GST & Tax Structure — Set 5

Correct Answer: B. A declaration by exporter to export without paying IGST, availing ITC refund

Letter of Undertaking (LUT) under GST (Form RFD-11) is filed by exporters to declare that they will export without paying IGST and will fulfil export obligations. This allows exporters to make exports without paying tax upfront and claim ITC refund on inputs used. LUT must be filed at the beginning of each financial year and is valid for one year.

Correct Answer: C. Supreme Court of India

The correct answer is Supreme Court of India. The Supreme Court of India has upheld the constitutional validity of the GST framework. In a landmark ruling, the Supreme Court also clarified that the GST Council's recommendations are persuasive but not binding on the Union or State Governments — they retain the legislative freedom to deviate from Council recommendations within constitutional limits. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.

Correct Answer: D. Nil (0%)

The correct answer is Nil (0%). Healthcare services (hospital services, medical treatment) and educational services (school and college education up to higher secondary level, government-recognized educational institutions) are exempt (Nil rated) under GST. This exemption ensures that basic services related to health and education remain affordable and accessible for all citizens. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.

Correct Answer: B. Mandate to pass on GST rate reduction benefits to consumers

The correct answer is Mandate to pass on GST rate reduction benefits to consumers. The anti-profiteering provision under Section 171 of the CGST Act requires businesses to pass on the benefit of any reduction in GST rates or increase in ITC to consumers by way of commensurate reduction in prices. A National Anti-Profiteering Authority (NAPA) was established to investigate and penalize companies that unjustifiably retained rate-cut benefits. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.

Correct Answer: A. New Delhi

The GST Council Secretariat is located in New Delhi. The Secretariat is headed by a Senior IAS officer designated as the Secretary. The Council was first constituted on September 12, 2016, after the 101st Constitutional Amendment. By 2024, the GST Council has held more than 50 meetings to resolve various GST-related issues.

Correct Answer: C. All forms of supply of goods/services including sale, exchange, barter, license for consideration

The correct answer is All forms of supply of goods/services including sale, exchange, barter, license for consideration. Under GST, 'supply' is a broad term that includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease, and disposal made or agreed to be made for a consideration by a person in the course of furtherance of business. Schedule I of the CGST Act lists supplies made without consideration that are still treated as supply. This topic is frequently tested in competitive examinations such as RRB NTPC, SSC, and UPSC.

Correct Answer: A. They determine whether IGST or CGST+SGST is applicable

The 'place of supply' rules in GST determine whether a transaction is intra-state or inter-state, which in turn determines whether CGST+SGST or IGST applies. If the place of supply and the supplier's location are in the same state, CGST+SGST applies. If they are in different states, IGST applies. These rules are crucial for determining which government receives the tax revenue.

Correct Answer: B. The point in time when GST liability arises

The 'time of supply' under GST determines when the tax liability arises and thus when the tax must be paid to the government. For goods, it is generally the earlier of: the date of invoice or the date of removal of goods. For services, it is the earlier of the date of invoice, date of receipt of payment, or the date of completion of service.

Correct Answer: D. 18%

Health insurance premiums attract 18% GST, which has been a subject of debate. The insurance industry and consumer groups have argued for a reduction to make health insurance more affordable. The GST Council had considered rationalizing the rate in 2024-25. Life insurance term plans attract 18% GST; endowment/ULIP plans have complex slab structures.

Correct Answer: B. Document issued by supplier when original supply is returned or price reduced

A credit note under GST is issued by the supplier to the recipient when: the goods are returned by the recipient, the quantity or value of supply is reduced, or there is a mistake in the original invoice. It effectively reduces the supplier's tax liability. Credit notes must be reported in GSTR-1 and must be linked to the original invoice.