GST - General awareness questions on current affairs

1)   What is the main tenet behind GST tax reform?

a. One Group, One Product
b. One Nation, One Tax
c. Both of the above
d. Neither of the above
Answer  Explanation 

ANSWER: Both of the above

Explanation:
Having opted for multiple rates under the upcoming goods and services tax (GST) regime, India is now looking to keep variations in rates on the same types of products at a minimum to ensure that the tax structure does not get any more complicated.

For example, all types of footwear or mobile phones could attract the same rate.

Single rate for one product group will bring simplicity in the structure and make implementation easier.

Globally, most regimes have a single rate. India has adopted a four-tier tax structure of 5%, 12%, 18% and 28%.

The rate applicable on most products will be 18%. The highest rate has been pegged in the GST law at 40%.

Many experts have said this structure will undermine the basic tenet of GST - a simple structure with at most two rates.

The GST Council now has to decide which goods and services go into which slabs.

The highly anticipated tax reform is expected to lift economic growth by 1-2 percentage points by removing inter-state barriers thus slashing cost and boosting efficiency.


2)   Which of the following is not among the 4 supporting legislations of the Goods and Services Tax?

a. CGST
b. IGST
c. Compensation
d. None of the above
Answer  Explanation 

ANSWER: None of the above

Explanation:
Rajya Sabha on 6 April 2017 passed all four supporting legislations of the Goods and Services Tax Bill, GST rollout 2017.

The four bills were passed by the Rajya Sabha by a voice vote as all parties were on board.

The four legislations are:

i. The Central Goods and Services Tax Bill, 2017 (The CGST Bill).
ii. The Integrated Goods and Services Tax Bill, 2017. (The IGST Bill).
iii. The Union Territory Goods and Services Tax Bill, 2017 (The UTGST Bill).
iv. The Goods and Services Tax (Compensation to the States) Bill, 2017 (The Compensation Bill).

The passage in the upper house of the Parliament has cleared the decks for the rollout of the historic GST Bill from 1 July 2017 and usher the one-nation-one-tax regime.

With this passage in Rajya Sabha, the Bill will be sent to President Pranab Mukherjee for the final nod. The bills will become the law after the President gives his assent to them.

The Bill was earlier passed by the Lok Sabha on 29 March 2017.

Now, the States can pass the State GST Bill in their assemblies.

Parliament passed all the four bills related to GST rollout unanimously.

The agricultural produce will not be taxed under the new indirect tax regime. All those items which are exempted as of now will continue to be so.


3)   Match the following GST bills correctly with their respective provisions:

IGSTLevy and collection of tax on intra-state supply of goods and services
CGSTLevy and collection of tax on inter-state supply of goods or services
UTGSTLevy on collection of tax on intra-UT supply of goods and services


a. 1-I, 2-ii, 3-iii
b. 1-ii, 2-i, 3-iii
c. 1-iii, 2-ii, 3-i
d. None of the above
Answer  Explanation 

ANSWER: 1-ii, 2-i, 3-iii

Explanation:
The Lok Sabha on 29 March 2017 passed four Goods and Services Tax (GST) Bills:

  • The Central Goods and Services Tax Bill, 2017 (The CGST Bill).
  • The Integrated Goods and Services Tax Bill, 2017 (The IGST Bill).
  • The Union Territory Goods and Services Tax Bill, 2017 (The UTGST Bill).
  • The Goods and Services Tax (Compensation to the States) Bill, 2017 (The Compensation Bill)
These four Goods and Services Tax (GST) Bills will subsume all the indirect taxes currently levied such as the Value Added Tax (VAT), excise duty, service tax and central sales tax.

It empowers the centre to impose an additional tax of up to 1 per cent on the inter-state supply of goods for two years or more.

IGST

IGST Bill makes provisions for levy and collection of tax on inter-state supply of goods or services or both by the Union Government.

CGST

The CGST Bill makes provisions for levy and collection of tax on intra-state supply of goods and services by the Union Government.

UTGST

The UTGST Bill makes provisions for levy on collection of tax on intra-UT supply of goods and services in the Union Territories without legislature.

SGST

Union Territory GST is similar to States Goods and Services Tax (SGST), which shall be levied and collected by the States and Union Territories on intra-state supply of goods or services or both.


4)   Which of the following are part of the GST tax reform?

a. Central GST Bill
b. Integrated GST Bill
c. Union Territory GST Bill
d. All of the above
Answer  Explanation 

ANSWER: All of the above

Explanation:
Finance minister Arun Jaitley on 27th March 2017 introduced four bills on the Goods and Services Tax (GST) in the lower house of parliament.

This is paving the way for the government to launch the landmark tax reform.

The bills introduced are the Central GST Bill, the Integrated GST Bill, the Union Territory GST Bill, and the GST (Compensation to States) Bill.

The state assemblies will also have to pass the State GST bill before the new tax system can be rolled out later this year.

The new tax, which the government expects to implement from July 1, is the biggest tax reform since India got independence in 1947 from the British colonial rule.

The tax is expected to boost the rate of economic growth by about 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.


5)   GST Council has approved the draft versions of which bills?

a. CGST
b. IGST
c. SGST
d. Both a and b
e. All the above
Answer  Explanation 

ANSWER: Both a and b

Explanation:
The Goods and Services Tax (GST) Council, in its meeting held in Vigyan Bhawan in New Delhi under the Chairmanship of the Union Minister for Finance & Corporate Affairs, Shri Arun Jaitley has approved the draft CGST Bill and the draft IGST Bill as vetted by the Union Law Ministry.

This clears the deck for the Central Government to take these two Bills to the Parliament for their passage in the ongoing Budget Session.



i. A State-wise single registration for a taxpayer forfiling returns, paying taxes,and to fulfil other compliance requirements. Most of the compliance requirements would be fulfilled online, thus leaving very little room for physical interface between the taxpayer and the tax official.
ii. A taxpayer has to file one single return state-wise to report all his supplies, whether made within or outside the State or exported out of the country and pay the applicable taxes on them. Such taxes can be Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST) and Integrated Goods and Services Tax (IGST).
iii. A business entity with an annual turnover of upto Rs. 20 lakhs would not be required to take registration in the GST regime, unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other States of the North-East) for not taking registration is Rs. 10 lakhs.
iv. A business entity with turnover upto Rs. 50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.
v. In order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the Law.
vi. In order to ensure that ITC can be used seamlessly for payment of taxes under the Central and the State Law, it has been provided that the ITC entitlement arising out of taxes paid under the Central Law can be cross-utilised for payment of taxes under the laws of the States or Union Territories. For example, a taxpayer can use the ITC accruing to him due to payment of IGST to discharge his tax liability of CGST / SGST / UTGST. Conversely, a taxpayer can use the ITC accruing to him on account of payment of CGST / SGST / UTGST, for payment of IGST. Such payments are to be made in a pre-defined order.
vii. In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input services within a legal entity.
viii. To prevent lock-in of capital of exporters, a provision has been made to refund, within seven days of filing the application for refund by an exporter, ninety percent of the claimed amount on a provisional basis.
ix. In order to ensure a single administrative interface for taxpayers, a provision has been made to authorise officers of the tax administrations of the Centre and the States to exercise the powers conferred under all Acts.
x. An agriculturist, to the extent of supply of produce out of cultivation of land, would not be liable to take registration in the GST regime.
xi. To provide certainty in tax matters, a provision has been made for an Advance Ruling Authority.
xii. Exhaustive provisions for Appellate mechanism have been made.
xiii. Detailed transitional provisions have been provided to ensure migration of existing taxpayers and seamless transfer of underutilised ITC in the GST regime.
xiv. An anti-profiteering provision has been incorporated to ensure that the reduction of tax incidence is passed on to the consumers.
xv. In order to mitigate any financial hardship being suffered by a taxpayer, Commissioner has been empowered to allow payment of taxes in instalments.
Source: Press Information Bureau

The Council has also included a revised peak rate of 20 per cent under GST, instead from the earlier 18 per cent.

This would mean that the total incidence of the tax could go as high as 40 per cent.

But smoothening concerns, Revenue Secretary Hasmukh Adhia said that it would not impact the four-tier rate structure of 5, 12, 18 and 28 per cent.

The UT-GST Bill would be for levying of the new tax in Union Territories that do not have a legislature (excluding Delhi and Puducherry).

The four laws will be approved by the Union Cabinet and taken to the Parliament in the coming session,.

Finance Ministry officials said that the proposed anti-profiteering agency under GST would not send out inspectors to check on prices but will look at applications made consumers.

The remaining two Bills namely, State Goods and Services Tax (SGST) Bill and the Union territory Goods and Services Tax (UTGST) Bill, which would be almost a replica of the CGST Act, would be taken-up for approval after their legal vetting in the next meeting of GST Council scheduled on 16 March 2017


6)   The base year for calculating the revenue structure of the state according to the GST Council is:

a. 2014-2015
b. 2015-2016
c. 2016-2017
d. 2017-2018
Answer  Explanation 

ANSWER: 2015-2016

Explanation:
The Goods and Services Council on 18th October 2016 reached a consensus on the way in which states would be compensated for loss of revenue with a four slab structure of 6, 12, 18 and 26 along with lower rates for essential items and highest band for luxury goods

  • Base year for calculating the revenue of the state would be 2015-2016
  • Secular growth rate of 14% would be taken for calculating the likely revenue of each state in the first 5 years of implementation of the GST
  • A consensus was reached on definition of revenue to compensate the state for revenue loss due to GST implementation
  • Rate structure should be such that it does not lead to further inflation and both States and Centre have adequate funds to discharge their duty.
  • The rate is to be revenue neutral so that there is no need to burden consumers with additional tax
  • To ensure inflation remains under control, food items along with other 50 percent items of common usage are proposed for tax exemption
  • Lower rates would be levied on essential items and the highest for luxury and demerit goods


7)   GST rate of what percent has been suggested by the GST Council for single GST rate?

a. 18-19
b. 19-20
c. 16-17
d. 17-18
Answer  Explanation 

ANSWER: 17-18

Explanation:
India’s plan to implement a nation-wide GST entered the final stage with the GST Council coming up with a formula to compensate states in the event of revenue loss after the new system is adopted

  • On 18th Oct 2016, the council decided 2015-2016 will be taken as the base year for calculating revenue assuming secular and long term growth rate of 14 percent.
  • States will be fully compensated for potential revenue loss up to 5 years
  • GST Council has also finalised area based exemptions and 1 states including 8 NE states and three hilly states will be treated under the new tax regime.
  • The tax exemption provided by the states as incentives to the industry will be counted in the definition of revenue for calculation of revenue loss
  • Objective is to ensure rates will not be inflationary
  • There could be four slabs of GST rates namely 6,12,18 and 26 percent
  • The cess on the highest band could be for ultra luxury items and demerit items such as tobacco
  • The panel under CEA has recommended a revenue neutral rate of 15- 15.5 percent with a standard rate of 17-18 percent levied on most goods and all services


8)   Union Cabinet approved the formation of the GST Council as per which article of the amended Constitution?

a. 279A
b. 279B
c. 279C
d. 279D
Answer  Explanation 

ANSWER: 279A

Explanation:
Union Cabinet on 12th September 2016 approved the process, formation and functioning of the Goods and Services Tax Council

  • Council will comprise FM and state Finance Ministers making recommendations on important issues pertaining to GST including items and rates
  • Creation of the GST Council is as per A279A of the amended Constitution
  • Creation of the GST Council Secretariat took place with its office in New Delhi
  • Appointment of the Secretary (Revenue) as the Ex Officio Secretary to the GST Council also took place
  • Chairpersons were included while CBEC was a permanent invitee (non-voting) on all proceedings of the GST Council
  • A post of additional secretary to the GST Council in the GST Council Secretariat and 4 posts of Commissioner in the GST Council Secretariat was also approved
  • As per Article 279A of the amended Constitution, GST Council shall comprise the following members:
  • Union Finance Minister- Chairperson
  • Member: Union Minister of State in Charge of Revenue of Finance
  • Members: Minister in charge of finance or taxation or any other minister nominated by the state government
  • On September 8, 2016 President Pranab Mukherjee have assent to the 122nd Constitutional Amendment Bill paving the way for the rollout of GST
  • The new tax regime will do away with indirect taxes ushering in one tax for the entire country
  • Around 18 states have ratified the bill
  • GST is a single indirect tax which will subsume most of the central and state taxes as VAT, excise duty, service tax and CST


9)   GST Bill was passed in LS with how many members voting in favour of it in August 2016?

a. 443
b. 442
c. 441
d. 440
Answer  Explanation 

ANSWER: 443

Explanation:
Greatest tax reform since independence received the nod of Parliament as LS on 8th August 2016 passed all amendments to landmark Goods and Services Tax Bill passed by RS

  • Bill was passed by 2/3rd majority with 443 members in LS voting in favour of the GST Constitution Bill
  • AIADMK has staged a walkout when voting began
  • Bill now has to be ratified by atlas 16 states in 30 days after it is passed by Parliament
  • While LS passed the GST Constitutional Amendment Bill in may 2015, separate amendments to the clauses were proposed in the Upper House which has been ratified in the Lower House
  • GST is a uniform indirect tax levied on goods and services revived across the nation and replace various taxes imposed on goods and services.


10)   What will be the impact of the GST Bill passed on 3rd August, 2016?

a. Will eliminate multiple taxes on firms
b. Will reduce black money
c. Will reduce logistics cost
d. All of the above
Answer  Explanation 

ANSWER: All of the above

Explanation:
The Goods & Services Tax Bill was finally passed to amend the Constitution, paving the way for one nation one tax.

  • Barring the AIADMK which staged a walkout on the plea that federalism had been violated, other parties, including the Congress voted for the Bill.
  • RS passed the constitutional amendment by 2/3rd majority as all parties except AIADMK pledged support.
  • GST will now have two components keeping the federal structure of India in mind: The Central GST and State GST.
  • Shift to the GST Bill will lead to uniform and seamless markets across the nation and it will be a uniform rate, checking evasion and boosting growth rates.
  • Services like hotels, cellphone bills, air and train tickets are set to cost more.
  • Goods like two wheelers, cars and SUVs as well as fans, lighting products, water heaters and air coolers will become cheaper.
  • GST if set at 18 percent will be lower than 24-26 percent tax on goods but higher than 15% services tax.
  • CPI inflation will go up by 20-70 basis points in the year of implementation.
  • The Bill will eliminate multiple taxes on firms and help in the ease of doing business.
  • It will also reduce logistics cost for firms due to elimination of inter state taxes.
  • Capital goods prices will fall boosting GDP growth by 0.5 percent.
  • Will reduce inflow of black money due to increased documentation.


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