Question

The GST Council governs GST in India and is chaired by the Union Finance Minister. Besides the Union Finance Minister, who are the other key members typically included in the GST Council?

• A. Chief Justices of the Supreme Court and High Courts
• B. State Finance Ministers or their nominated representatives
• C. Chairpersons of Public Sector Banks
• D. Chief Ministers of all States
• A. The number of branches the business operates
• B. The business's annual aggregate turnover exceeding a specified threshold
• C. Whether the business is owned by an individual or a company
• D. The educational qualification of the business owner
• A. By increasing the final price of goods and services
• B. By allowing businesses to pay taxes only on the value added at each stage of the supply chain
• C. By exempting businesses from paying any taxes on their outputs
• D. By making compliance procedures more complex
• A. To collect tax on imports into India only
• B. To ensure a seamless flow of credit across states for interstate supplies
• C. To replace income tax on businesses involved in interstate trade
• D. To levy tax only on services supplied between states
• A. To the state from where the goods are dispatched or services originate
• B. Equally between the state of origin and the state of destination
• C. To the state where the final consumption of the goods or services takes place
• D. To the Central Government only

Answer 1

The Correct Option is B

The GST Council is a key body in India's taxation system, and it is responsible for the implementation and administration of Goods and Services Tax (GST) across the country.
The GST Council is chaired by the Union Finance Minister, and the other members typically include State Finance Ministers or their nominated representatives. This ensures that both the central government and the states have an equal say in the GST decision-making process.
The other options listed, such as the Chief Justices or Chairpersons of Public Sector Banks, are not part of the GST Council’s membership. Only the finance ministers from the states are involved in the council’s operations.

Answer 2

A business is required to register under GST if its annual aggregate turnover exceeds the specified threshold, which is defined by the GST Act.
The threshold value varies depending on the type of business and its location. For example, businesses operating in certain sectors or regions may have different turnover thresholds for GST registration.
This requirement ensures that businesses above a certain size or with substantial operations contribute to the tax system. On the other hand, smaller businesses may not need to register if their turnover falls below the threshold.
The other options, such as the number of branches or the educational qualifications of the business owner, do not play a role in determining GST registration. The focus is strictly on the turnover of the business.

Answer 3

The Input Tax Credit (ITC) mechanism allows businesses to offset the tax paid on inputs against the tax they collect on outputs.
This reduces the cascading effect of taxes, as businesses only pay taxes on the value added at each stage of the supply chain rather than on the entire value of the goods or services.
This system significantly lowers the tax burden on businesses by enabling them to claim credit for taxes paid on purchases, thus ensuring that tax is paid only on the value added.

Answer 4

The primary purpose of the Integrated Goods and Services Tax (IGST) is to ensure that credit flows seamlessly between states for interstate transactions.
IGST ensures that there is no loss of input tax credit when goods or services are supplied across state borders. It allows businesses to claim tax credits even for interstate transactions, maintaining the continuity of the credit chain and preventing the cascading effect of taxes.
The other options are not the main objectives of IGST, as it is not specifically related to income tax, services between states, or just collecting tax on imports.

Answer 5

The Goods and Services Tax (GST) system in India is based on a destination-based consumption tax model.
This principle means that the revenue generated from an intra-state transaction, including both CGST (Central GST) and SGST (State GST), is allocated to the state where the final consumption of the goods or services takes place.
For example, if goods are produced in one state but consumed in another, the revenue from the tax on those goods will go to the state where the goods are consumed, not where they are produced. This ensures that the tax burden is borne by the final consumer and benefits the state where the goods or services are used.
Option 1 is incorrect because the revenue is not allocated to the state from where the goods are dispatched, and Option 2 is incorrect as the revenue is not split equally between the origin and destination states.
Option 4 is incorrect as it refers to a different tax structure where revenue goes to the Central Government alone.