GST & Tax Structure — Set 6

Correct Answer: B. 5% (without ITC)

Under-construction properties attract 5% GST (1% for affordable housing) without the benefit of ITC. Before 2019, the rate was 12% (8% for affordable housing) with ITC. The GST Council reduced the rate in 2019 to boost the real estate sector. Completed properties (after issuance of completion certificate) are outside GST scope.

Correct Answer: B. State Goods and Services Tax Department / Commercial Tax Department

At the state level, GST is administered by the State GST (SGST) Department, also known as the Commercial Tax Department or State Tax Authority. The jurisdiction of central and state tax authorities is divided — taxpayers with annual turnover below ₹1.5 crore are administered by states, while those above are jointly administered by both Centre and State tax authorities.

Correct Answer: B. IT backbone for GST — registration, return filing, payment, and data management

GSTN (Goods and Services Tax Network) is the IT infrastructure backbone of the GST system in India. It manages taxpayer registration, return filing (GSTR-1, GSTR-3B), tax payment processing, invoice matching, and data sharing between Centre and States. GSTN is a non-profit entity that handles billions of transactions and millions of taxpayer records.

Correct Answer: C. 5 standard slabs

India's GST structure has 5 standard tax slabs: 0% (Nil), 5%, 12%, 18%, and 28%. Additionally, there is a special 3% rate for gold and precious metals, and a 0.25% rate for rough diamonds. The 28% slab also has Compensation Cess on top. There is ongoing discussion about rationalizing slabs to simplify the structure.

Correct Answer: B. E-commerce operators must collect TCS (Tax Collected at Source) at 1%

Under GST, e-commerce operators (like Amazon, Flipkart, Zomato, Swiggy) are required to collect Tax Collected at Source (TCS) at 1% (0.5% CGST + 0.5% SGST or 1% IGST) on the net taxable value of sales made through their platform by sellers/suppliers. This TCS is deposited with the government and reflected in the seller's credit ledger.

Correct Answer: B. Tax on inter-state sale of goods, pre-GST

CST (Central Sales Tax) was a tax levied on the inter-state sale of goods under the Central Sales Tax Act, 1956, before the implementation of GST. CST was a destination-based tax collected by the state of origin and was a major cause of cascading effects and tax barriers between states. GST replaced CST with IGST which has a seamless ITC mechanism.

Correct Answer: B. Elimination of inter-state tax barriers creating one common market across India

One of the major benefits of GST implementation is the creation of a unified national market by eliminating inter-state tax barriers such as entry tax, CST, and octroi. These barriers created inefficiencies in inter-state trade, increased logistics costs, and discouraged scale economies. GST's unified framework, with a seamless ITC mechanism, has made India a single common market.

Correct Answer: B. Registered buyer pays GST on purchases from unregistered suppliers

Under the Reverse Charge Mechanism (RCM) for unregistered suppliers, when a registered business purchases goods or services from an unregistered supplier, the registered buyer is liable to pay GST under RCM. The buyer can subsequently claim ITC on this RCM payment. This ensures that tax is paid even when the supplier is not registered under GST.

Correct Answer: B. An entity that distributes ITC of services received from head office to its branches

An Input Service Distributor (ISD) is a head office or any other establishment of a taxpayer that receives invoices for input services (like rent, legal, IT services) used by its various branches. The ISD distributes the ITC related to these services to its branches (which have separate GSTINs) in proportion to the turnover of each branch.

Correct Answer: B. Quasi-judicial body to hear GST disputes appealed from AAR and first appellate authority

GSTAT (GST Appellate Tribunal) is the second appellate authority under GST — taxpayers can appeal against orders of the first appellate authority (Commissioner Appeals) to GSTAT. Before GSTAT was constituted (finalized in 2023-24), taxpayers had to directly approach High Courts for disputes above the first appellate level. GSTAT reduces litigation burden on High Courts.