GST in India-An Introduction – CA Final IDT Study Material is designed strictly as per the latest syllabus and exam pattern.
GST in India-An Introduction – CA Final IDT Study Material
Question 1.
Explain the concept of Dual GST. [Nov. 2017, 2 Marks]
Answer:
Under dual GST system, GST is levied by both the federal (i.e. Central Government) and State Government. In view of the federal structure of the country, India has adopted a Dual GST model.
Intra-State Supplies: The tax is imposed by the Centre and States simultaneously on taxable supply of goods/services which, takes place within a State or Union Territory, in the form of:
- CentraI GST (CGST) and
- State GST (SGST)
Inter-State Supplies: The Centre has the exclusive power to levy and collect GST on inter state supplies in the form of Integrated GST (IGST), which is shared between the Center and State.
Question 2.
Enumerate any five matters on which the GST Council may make recommendations under Article 279A
of the Constitution of India. [Nov 2019, 5 Marks]
Answer:
The GST Council shall make recommendation to the Union and the States on –
| (a) | Abolition of taxes | The taxes, cesses and surcharges levied by the Union, the State and the local bodies which may be subsumed in the GST. |
| (b) | Number of Goods or Services Exempted | The goods and services that may be subjected to, or exempted from GST. |
| (c) | Making of rules of levy and place of supply | Model GST Laws, principles of levy, apportionment of Integrated Goods and Services Tax (IGST) and the principles that govern the place of supply. |
| (d) | Threshold exemption | The threshold limit of turnover below which goods and services may be exempted from GST. |
| (e) | Rates of tax | The rates including floor rates with bands of GST. |
Question 3.
What do you mean by GST Council? What is Its guiding principle? What are its functions?
Answer:
- The GST Council is a joint forum of the Centre and States.
- The Article 279A of the Constitution of India empowers the President to constitute Goods and Services Tax Council (GST Council) and was constituted on 15th September, 2016.
- The GST Council consists of the following:
(i) Union Finance Minister as a Chairperson
(ii) Union Minister of State in-charge of Finance as a member
(iii) The State Finance Minister or State Revenue Minister or any other Minister nominated by each State as a member of the Council.
- The GST Council shall select one of them as Vice Chairperson of Council.
- The GST Council is to make recommendations to the Central Government and the State Governments on
(a) tax rates and classification of supply
(b) exemptions
(c) threshold limits for registration
(d) dispute resolution
(e) GST legislations including rules and notifications etc.
Question 4.
State the advantages of GST.
Answer:
The following are the advantages of GST:
(a) One Nation One Tax.
(b) Removal of many indirect taxes such as Central level Taxes like Excise Duty, Service Tax, CVD, CST and State Level Taxes like VAT, Entertainment Tax, Tax on Lottery, Betting and Gambling etc.
(c) Removal of cascading effect of taxes (i.e. removes burden of tax on tax).
(d) Increased ease of doing business;
(e) Lower cost of production, increases demand will lead to increase supply. Hence, this will ultimately lead to rise in the production of goods. Resultantly boost to make in India initiative.
(f) GST will boost export and manufacturing activity.
(g) Generate more employment.
(h) Uniformity of tax rates and structures
(i) Improved competitiveness
(j) Better control on revenue leakage
Question 5.
State briefly the features of the GSTN, i.e., the role assigned to GSTN in India.
Answer:
Solution.
Functions of the GSTN are :
- Filing of registration application
- Filing of return & matching of input tax credit
- Intimate to Registered person in case of Mismatch of ITC
- Creation of challan for a tax payment
- Settlement of GST payment (like a clearing house),
- Generation of E-Way Bill.
All statutory functions to be performed by tax officials under GST like approval of registration, assessment, audit, appeal, enforcement etc. will remain with the respective tax departments.
Question 6.
Difference between Direct Tax & Indirect Tax?
Answer:
| Basis | Direct Tax | Indirect Tax |
| 1. Tax Burden | The person paying the tax to the Government directly bears the incidence of the tax | The person paying the tax to the Government collects the same from the ultimate consumer. Thus, incidence of the tax is shifted to the other person |
| 2. Nature | Progressive in nature – high rate of taxes for people having higher ability to pay | Regressive in nature – All the consumers equally bear the burden, irrespective of their ability to pay |
Question 7.
Explain the concept of GST?
Answer:
GST IS A VALUE ADDED TAX
GST is a tax levied at multiple stages of production & distribution of goods & services in which tax paid on inputs are allowed as set-off against tax payable on output. In short, we can say that GST is charged on “Value Addition.”
CHAIN OF TAX CREDITS
GST offers comprehensive and continuous chain of tax credits from the producer’s point/service up to the retailer’s level/consumer’s level.
BURDEN ON FINAL CONSUMER
The final burden of GST is borne by the consumer as it is charged by the last supplier with set off benefits at all previous stages.
NO CASCADING EFFECT OF TAXES
The past tax structure of India has number of indirect taxed collected both by Central and State Government. Due to such multiple taxes, there had been cascading effect of taxes (tax on tax) and double taxation.
GST will subsume all these indirect taxes and will thus, facilitate seamless flow of credit resolving the problem of double taxation and cascading effect of taxes.
Question 8.
Write a Short note on Legislations governing GST.
Answer:
Legislations governing GST:
(1) The UTGST Act has been passed for Union territories which do not have legislature. For the purpose of GST, each Union Territory shall be considered as a separate Union territory. For instance, the goods have been supplied by a trader from Chandigarh to Lakshadweep. Now, although both the UT’s are governed by the same UTGST Act but it will be treated as Inter-State Supply & is subject to IGST.
(2) Out of 8 Union Territories, the three Union territories “Delhi”, “Puducherrv” and “Jarnmu & Kashmir” have their own legislature and they have passed their own SGST Acts. That is why; Delhi, Puducherry and J&K are not covered by the list of UT for this purpose.
(3) All the 28 states have passed their own State GST Act in order to impose SGST on supply of Goods & Services within the State. It may be noted that all provisions of State GST Acts are identical with CGST Act.