was considered as the total cost for the car dealer. The dealer margin was added to this total cost, and VAT was then calculated on the new total, resulting in tax being applied on top of existing taxes.

37
Q

How does the GST system differ from the old indirect tax system in terms of taxation?

A

Under the GST system, multiple taxes are replaced by a single tax, reducing the complexity of taxation and eliminating the effect of tax on tax.

38
Q

What taxes are applicable under the GST system for the manufacturer’s sale of cars to the car dealer?

A

The applicable taxes are Central GST (CGST) and State GST (SGST), both at a rate of 11%.

39
Q

How does the GST system simplify taxation for the manufacturer?

A

Under GST, the manufacturer only needs to levy and collect GST on the sale of vehicles to the dealer, simplifying the taxation process.

40
Q

What taxes are applicable for the sale of vehicles from the dealer to the final customer?

A

The applicable taxes are CGST and SGST, both at a rate of 11%.

41
Q

How does the GST system prevent double taxation in the supply chain?

A

By replacing multiple taxes with a single GST, the system eliminates the effect of tax on tax and ensures that taxes are not duplicated at each stage of the supply chain.

42
Q

What is the benefit of GST in terms of taxation?

A

GST simplifies the tax structure, removes double taxation, and streamlines the collection and deposit of taxes with the central and state governments.

43
Q

What is input tax credit?

A

Input tax credit refers to the tax already paid by a person on inputs or services used in the production process, which can be deducted from the tax payable under GST.

44
Q

How does input tax credit help in lowering the price of final products?

A

Input tax credit eliminates the cascading effect of tax, where tax is levied on tax, by allowing businesses to offset the tax already paid on inputs. This helps in reducing the overall tax burden and can lead to lower prices of final products.

45
Q

At what stage of production is input tax credit available?

A

Input tax credit is available at every stage of production, allowing businesses to claim credit for the tax paid on inputs used in the production process.

46
Q

How does input tax credit benefit manufacturers?

A

Manufacturers can claim input tax credit on the GST paid for raw materials or services used in production. This allows them to charge GST only on the value they add to the final product, reducing the tax burden.

47
Q

What is the purpose of input tax credit under GST?

A

The purpose of input tax credit is to avoid the double taxation of goods and services by allowing businesses to claim credit for the tax paid on inputs, thus ensuring that tax is levied only on the value added at each stage of production.