GST & Tax Structure — Set 8

Correct Answer: A. Special NRTP provisions requiring advance tax deposit

A Non-Resident Taxable Person (NRTP) — a person who occasionally supplies goods/services but does not have a fixed place of business in India — must register under GST before making taxable supplies. An NRTP is required to make advance deposit of estimated tax liability at the time of registration. NRTPs are not eligible for ITC.

Correct Answer: B. 5%

Essential medicines and drugs approved by the National List of Essential Medicines (NLEM) generally attract 5% GST. Life-saving drugs and cancer drugs may attract lower or nil rates. Medical devices like syringes and bandages attract 12% GST. The GST Council has periodically reviewed and reduced rates on medicines and medical devices to improve healthcare affordability.

Correct Answer: B. Input Service Distributor (ISD) mechanism

The Input Service Distributor (ISD) mechanism allows a company's head office or registrant to distribute ITC of input services received (like centrally procured IT, legal, or consulting services) to its various branch offices which have separate GSTINs. The distribution is based on the turnover of each branch and the branches can then use this ITC against their respective output tax liabilities.

Correct Answer: B. Examination of records and returns by a GST officer to verify correctness of declared liability

GST Audit under Section 65 of the CGST Act is conducted by a GST Commissioner or an authorized officer to examine the records, returns, and other documents maintained by a registered person to verify the correctness of turnover declared, taxes paid, ITC availed, and compliance with GST provisions. Section 66 provides for 'Special Audit' by a CA/CMA nominated by the Commissioner.

Correct Answer: B. Auto-generated static ITC statement for recipients

GSTR-2B is an auto-generated static Input Tax Credit (ITC) statement for every registered taxpayer, generated on the 14th of each month (for monthly filers). It shows the ITC available to a taxpayer based on invoices uploaded by their suppliers in GSTR-1. Unlike GSTR-2A (which is dynamic), GSTR-2B is static and once generated, does not change. It helps taxpayers reconcile their ITC claims.

Correct Answer: B. Supply under a contract where goods are supplied continuously or on recurrent basis over a period

Under GST, 'continuous supply of goods' refers to a supply of goods provided or agreed to be provided continuously or on a recurrent basis, under a contract, for a period exceeding 3 months, or where the supplier issues a tax invoice periodically. Common examples include regular supply of water, gas through pipelines, or periodic supply of printed materials. Time of supply rules are applied differently for continuous supplies.

Correct Answer: D. Council recommendations help resolve; Constitutional provisions allow review

The GST Council resolves most centre-state and inter-state GST disputes through consensus in its meetings. Article 279A(11) provides for the establishment of a mechanism to adjudicate disputes arising out of Council recommendations. The Supreme Court (2022) clarified that recommendations are not binding, giving legislative autonomy to Centre and States within GST constitutional framework.

Correct Answer: B. Only compensation cess exists; general cess not a regular GST feature

Under GST, the primary cess is the Compensation Cess levied on sin goods (tobacco, aerated drinks, luxury cars) at various rates in addition to the 28% GST. There is no additional general cess on all GST transactions. The concept of 'swachh bharat cess' and 'Krishi Kalyan cess' from the pre-GST era were abolished. GST's design aims for clean, single-rate taxation without multiple cesses.

Correct Answer: B. 5%

Solar photovoltaic cells, modules, and systems (solar panels) attract 12% GST (revised from 5% in early GST regime). Some components like wind turbines attract 12%. The GST Council has faced pressure to reduce rates on renewable energy devices to promote India's clean energy transition. Storage batteries for solar systems also attract GST.

Correct Answer: A. 5% without ITC (most restaurants)

Restaurant services generally attract 5% GST without ITC. However, restaurants in hotels with room tariff above ₹7,500 attract 18% GST (with ITC). The 5% rate was fixed to make dining out affordable and is applied to standalone restaurants, food courts, and small eateries. Online food delivery platforms (Zomato, Swiggy) also remit GST collected on restaurant orders.