GST - General awareness questions on current affairs

1)   What rates are the 4 slab service tax structures proposed by the GST council?

a. 5,12,18,28
b. 6,13,19, 29
c. 7, 14, 20, 30
d. None of the above
Answer  Explanation 

ANSWER: 5,12,18,28

Explanation:
The GST Council headed by finance Minister Arun Jaitley has finalised a 4-slab service tax structure at the rates of 5, 12, 18 and 28 per cent as against the single rate of 15% levied on all taxable services.

GST regime is scheduled to be implemented from July 1.

In the next GST Council meeting, tax rates on gold and other precious metals will be taken up for discussion.

Luxury hotels, gambling, race club betting and cinema services will attract a tax rate of 28%.

Education, healthcare and non-AC rail travel will remain exempted from the GST tax regime.

However, the states will be given the option to levy additional taxes on cinema to compensate for the revenue losses entailed due to merging of entertainment tax with GST.

At present, the total tax incidence on cinema including entertainment and 4-slab service tax is in the range of 55%.

The states need to use the legislative route if it wants to levy additional tax on cinema. States will also be permitted to levy any new tax as the taxation powers of the states have only been restricted and not abolished after the rollout of GST.

Telecom and financial services will be taxed at a rate of 18%. Transport services will be taxed at the rate of 5%.

Cab aggregators like Ola and Uber will have to pay 5% under GST in place of 6%. AC rail travel will attract 5% tax. Economy class air travel will attract 5% GST while business class will attract 12%.

Travelling on metro, local train and religious travel such as Haj Yatra would be exempted from GST.

The e-commerce players like Flipkart and Snapdeal would be required to shell out 1% Tax Collected at Source (TCS).

Non-AC restaurants and AC restaurants will attract a GST of 12% and 18% respectively.

Advertisements published in newspapers will attract 5% GST. At present it is exempt from 4-slab service tax.

GST Council: Know More

  • ST Council is a federal forum with both centre and states in India on board formed in September 2016.
  • It is made of: The Union Finance Minister (as Chairman), The Union Minister of State in charge of Revenue or Finance, and The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.
  • The decisions of the GST Council are made by three-fourth majority of the votes cast. The centre has one-third of the votes cast, and the states together have two-third of the votes cast.
  • Each state has one vote, irrespective of its size or population.
  • The Secretary (Revenue) will be appointed as the Ex-officio Secretary to the GST Council. The Chairperson, Central Board of Excise and Customs (CBEC), will be included as a permanent invitee (non-voting) to all proceedings of the GST Council.
  • One post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India) will be created.
  • Four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India) will also be created.


2)   GST council has finalised tax rates and approved ___ rules of the GST regime.

a. 5
b. 6
c. 7
d. 8
Answer  Explanation 

ANSWER: 7

Explanation:
The GST Council headed by finance Minister Arun Jaitley has finalised tax rates and has approved all the seven rules for the GST regime that is scheduled to be implemented from July 1.

The remaining two rules of the GST pertaining to transition and return is under the examination of the legal committee.

In total, the council has fixed the rates of 1211 items. It will decide rates of some other items and services in the coming days.

Out of 1211 items, 81% of the items will attract tax of 18% or less. Only the remaining 19% of items will attract a highest rate of 28%.

Household items like Sugar, Tea, Coffee and edible oil will attract 5% levy. Cereals and milk will be exempted from the tax.

Manufactured goods will attract 18% levy. Luxury cars will attract 28% GST in addition to a cess of 15%.

Small petrol cars will attract 28% GST plus a 1% cess, and diesel cars will be taxed at 28% plus 3% cess.

Capital goods, a key asset for the manufacturing sector, will be taxed at 28%. Aerated drinks will fall under the 28% tax bracket.

GST Council Overall Tax: Know More

  • The GST Council has not increased the overall tax in any of the 1211 items but have reduced tax on many items.
  • For example, Soap, which is now taxed at the rate of 22-24%, will be taxed at 18%. The present tax incidence in excess of 28% on luxury items will be treated as cess and will be deposited in the corpus for compensating states if they suffer any revenue loss.
  • Food items are expected to become cheaper. Daily use items like hair oil, toothpaste, and soap are kept in the 18% tax slab instead of 28%.
  • The cost of energy generation is expected to become less as tax incidence on coal has been reduced from 11% to 5%.
  • GST regime is expected to unify the whole of the country into a common market eliminating both Central and State levies.
  • GST is also expected to increase state and federal tax revenues, ease inflation and boost economic growth by 1-2% points in the medium term.


3)   What value will India grow to this fiscal (2017) as bankruptcy and GST laws help, according to ADB?

a. 7.3
b. 7.4
c. 7.5
d. 7.6
Answer  Explanation 

ANSWER: 7.4

Explanation:
The Indian economy will grow 7.4 per cent this fiscal and 7.6 per cent in the next as the bankruptcy and GST laws will help create a better business friendly environment.

This is as per the Asian Development Bank (ADB).

Ahead of its 50th annual meeting to be attended by finance minister and central bank governors of member nations, ADB indicated new bankruptcy law will make it easier to do business in India.

The growth rate compares to 7.1 per cent of the previous fiscal.

Over 7 per cent growth rate is high if one compares it to other emerging market economies and also China.

Behind this is cyclical factor, improved terms of trade. The Indian government adopted new bankruptcy law that improved the business enabling environment.

That is the a short-term and medium-term factor behind the gross acceleration in India.

On the impact of demonetisation of old 500 and 1,000 rupee notes that took out 86 per cent of the currency in circulation, it obviously generated short-term decline in cash-based transactions and consumer sentiment.

ADB has not studied if the demonetisation had any consequences on black money.

The GST, the biggest indirect tax reform since independence, together with the new bankruptcy law are big positives for India.

The bankruptcy law and the GST will help in creating a better business enabling environment, which seems to be a factor behind this gross acceleration of India,.

The rupee strengthened to 64.2 against the US dollar and has been gaining strength as compared to other emerging economy currencies.

The rupee has appreciated by over 5 per cent against the US dollar since January.

ADB: Know More

  • Headquarters: Mandaluyong, Philippines
  • President: Takehiko Nakao
  • Founded: 19 December 1966
  • Membership: 67 countries
  • Staff: 2997 employees
  • Purpose: Economic development
  • Motto: Fighting poverty in Asia and the Pacific


4)   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.


5)   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.


6)   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.


7)   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.


8)   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


9)   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


10)   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


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