Chapter 1 Introduction And Basics Flashcards
What does GST stand for?
Goods and Services Tax
GST is a comprehensive indirect tax on the supply of goods and services.
What is the primary responsibility of the Government in a Welfare State?
Fulfill the increasing developmental needs of the country and its people by way of public expenditure.
What is a tax?
A pecuniary burden laid upon individuals or property owners to support the Government, enforced by legislative authority.
Define direct tax.
A charge imposed directly on the taxpayer and paid directly to the Government, such as income tax.
Define indirect tax.
A tax that can be shifted by the taxpayer to someone else, with the incidence borne by consumers.
List some examples of indirect taxes that were levied in India before GST.
- Excise duty
- Customs duty
- Service tax
- Central sales tax (CST)
- Value added tax (VAT)
- Entry tax
- Purchase tax
- Entertainment tax
- Luxury tax
- Tax on advertisements
- Tax on lottery, betting, and gambling
When was GST introduced in India?
1st July 2017
What was the significant amendment made to the Constitution of India to facilitate GST?
Constitution (101st Amendment) Act, 2016
What does GST aim to create in India?
A common national market.
What is the basic principle of GST?
A value added tax levied on supply, taxing only the value added at each stage of supply chain.
What is the cascading effect in taxation?
A situation where taxes are levied on taxes, leading to an increased overall tax burden.
What are the benefits of implementing GST in India?
- Simplification of the tax structure
- Elimination of cascading taxes
- Unified indirect tax regime
- Increased compliance and efficiency
- Enhanced revenue for the government
What is the significance of the GST Council?
It recommends the CGST, SGST, IGST, UTGST & Compensation Cess Bill.
What was the first country to implement VAT/GST?
France in 1954.
True or False: GST is a single tax applicable throughout the country.
True
What does CENVAT stand for?
Central Value Added Tax
Fill in the blank: GST has subsumed multiple indirect taxes such as _______.
excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax
What are the components of the dual GST model adopted by India?
- Central Goods and Services Tax (CGST)
- State Goods and Services Tax (SGST)
- Integrated Goods and Services Tax (IGST)
What year was the Constitution (122nd Amendment) Bill introduced in the Lok Sabha?
2014
What was the role of the task force formed in 2003?
To recommend a fully integrated GST on a national basis.
What does the term ‘input tax credit’ refer to in GST?
The credit for GST paid on purchases that can be set off against GST payable on sales.
What is the effect of the dual GST system on tax collection?
It allows both federal and state governments to levy GST, ensuring that tax accrues to the jurisdiction where consumption takes place.
What was a major deficiency in the earlier indirect tax regime?
Double taxation due to blurred distinctions between goods and services.
Who announced the introduction of GST during the Union Budget of 2006-2007?
Union Finance Minister, Shri P. Chidambaram
What type of tax is CST?
Origin-based tax
CST is against the principle that tax should accrue to the jurisdiction where consumption takes place.
What happens when a dealer in Delhi purchases goods from Punjab?
The dealer pays ` 150 as VAT after selling for ` 1200, with no credit for CST paid
CST paid was ` 20, but credit is not allowed.
What are some local levies not included in State VAT?
- Luxury tax
- Entertainment tax
These local taxes were not accounted for in the State VAT.
What issue does the GST address regarding cascading taxes?
It removes cascading effects of CENVAT and service tax
GST ensures a continuous chain of set-off from the producer to the consumer.
What is the basis for the new tax regime in India under GST?
Tax is levied on ‘Supply of Goods and/or services’
The earlier concepts of manufacture or sale are no longer applicable.
What is the Dual GST Model?
Centre and States simultaneously levy GST on the complete supply chain
This includes production to distribution stages.
What types of GST are applicable in India?
- CGST
- SGST
- UTGST
- IGST
Each type is levied by different authorities based on the supply location.
What determines whether a supply is intra-State or inter-State?
The location of the supplier and the place of supply
Intra-State occurs in the same State; inter-State occurs in different States.
What is IGST?
Integrated Goods and Services Tax, levied on inter-State supplies
IGST is the sum of CGST and SGST/UTGST.
What is the legislative framework for GST in India?
Single legislation for CGST and separate for SGST and UTGST
Different States and Union Territories have their own GST laws.
What is the purpose of the Composition Scheme under GST?
To provide relief to small businesses with a simpler tax payment method
It applies to manufacturers, service providers, and traders making intra-State supplies.
What is the threshold limit for GST registration for suppliers of goods and services?
Varies by State and type of supply, generally ` 20 lakh or ` 40 lakh
Specific limits apply for exclusive suppliers of goods or services.
What does seamless flow of credit under GST mean?
Credit can be utilized across intra-State and inter-State supplies
Unlike earlier scenarios, the credit chain does not break.
Fill in the blank: The order of utilization of ITC should be _______.
IGST, then CGST, then SGST/UTGST
ITC of CGST cannot be used for SGST and vice versa.
What does the GST Common Portal facilitate?
Integrates tax administrations and verifies claims
It acts as a clearing house for funds transfer among governments.
What is the HSN used for in GST?
Classifying goods for tax rates
HSN stands for Harmonised System of Nomenclature.
What is SAC used for in GST?
Classifying services under GST
SAC stands for Services Accounting Code.
What does GST stand for?
Goods and Services Tax
What is the primary feature of GST?
It is a destination-based tax
What is the role of the Common GST Electronic Portal?
To establish a uniform interface for taxpayers and a common IT infrastructure
What is the website for the Common GST Electronic Portal?
www.gst.gov.in
Which organization manages the GST portal?
Goods and Services Network (GSTN)
What is the purpose of the E-way bill?
To serve as an electronic document evidencing the movement of goods
What is the website for generating E-way bills?
www.ewaybillgst.gov.in
Who is required to issue e-invoices?
Businesses with an aggregate turnover greater than ₹5 crore
What do GSPs stand for?
GST Suvidha Providers
What is the role of GSPs?
To develop applications for taxpayers to interact with GSTN
What is the GST Compensation Cess?
A cess imposed on luxury items or demerit goods to compensate States for revenue loss
What items are excluded from GST?
Alcoholic liquor for human consumption and petroleum products
What is the duration for which the GST Compensation Cess was initially levied?
5 years, extended until March 31, 2026
What are the benefits of GST to the economy?
- Creation of a unified national market
- Boost to ‘Make in India’ initiative
- Increased investments and employment
Which taxes were subsumed under GST?
- Central Excise Duty
- Service Tax
- VAT/Sales Tax
- Entertainment Tax
- Luxury Tax
True or False: Tobacco is outside the purview of GST.
False
What is the significance of Article 265 of the Constitution of India regarding taxes?
It prohibits arbitrary collection of taxes
What does Article 246 of the Constitution of India address?
It provides authority to Union and State Governments for levying taxes
What is the purpose of the GST Council?
To decide the date from which GST will be applicable on certain products
Fill in the blank: GST is a _______ based consumption tax.
destination
What is the impact of GST on small traders and entrepreneurs?
Increased threshold limit for GST registration and benefits of a composition scheme
What is a major advantage of GST for trade and industry?
Reduction in prices of goods and services
What does the term ‘cascading’ refer to in taxation?
Tax on tax
What is the primary goal of GST?
To simplify the tax structure and enhance compliance
What are the three lists in the Seventh Schedule to Article 246?
- Union List
- State List
- Concurrent List
What does the Union List contain?
Matters in respect of which the Parliament (Central Government) has the exclusive right to make laws.
What does the State List contain?
Matters in respect of which the State Governments have the exclusive right to make laws.
What is included in the Concurrent List?
Matters in respect of which both the Central & State Governments have power to make laws.
Which entries of the Union List enumerate subjects where the Central Government has power to levy taxes?
Entries 82 to 91.
Which entries of the State List enumerate subjects where the State Governments have power to levy taxes?
Entries 45 to 63.
What power does Parliament have regarding laws for parts of India not comprised in a State?
Parliament can make any law for any part of India not comprised in a State even if such matter is included in the State List.
Which taxes does the Central Government levy according to the Union List?
Income tax and customs duty.
What is the purpose of Article 246A of the Constitution?
It confers power to levy Goods and Services Tax (GST).
What was the significant reason for the introduction of the Constitution (101st Amendment) Act, 2016?
To enable integration of various taxes into a comprehensive Goods and Services Tax.
What does the GST Council do?
Makes recommendations on important issues like tax rates, exemptions, and dispute resolution.
What are the products on which GST shall not be levied until notified?
- Petroleum Crude
- High Speed Diesel
- Motor Spirit (Petrol)
- Natural Gas
- Aviation Turbine Fuel
What power does Article 279A grant to the President?
To constitute the Goods and Services Tax Council.
Who is the Chairman of the GST Council?
The Union Finance Minister.
What does Article 246A specify about GST laws?
Parliament and State Legislatures have the power to make laws with respect to GST.
What is the definition of ‘Goods and Services Tax’ under Article 366?
Any tax on supply of goods, or services or both except taxes on the supply of alcoholic liquor for human consumption.
Which article was omitted that empowered the Union to levy service tax?
Article 268A.
What does Article 269A state about GST on inter-State supply?
GST shall be levied and collected by the Government of India and apportioned between the Union and the States.
What does Article 270 provide for?
Distribution of GST between the Centre and the States.
What significant change was made to Article 286 regarding tax imposition?
Substituted ‘sale or purchase’ with ‘supply’ and ‘goods’ with ‘goods or services or both’.
What is the role of the Finance Commission in relation to GST?
To make recommendations for the distribution of GST between the Centre and the States.
True or False: The Union Government has the power to levy GST on intra-State transactions.
False.
Fill in the blank: The _______ are responsible for making recommendations on tax rates under GST.
GST Council
What is the role of the Union Government in imposing GST on inter-State supply?
The Union Government levies GST on inter-State supply of goods or services or both under Article 269A.
What does clause (3) of Article 286 stipulate regarding State laws?
It stipulates restrictions and conditions for State laws imposing taxes on goods declared by Parliament as important in inter-State trade.
What is the purpose of Article 279A?
It empowers the President to constitute the Goods & Services Tax Council.
When did the provisions relating to the GST Council come into force?
12th September, 2016.
Who is the Chairperson of the GST Council?
The Union Finance Minister.
What are the members of the GST Council?
Members include the Union Finance Minister, Union Minister of State in charge of Revenue or Finance, and State Ministers in charge of Finance or Taxation.
How is the Vice-Chairperson of the GST Council chosen?
Members choose one amongst themselves to be the Vice-Chairperson.
What recommendations does the GST Council make?
Recommendations on taxes to be subsumed, goods/services to be taxed or exempted, model GST laws, turnover thresholds, tax rates, and special provisions for certain States.
What is required for a quorum in GST Council meetings?
One-half of the total number of members.
How are decisions made in the GST Council?
By a majority of not less than three-fourths of the weighted votes of members present and voting.
What weightage does the vote of the Central Government have in GST Council decisions?
One-third of the total votes cast.
What weightage do the votes of State Governments have in GST Council decisions?
Two-thirds of the total votes cast.
What does Article 368 entail regarding GST Council amendments?
Requires two-thirds majority in each House of Parliament and ratification by half of the States for amendments.
Which taxes are not subsumed in GST?
Service tax, customs duty, luxury tax, tax on lottery, betting and gambling, entertainment tax levied by local bodies.
What are some benefits that GST may accrue to the economy?
- Creation of a unified national market
- Boost to ‘Make in India’ initiative
- Boost to investments, exports, and employment
How is GST levied on intra-State supply of goods or services?
Both Central GST (CGST) and State GST (SGST) are levied simultaneously.
What are the examples of dual taxation under GST?
CGST and SGST are charged on the same transaction value.
What necessitated the amendment of the Constitution for GST introduction?
To empower both Centre and States to levy and collect GST.
What is the nature of GST as a tax?
GST is a destination-based tax on consumption of goods or services.
What commodities are kept outside the purview of GST?
- Alcoholic liquor for human consumption
- Petroleum products
- Tobacco
- Opium and narcotics
What is the definition of GST according to Article 366(12A)?
A tax on supply of goods or services or both, except supply of alcoholic liquor for human consumption.
What does Article 269A stipulate regarding inter-State trade?
GST on inter-State trade shall be levied and collected by the Government of India.
What is the Integrated GST (IGST)?
IGST is levied by the Centre on every inter-State supply of goods and/or services.
What is the basis for apportioning the amount between the Union and the States?
As provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
How is the supply of goods or services treated during import into India?
Deemed to be supply in the course of inter-State trade or commerce.
What happens to the amount apportioned to a State?
It shall not form part of the Consolidated Fund of India.
If IGST is used for payment of SGST or vice versa, what is the status of that amount?
It shall not form part of the Consolidated Fund of India/State respectively.
Who has the power to formulate principles for determining the place of supply?
Parliament.
What does Article 246A stipulate regarding GST laws?
Parliament and State Legislatures have power to make laws with respect to GST imposed by the Union or the State.
Who has exclusive power to make laws regarding GST in inter-State trade?
Parliament.
Which products are specifically mentioned regarding the application of GST provisions?
- Petroleum crude
- High speed diesel
- Motor spirit (petrol)
- Natural gas
- Aviation turbine fuel
When will the provisions apply to certain petroleum products?
From the date to be notified by the Government on the recommendations of the GST Council.
Fill in the blank: India has adopted ______ GST model because of its unique federal nature.
GST
What is the Common GST Electronic Portal for furnishing way bills?
www.ewaybillgst.gov.in
What is the website for uploading/reporting of e-invoices by notified persons?
www.gst.gov.in
What is the nature of tax that GST represents?
A value-added tax.
Who was the first country to implement VAT/GST?
France in 1954.
According to Article 265 of the Constitution of India, what is required for tax levying?
No tax shall be levied or collected except by authority of law.
What is the acronym used for classifying goods under GST?
HSN (Harmonized System of Nomenclature).
True or False: Central excise duty is subsumed in GST.
False.
True or False: State excise duties are subject to GST.
True.
