GST & Tax Structure — Set 9

Correct Answer: B. IGST levied on imports in addition to Basic Customs Duty (BCD)

When goods are imported into India, in addition to Basic Customs Duty (BCD), IGST is levied on the total value (CIF + BCD + other charges). This IGST on imports replaced the erstwhile CVD (Countervailing Duty) and SAD (Special Additional Duty) under the old regime. Importers can claim ITC on the IGST paid on imports, subject to normal ITC conditions.

Correct Answer: C. Liable to pay GST as if they are the service provider themselves

Under Section 9(5) of the CGST Act, certain 'aggregator' services like cab aggregators (Ola, Uber) are treated as the supplier of the passenger transport service (even though the actual service is provided by the cab driver). Therefore, Ola/Uber are liable to pay GST on the entire fare, and the cab drivers on their platform are not separately required to pay GST on services provided through the aggregator.

Correct Answer: B. VAT was a state-level tax on goods without full inter-state ITC; GST is comprehensive tax with nationwide ITC

VAT (Value Added Tax) was a state-level indirect tax on goods with full ITC within a state but no ITC credit for inter-state transactions. Service Tax was separately levied by the Centre. This fragmented system led to cascading, multiple compliance requirements, and inter-state tax barriers. GST replaced both with a comprehensive, destination-based tax covering both goods and services with nationwide ITC.

Correct Answer: B. 12% or 5% GST on processing or treatment of goods belonging to a principal

Job work under GST means processing or working on goods belonging to another registered person (the principal). GST on job work services is generally 12% (for most manufacturing activities) or 5% (for agricultural equipment and certain food processing). The principal can send goods for job work without payment of tax, and the job worker charges GST only on the service component.

Correct Answer: D. No GST (outside GST scope after completion certificate)

Sale of completed residential or commercial properties (where the completion certificate has been obtained and the property is ready for occupation) is outside the scope of GST — no GST is levied. However, stamp duty and registration charges apply. GST (5% without ITC, or 1% for affordable housing) applies only to under-construction properties.

Correct Answer: B. 5%

Domestic LPG (Liquified Petroleum Gas) cylinders used for household cooking attract 5% GST. This subsidized rate reflects the government's policy of keeping essential cooking fuel affordable. However, commercial LPG cylinders (used for restaurants, hotels) attract 18% GST. LPG for household is also linked to the Pradhan Mantri Ujjwala Yojana subsidy scheme.

Correct Answer: A. GST is collected at the destination state (consuming state), not origin state

GST is a destination-based consumption tax, meaning the tax revenue goes to the state where the goods or services are finally consumed, not where they are produced. This is a major shift from the origin-based system (where tax was collected by the producing state under CST). The destination-based principle ensures that consuming states benefit from tax revenue.

Correct Answer: D. Petrol and diesel are currently outside GST

Petrol, diesel, crude oil, aviation turbine fuel (ATF), and natural gas are currently outside the GST regime and are taxed through Central Excise Duty (by Centre) and VAT/Sales Tax (by States). Including them in GST has been pending since 2017. Their exclusion allows states to independently tax fuel, which is a major revenue source. GST Council can notify their inclusion date.

Correct Answer: B. Supply on which no GST is charged AND no ITC on inputs used is available

Under GST, 'exempt supply' refers to supply of goods or services on which no GST is charged (either because the rate is nil, or the supply is specifically exempted). For exempt supplies, the supplier cannot claim ITC on inputs used for making such exempt supplies. Businesses making both taxable and exempt supplies must reverse proportionate ITC for inputs used in exempt supplies.

Correct Answer: B. ISD is a separate registration obtained by head office to distribute input service ITC to branches

ISD (Input Service Distributor) registration is a separate, additional GST registration obtained by a business unit (head office) that receives input service invoices on behalf of its branches. The ISD can distribute the ITC of these services to the respective branches in proportion to their turnover. ISD cannot distribute ITC related to goods, only services.