GST & Tax Structure — Set 7

Correct Answer: B. 5% for goods transport; complex rates for passenger transport

Under GST, goods transport by road (through GTA — Goods Transport Agency) attracts 5% (with no ITC) or 12% (with ITC). Railway transport for goods attracts 5%. Passenger transport by road (non-AC bus, auto rickshaw) is exempt; AC buses attract 5%. Air travel (economy class) attracts 5%, business class 12%.

Correct Answer: B. December 31 of the following year

GSTR-9 (Annual Return) must be filed by December 31 of the year following the financial year for which it is filed. For example, GSTR-9 for FY 2022-23 must be filed by December 31, 2023. GSTR-9C (reconciliation statement/audit) is also due on the same date for taxpayers with turnover above ₹5 crore.

Correct Answer: B. Supply taxed at 0% but with full ITC benefit (exports + SEZ supplies)

Zero-rated supply is a supply that is taxed at 0% but where the supplier can claim full ITC on inputs used. Under GST, zero-rated supplies include exports and supplies to Special Economic Zones (SEZs). This is different from 'exempt supply' (where no tax is levied and ITC is not available) and 'nil-rated supply' (where GST rate is 0%).

Correct Answer: C. Fresh vegetables and fruits (unprocessed)

Fresh vegetables and unprocessed food items are 'exempt supplies' under GST — they attract 0% GST, but unlike zero-rated supplies, the supplier cannot claim ITC on inputs. In contrast, exports are 'zero-rated supplies' where ITC can be claimed. This distinction is important: ITC must be reversed on inputs used for making exempt supplies.

Correct Answer: D. 18%

Hotels rooms with tariff above ₹7,500 per night attract 18% GST. Hotel rooms with tariff between ₹1,001 and ₹7,500 attract 12% GST. Rooms below ₹1,000 per night (economy rooms) attract 0% GST. GST Council regularly reviews these thresholds as part of rate rationalization.

Correct Answer: A. Two or more supplies made as part of a natural bundle where one is the principal supply

A 'composite supply' under GST is a supply comprising two or more supplies, one of which is a principal supply, and the tax rate of the principal supply applies to the whole composite bundle. For example, in a hotel stay with breakfast included, accommodation is the principal supply and the entire package is taxed at the hotel accommodation GST rate.

Correct Answer: D. 18%

Banking and financial services attract 18% GST. This includes processing fees, loan origination charges, credit card fees, ATM transaction charges, fund management fees, and other fee-based banking services. However, the margin on forex transactions is taxed using a special valuation mechanism. Core banking deposit/lending interest is not subject to GST.

Correct Answer: B. Two or more supplies made for a single price where no supply is principal

A 'mixed supply' under GST comprises two or more individual supplies of goods or services, or a combination thereof, made together for a single price, where no one supply is the principal supply. The GST rate applicable to the mixed supply is the highest rate among all components. For example, a gift hamper with assorted goods would be taxed at the highest GST rate among its components.

Correct Answer: B. ITC not available for certain specified goods/services even if used for business

Section 17(5) of the CGST Act lists 'blocked credit' — ITC that is NOT available even if the goods/services are used for business purposes. Blocked credit includes: motor vehicles for personal use, food and beverages, beauty treatments, membership fees, health club services, and goods used for personal consumption. These are 'blocked' to prevent misuse of ITC.

Correct Answer: B. Tax Deducted at Source by government bodies (ministries, PSUs) at 2% on payments to suppliers

TDS (Tax Deducted at Source) under GST (Section 51 of CGST Act) requires certain notified persons — government departments, PSUs, local authorities, and certain societies — to deduct TDS at 2% (1% CGST + 1% SGST) from payment to suppliers where the contract value exceeds ₹2.5 lakh. The deducted TDS is deposited with the government and credited to the supplier's electronic credit ledger.