Introduction to GST

Question 1

What is an indirect tax?

Answer 1

A revenue to the government for public expenditure.

Question 2

Which article of the Constitution of India deals with the levy of tax?

Answer 2

Article 265.

Question 3

In indirect tax, who ultimately bears the tax burden?

Answer 3

The ultimate consumer.

Question 4

How does the burden of direct tax differ from that of indirect tax?

Answer 4

In direct tax, the burden cannot be passed to another person.

Question 5

Give an example of indirect tax.

Answer 5

Customs duty.

Question 6

What significant reform did the Government of India introduce to curb inflation due to multiple taxes?

Answer 6

Goods & Service Tax (GST).

Question 7

When did the Goods and Services Tax (GST) come into effect?

Answer 7

1st July 2017.

Question 8

What is GST?

Answer 8

Goods and Services Tax, an indirect tax replacing many other indirect taxes in India.

Question 9

What is the nature of tax collection under GST?

Answer 9

Multi-stage and destination-based tax levied on every value addition.

Question 10

What are the components of GST?

Answer 10

• CGST (Central GST) * SGST (State GST) * IGST (Integrated GST)

Question 11

What does CGST stand for?

Answer 11

Central Goods and Services Tax.

Question 12

What does SGST stand for?

Answer 12

State Goods and Services Tax.

Question 13

What does IGST stand for?

Answer 13

Integrated Goods and Services Tax.

Question 14

Fill in the blank: The tax burden of direct tax is __________.

Answer 14

borne by the person who has taxable income.

Question 15

Fill in the blank: The tax burden of indirect tax is __________.

Answer 15

passed on by the seller to the consumer.

Question 16

True or False: Indirect tax revenue of the Government is less than direct tax revenue.

Answer 16

False.

Question 17

True or False: GST is a single domestic indirect tax law for the entire country.

Answer 17

True.

Question 18

What are the stages in the supply chain where GST is levied?

Answer 18

• Purchase of raw materials * Production or manufacture * Warehousing of finished goods * Selling to wholesalers * Sale of the product to the retailers * Selling to the end consumers

Question 19

What did the cascading effect of taxes lead to in the pre-GST regime?

Answer 19

Every purchaser paid tax on tax.

Question 20

How does GST help in price reduction?

Answer 20

It removes the cascading effect, calculating tax only on value addition.

Question 21

What was the final selling price to the customer before GST for a product costing ₹100 with a 15% tax?

Answer 21

₹593.

Question 22

What is the final selling price to the customer after GST for the same product?

Answer 22

₹575.

Question 23

What significant amendment conferred the power to levy GST?

Answer 23

101st Amendment Act, 2016.

Question 24

What does Article 246A of the Constitution provide?

Answer 24

Power to make laws with respect to Goods and Services Tax.

Question 25

What is the role of the GST Council according to Article 279A?

Answer 25

To make recommendations on GST-related matters.

Question 26

Fill in the blank: The entire tax revenue from inter-state sales under GST goes to __________.

Answer 26

the destination state.

Question 27

List some of the indirect taxes subsumed under GST.

Answer 27

* Central Excise Duty * State VAT * Central Sales Tax * Luxury Tax * Entertainment Tax * Entry Tax * Taxes on advertisements * Taxes on lotteries, betting, and gambling