GST & Tax Structure — Set 16

Correct Answer: B. Application for new GST registration

Form GST REG-01 is the application form used for applying for new GST registration. It is filed online on the GSTN portal. The applicant must provide details like PAN, business name, business address, type of business, and upload supporting documents. Registration is normally granted within 3 working days, or 7 working days if additional documents are sought.

Correct Answer: B. 12% for agricultural tractors; 28% for road-going tractors

Agricultural tractors (those designed primarily for agricultural use) attract 12% GST. Road-going tractors (used for commercial transport purposes) attract 28% GST. This distinction recognizes the importance of tractors in Indian agriculture. India is one of the largest tractor markets globally, and the 12% rate helps keep farm mechanization costs manageable.

Correct Answer: B. Authorized tax professionals who help taxpayers with GST compliance on their behalf

GST Practitioners (GSTPs) are tax professionals authorized by the GSTN/GST Council to appear before GST authorities and assist taxpayers in GST compliance tasks like filing returns, payment of taxes, filing refund applications, and representing clients before tax authorities. GSTPs must clear a qualifying examination and are listed on the GSTN portal. They are similar to Income Tax practitioners.

Correct Answer: B. GST was implemented at midnight (July 1, 2017) in a special Parliament session in the Central Hall

GST was formally launched by President Pranab Mukherjee and Prime Minister Narendra Modi at a special midnight Parliament session in the Central Hall on June 30-July 1, 2017 — symbolically coinciding with the start of July 1, 2017, the implementation date. This midnight ceremony was a tribute to the tradition of major national events beginning at midnight, similar to India's independence in 1947.

Correct Answer: B. Exporters who paid IGST on exports can claim 100% IGST refund as exports are zero-rated

Since exports are zero-rated under GST, exporters who have paid IGST on their export shipments can claim a 100% refund of the IGST paid. Alternatively, exporters can export under Bond/LUT without paying IGST and claim a refund of the accumulated ITC on inputs. This zero-rating/refund mechanism ensures Indian exports are competitive by not embedding domestic taxes in export prices.

Correct Answer: B. GSTR-2A is a dynamic real-time statement; GSTR-2B is a static auto-generated monthly ITC statement

GSTR-2A is a dynamic, auto-populated statement that updates in real-time as suppliers upload their invoices in GSTR-1. GSTR-2B is a static, auto-generated ITC statement generated on the 14th of each month, which does not change after generation. GSTR-2B is used as the definitive basis for ITC claims as it provides a stable, snapshot view. GSTR-2A is useful for monitoring but GSTR-2B is the controlling document for ITC.

Correct Answer: A. 0.25% for rough; 1.5% for polished

Rough diamonds (uncut) attract 0.25% GST, while polished/cut-and-polished diamonds attract 1.5% GST. These special rates reflect India's dominant position in the global diamond industry — India cuts and polishes approximately 90% of the world's diamonds. Lower GST on diamonds helps India maintain its competitive advantage in this labour-intensive, high-value export sector.

Correct Answer: B. Procedure for GST department to issue demand notices for unpaid/short-paid tax

Sections 73 (non-fraud cases) and 74 (fraud/suppression cases) of the CGST Act provide the procedure for GST authorities to issue demand notices and recover unpaid, short-paid, erroneously refunded, or wrongly availed ITC. Section 73 demands have a lower penalty (15% if paid within show cause notice period); Section 74 fraud cases have higher penalties (100% penalty). These are the main demand-adjudication provisions in GST.

Correct Answer: B. Multi-level cess based on retail price or per unit basis on various tobacco/pan masala products

The GST Compensation Cess on tobacco and pan masala products is complex — it includes ad valorem cess (percentage-based) and specific cess (per unit/per stick). Cigarettes, for example, attract both 28% GST and a specific cess ranging from ₹2076 to ₹4170 per thousand sticks depending on length. Pan masala attracts cess as a percentage of retail selling price. This multi-tier structure is designed to maximally tax these harmful products.

Correct Answer: B. India's GST-to-GDP ratio (~6.7%) is among the lower-middle range globally

India's GST-to-GDP ratio is approximately 6-7% (2023-24), which is in the lower-middle range globally. Advanced economies and countries with mature VAT/GST systems typically have ratios of 8-12%. India's lower ratio reflects the high share of agriculture and informal economy that are largely outside the GST net. However, the ratio has been improving steadily since GST implementation in 2017.