Introduction to Goods and Services Tax Very Short Answer Type Questions

Introduction to Goods and Services Tax Very Short Answer Type Questions

Question 1.
Expand GST.
Answer:
GST: Goods and Services Tax.

Question 2.
What is Goods and Service Tax (GST)?
Answer:
A good and service Tax is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

Question 3
States the definition of GST.
Answer:
The term GST is defined in Article 366 (12A) to mean “any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption. In other words, GST is a destination based tax and levied at a single point at the time of consumption of goods or services by the ultimate consumer.

Question 4.
Expand CGST.
Answer:
CGST: Central Goods and services Tax.

Question 5.
Expand SGST.
Answer:
SGST: State Goods and services Tax.

Question 6.
Expand ITC.
Answer:
ITC: Input Tax Credits

Question 7.
Expand CC.
Answer:
CC: CENVAT Credit.

Question 8.
Give the meaning of goods.
Answer:
Goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached or forming part of the land, which are agreed to be served before supply or under a contract of supply.

Question 9.
What does the GST Council constitute of?
Answer:
A GST Council would be constituted comprising the Union Finance Minister (who will be the Chairman of the Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers to make recommendations to the Union.

Question 10.
What is dual GST Model?
Answer:
The Dual GST is assumed to be a simple tax with two models i.e. Central Goods and Service Tax (CGST) and State Goods and Services. Tax (SGST) rates.

Question 11.
Expand HSN.
Answer:
HSN stands for Harmonised System of Nomenclature.

Question 12.
Expand GSTN.
Answer:
GSTN stands for Goods and Service Tax Network (GSTN).

Question 13.
What is GSTN? Explain its role in the GST regime?
Answer:
GSTN stands for Goods and Service Tax Network (GSTN). A Special Purpose Vehicle called the GSTN has been set up to cater to the needs of GST. The GSTN shall provide a shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of GST.

Question 14.
What exactly is the concept of destination based tax on consumption?
Answer:
The main concept of destination based tax an consumption would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.

Question 15.
Which are the commodities proposed to be kept outside the purview of GST?
Answer:
The main commodities includes:

• Alcohol for human consumption.
• Petroleum Products viz. petroleum crude.
• Motor spirit (petrol).
• High speed diesel.
• Natural gas and aviation turbine fuel and Electricity.

Question 16.
What will be the status in respect of taxation of the commodities after introduction of GST?
Answer:
The existing taxation system (VAT & Central Excise) will continue in respect of the above commodities which are proposed to be kept outside the purview of GST.

Question 17.
What will be status of Tobacco and Tobacco products under the GST regime?
Answer:
Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the power to levy Central Excise duty on these products.

Question 18.
What type of GST is proposed to be implemented?
Answer:
It would be a dual GST with the Centre and States simultaneously levying it on a common tax base. The GST to be levied by the Centre on intra-State supply of goods and or services would be called the Central GST (CGST) and that to be levied by the States would be called the State GST (SGST). Similarly Integrated GST (IGST) will be levied and administered by Centre on every inter¬state supply of goods and services.

Question 19.
Why is Dual GST required?
Answer:
India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.

Question 20.
Which authority will levy and administer GST?
Answer:
Centre will levy and administer CGST & IGST while respective states will levy and administer SGST.

Question 21.
How will the goods and services bi ciassified under GST regime?
Answer:
HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above ₹ 1.5 crores but below ₹ 5 crores shall use 2 digit code and the taxpayers whose turnover is ₹ 5 crores and above shall use 4 digit code. Taxpayers whose turnover is below ₹ 1.5 crores are not required to mention HSN Code in their invoices. Services will be classified as per the Services Accounting Code (SAC).

Question 22.
How will imports be taxed under GST?
Answer:
Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the GST paid on import on goods and services.

Question 23.
How will Exports be treated under GST?
Answer:
Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters.

Question 24.
Who can opt for Composition Scheme?
Answer:
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 annual turnover is below ₹ 75 Lakhs.

Question 25.
What is the tax rate applicable oft a composition dealer?
Answer:
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.

Question 26.
What is the threshold limit to be eligible for Composition Scheme?
Answer:
Any dealer whose aggregate turnover in a financial year does not exceed ₹ 75 Lakh can opt for composition scheme.

Question 27.
What are the transition provisions if a business transits from Composition Scheme under current regime to Regular Taxation – under GST?
Answer:
Taxpayers registered under composition scheme under the current regime will be allowed to take credit of input held in stock or in semi-finished goods or in finished goods on the day immediately preceding the date from which they opt to be taxed as a regular tax payer.

Question 28.
What is IGST?
Answer:
IGST or integrated goods and services tax 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.