GST & Tax Structure — Set 15

Correct Answer: B. Article 246A

Article 246A, inserted by the 101st Constitutional Amendment (2016), grants both Parliament and State Legislatures concurrent power to make laws with respect to GST. This is a unique constitutional provision that enables the dual GST structure. For IGST (inter-state GST), Parliament has exclusive power under Article 246A(2).

Correct Answer: B. ₹20 lakh for goods; ₹10 lakh for services

For special category states (hill states and northeastern states — Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Himachal Pradesh, Uttarakhand, Jammu & Kashmir before J&K was reorganized), the GST registration threshold is lower at ₹20 lakh for goods and ₹10 lakh for services to account for the smaller economic scale.

Correct Answer: B. GST is paid by the recipient (consignee/consignor) of GTA services under RCM

Goods Transport Agency (GTA) services are subject to Reverse Charge Mechanism (RCM) under GST in most cases. The recipient of GTA services (consignee or consignor who is a registered person) must pay 5% GST (without ITC) on the transportation charges under RCM, rather than the GTA collecting GST. GTA can alternatively opt to pay 12% GST themselves with ITC.

Correct Answer: B. GST Council — joint decision-making by Centre and States — is a model of cooperative federalism

GST is widely regarded as India's finest example of cooperative federalism. The GST Council brings together the Centre and all 28 States + UTs in a single decision-making body where decisions are made by consensus or 3/4 weighted majority. States voluntarily surrendered their right to levy Sales Tax/VAT and the Centre surrendered Central Excise on most goods, creating a unified national market through cooperative governance.

Correct Answer: B. GST-registered firms/companies receiving legal services from individual advocates/law firms must pay GST under RCM

Under Reverse Charge Mechanism, when a GST-registered business receives legal services from an individual advocate or a partnership firm of advocates (not a company), the registered business (recipient) is liable to pay 18% GST under RCM. This was introduced because individual advocates were not required to register under the erstwhile Service Tax regime. The firm can subsequently claim ITC on this RCM payment.

Correct Answer: B. TCS is collected by e-commerce operators at 1%; TDS is deducted by government bodies at 2%

In GST, Tax Collected at Source (TCS) is collected by e-commerce operators (Amazon, Flipkart) at 1% on net sales value of supplies made through their platform. Tax Deducted at Source (TDS) is deducted by government entities (ministries, PSUs, local bodies) at 2% on payments to suppliers where contract value exceeds ₹2.5 lakh. Both TCS and TDS are deposited with the government and credited to the supplier's electronic ledger.

Correct Answer: B. 2%

The Central Sales Tax (CST) rate for inter-state sale of goods was 2% (reduced from 4% in phases starting from 2007). CST was a tax against which no ITC was available, leading to cascading effects on goods traded across states. The reduction of CST to 2% was a step towards GST implementation. Under GST, CST was completely replaced by IGST which has a seamless ITC mechanism.

Correct Answer: C. Exempt from GST (with refund mechanism for taxes paid)

Diplomatic missions (embassies, consulates), international organizations like the UN, and certain multilateral institutions are exempt from GST in India under reciprocity arrangements. While GST is charged on purchases made by them, they can claim refunds of the GST paid. This is managed through the Foreign Diplomatic Missions (FDM) refund mechanism under the GST law.

Correct Answer: B. Works contracts (involving goods + services in construction/civil work) taxed as services at 12% or 18%

Under GST, a 'works contract' (a contract involving both goods and services like construction, renovation, installation) is treated as a supply of service (not goods). Works contracts for construction of residential complexes attract 18% GST with ITC (or 12% for affordable housing). Works contracts for government infrastructure (roads, bridges, railways, metro) attract 12% GST. This unified treatment replaced the earlier complex service tax + VAT structure.

Correct Answer: C. 50+ meetings

The GST Council has met more than 50 times since its first meeting in September 2016. These meetings have addressed rate rationalizations, compliance simplifications, extension of compensation cess, COVID-related GST exemptions, online gaming GST, and numerous sector-specific issues. The Council's sustained engagement reflects its role as the key decision-making body for India's indirect tax system.