GST & Tax — Set 1

Correct Answer: B. 101st Amendment Act

• **101st Amendment Act** = The 101st Constitutional Amendment Act of 2016 enabled the introduction of GST in India by amending the Constitution. • **Concurrent taxing power granted** = It allowed both the Centre and States to levy taxes on the same base of goods and services simultaneously. • 💡 Wrong-option analysis: 115th Amendment Act: the 115th Amendment Act is not related to GST; 122nd Amendment Act: this was the GST Bill's original name in Parliament before it was passed as the 101st Amendment; 100th Amendment Act: it dealt with the India-Bangladesh land boundary agreement.

Correct Answer: C. Destination-based tax

• **Destination-based tax** = GST is a destination-based tax because it is levied at the point of consumption, not at the point of origin. • **Revenue accrues to consuming state** — This means the tax revenue goes to the state where the goods or services are actually consumed, not where they are produced. • 💡 Wrong-option analysis: Origin-based tax: in an origin-based system the revenue goes to the producing state; GST does the opposite; Direct tax: GST is an indirect tax, not a direct tax; Single-stage tax: GST is a multi-stage tax levied at every stage of the supply chain.

Correct Answer: C. 15%

• **15%** = There is no standard 15% tax slab under the GST regime; the standard slabs are 5%, 12%, 18%, and 28%. • **Four standard slabs: 5%, 12%, 18%, 28%** — These four rates cover all categories, from essential goods at 5% to luxury and demerit goods at 28%. • 💡 Wrong-option analysis: 28%: this is a valid GST slab applied to luxury and demerit goods; 12%: this is a standard GST slab applied to processed foods and certain goods; 5%: this is the lowest standard slab applied to essential goods and services.

Correct Answer: C. Union Finance Minister

• **Union Finance Minister** = The Union Finance Minister acts as the Chairperson of the GST Council as per Article 279A of the Constitution. • **Article 279A, Council composition** — The Council includes the Union Minister of State for Finance and finance ministers from all state governments. • 💡 Wrong-option analysis: Comptroller and Auditor General: the CAG audits government accounts and is not part of the GST Council; Prime Minister of India: the PM is not the chairperson of the GST Council; Governor of RBI: the RBI Governor handles monetary policy and is not a member of the GST Council.

Correct Answer: C. Integrated Goods and Services Tax

• **Integrated Goods and Services Tax** = IGST stands for Integrated Goods and Services Tax, levied on all inter-state supplies of goods and services. • **Collected by Centre, shared with states** — IGST is collected by the Central Government and then distributed between the Centre and the consuming state. • 💡 Wrong-option analysis: Intra-state Goods and Services Tax: IGST applies to inter-state transactions, not intra-state; Indirect Goods and Services Tax: this is not the correct expansion of IGST; Internal Goods and Services Tax: this is not the correct full form of IGST.

Correct Answer: B. CGST

• **CGST** = CGST (Central Goods and Services Tax) is levied by the Union Government on transactions occurring within a single state. • **Collected simultaneously with SGST** — CGST and SGST are collected together on intra-state transactions, appearing as separate line items on the same invoice. • 💡 Wrong-option analysis: IGST: IGST is levied on inter-state supplies, not intra-state supplies by the Centre; UTGST: UTGST is levied in Union Territories without their own legislature; SGST: SGST is levied by the State Government, not the Central Government.

Correct Answer: C. Petroleum products

• **Petroleum products** = Petroleum products like petrol and diesel are excluded from GST and continue to attract state excise and central excise duties. • **GST Council can include them later** — The GST Council has the power to bring petroleum products into the GST net at a future date. • 💡 Wrong-option analysis: Packaged food: packaged food is covered under GST; Automobiles: automobiles are taxed under the 28% GST slab; Electronic goods: electronic goods are within the GST purview.

Correct Answer: B. Article 279A

• **Article 279A** = Article 279A of the Constitution empowers the President to constitute the GST Council. • **Article 246A gives law-making power** — While Article 279A creates the Council, Article 246A gives both Parliament and State Legislatures the concurrent power to make laws with respect to GST. • 💡 Wrong-option analysis: Article 270: it deals with distribution of taxes between the Centre and states; Article 269A: it specifically deals with the levy and collection of IGST on inter-state trade; Article 246A: it grants concurrent power to legislate on GST but does not establish the GST Council.

Correct Answer: D. Haryana

• **Haryana** = Haryana was the first state in India to implement VAT in April 2003. • **Most states adopted by 2005** — By 2005, most other states had adopted the VAT system, replacing the earlier sales tax regime. • 💡 Wrong-option analysis: Kerala: Kerala adopted VAT after Haryana and was not the first; Tamil Nadu: Tamil Nadu was among the later states to adopt VAT; Maharashtra: Maharashtra was not the first state to implement VAT.

Correct Answer: D. Tax on Tax

• **Tax on Tax** = A cascading effect occurs when tax is levied at every stage of the supply chain without credit for taxes paid earlier, leading to 'tax on tax'. • **GST removes it via ITC** — GST was specifically designed to eliminate this effect by providing Input Tax Credit (ITC) at every stage. • 💡 Wrong-option analysis: Tax exemption: tax exemption means no tax is levied, not tax on tax; Direct tax collection: this refers to income or corporate tax collection, not cascading; Tax evasion: this is illegal non-payment of taxes, not the cascading effect.