GST REVISION OF MCQS

1. Indirect Tax:
 Meaning: Indirect taxes are levied on goods and services, and the
burden of these taxes can be shifted from the taxpayer to the
consumer. Unlike direct taxes, they are not directly paid by the
person on whom they are levied.
 Features:
 Indirect taxes are regressive in nature.
 They are collected at each stage of production and
distribution.
 The burden can be shifted to the final consumer.
 Examples include excise duty, customs duty, and service tax.
 Difference between Direct and Indirect Taxes:
 Direct taxes are levied on individuals and corporations, and
the burden cannot be shifted. Examples include income tax
and corporate tax. Indirect taxes are levied on goods and
services, and the burden can be shifted.
2. Types of Indirect Taxes (Before GST):
 Excise Duty: Tax on goods produced within the country.
 Customs Duty: Tax on goods imported into or exported out of the
country.
 Service Tax: Tax on certain services provided.
3. Shortcomings of Indirect Tax System (Pre-GST Era):
 Cascading Effect: Tax on tax, as it was levied at each stage of
production.
  Complexity: Multiple taxes with different rates led to a complex tax
structure.
 Tax Evasion: Difficulty in tracking and controlling tax evasion.
4. GST (Goods and Services Tax):
 Meaning: GST is a comprehensive indirect tax levied on the supply
of goods and services. It replaced multiple indirect taxes to create a
unified tax structure.
 Advantages:
 Unified Tax Structure: Replaces multiple taxes with a single
tax.
 Reduced Cascading Effect: Eliminates tax on tax.
 Simplification: Streamlines tax administration.
 Disadvantages:
 Initial Implementation Challenges: Businesses faced
difficulties during the transition period.
 Technology Challenges: Adoption of new technologies for
compliance.
5. Evaluation of GST:
 Advantages:
 Simplification of Tax Structure: Streamlines tax
administration.
 Boost to GDP: Expected to contribute to economic growth.
 Reduced Tax Evasion: Improved tracking and compliance.
 Disadvantages:
 Initial Disruptions: Businesses faced challenges during the
transition.
 Complex Compliance: Some businesses found compliance
procedures complex.
6. Structure of GST:
 Central GST (CGST): Collected by the central government on intra-
state supplies.
 State GST (SGST): Collected by state governments on intra-state
supplies.
 Integrated GST (IGST): Collected by the central government on
inter-state supplies.
 Union Territory GST (UTGST): Collected by the union territories.
7. Important Definitions under GST Act:
 Input Tax: Taxes paid on inputs (goods and services used in
production).
 Output Tax: Taxes collected on the sale of goods or services.
 Reverse Charge Mechanism: Liability to pay tax is on the recipient
rather than the supplier.

MCQs:

What is the main characteristic of indirect taxes?

a. Progressive
b. Regressive
c. Proportional
d. Direct
Which tax is levied on goods produced within the country?
a. Customs Duty
b. Excise Duty
c. Service Tax
d. Income Tax

What was a significant shortcoming of the indirect tax system

before GST?
a. Simplification
b. Cascading Effect
c. Unified Tax Structure
d. Reduced Compliance

What is the primary advantage of GST?

a. Cascading Effect
b. Unified Tax Structure
c. Complexity
d. Tax Evasion

Which GST component is collected by the central government on

inter-state supplies?
a. SGST
b. CGST
c. IGST
d. UTGST
What is the term for taxes paid on inputs used in production?
a. Output Tax
b. Reverse Charge
c. Input Tax
d. Excise Duty

What is the purpose of the Reverse Charge Mechanism under GST?

a. Simplification of tax structure
b. Shifting the burden to the consumer
c. Liability to pay tax on the recipient
d. Exemption from tax

Which tax is an example of a direct tax?

a. Excise Duty
b. Customs Duty
c. Income Tax
d. Service Tax

What replaced multiple indirect taxes to create a unified tax

structure?
a. Service Tax
b. Customs Duty
c. GST
d. Excise Duty
What is the structure of GST that is collected by state governments
on intra-state supplies?
a. CGST
b. SGST
c. IGST
d. UTGST

What is the full form of GST?

a. General Sales Tax
b. Goods and Services Tax
c. Gross Service Tax
d. Government Sales Transaction
Answer: b. Goods and Services Tax

Which of the following is a feature of GST?

a. Progressive taxation
b. Regressive taxation
c. Tax on tax
d. Single-stage taxation
Answer: c. Tax on tax
Under GST, which type of supply involves transactions between two
states?
a. Intrastate supply
b. Interstate supply
c. Exempted supply
d. Composite supply
Answer: b. Interstate supply

What is the primary purpose of Input Tax Credit (ITC) under GST?
a. To increase the tax burden on consumers
b. To eliminate the cascading effect
c. To discourage businesses from compliance
d. To impose tax on exports
Answer: b. To eliminate the cascading effect

Which organization administers and oversees the implementation

of GST in India?
a. Reserve Bank of India (RBI)
b. Ministry of Finance
c. Goods and Services Tax Council
d. Central Board of Direct Taxes (CBDT)
Answer: c. Goods and Services Tax Council
What is the threshold limit for GST registration for service
providers?
a. ₹10 lakhs
b. ₹20 lakhs
c. ₹30 lakhs
d. ₹40 lakhs
Answer: b. ₹20 lakhs

Which type of GST is levied on the consumption of goods and

services within a specific state?
a. CGST
b. SGST
c. IGST
d. UTGST
Answer: b. SGST

What does IGST stand for in the context of GST?

a. Integrated Goods and Service Tax
b. Interstate Goods and Sales Tax
c. Indian General Sales Tax
d. Internal Goods and Service Tax
Answer: a. Integrated Goods and Service Tax
Which of the following is an exempted supply under GST?
a. Zero-rated supply
b. Composite supply
c. Reverse Charge supply
d. Exempted supply
Answer: d. Exempted supply

What is the maximum rate of GST as of the latest revision?

a. 12%
b. 18%
c. 28%
d. 30%
Answer: c. 28%

Which council recommends the rates of tax, exemptions, and

thresholds under GST?
a. Reserve Bank of India (RBI)
b. Finance Commission
c. Goods and Services Tax Council
d. Securities and Exchange Board of India (SEBI)
Answer: c. Goods and Services Tax Council
What is the purpose of the Composition Scheme under GST?
a. To encourage small businesses to register under GST
b. To simplify the tax compliance for small businesses
c. To impose higher taxes on large businesses
d. To discourage businesses from tax compliance
Answer: b. To simplify the tax compliance for small businesses

Which form is used for filing annual GST returns?

a. GSTR-1
b. GSTR-2
c. GSTR-3B
d. GSTR-9
Answer: d. GSTR-9

What is the primary objective of the Reverse Charge Mechanism

(RCM) under GST?
a. To simplify tax payments for businesses
b. To shift the tax burden to consumers
c. To promote tax evasion
d. To make businesses liable to pay tax instead of the supplier
Answer: d. To make businesses liable to pay tax instead of the
supplier
Which sector was initially kept outside the purview of GST during its
implementation?
a. Manufacturing
b. Agriculture
c. Services
d. Export
Answer: b. Agriculture

What is the time limit for filing a refund claim under GST?
a. 3 months
b. 6 months
c. 9 months
d. 12 months
Answer: b. 6 months

What is the concept of "Time of Supply" under GST?

a. Time taken to process a tax refund
b. Time when goods are supplied
c. Time taken to complete a business transaction
d. Time when a service is rendered
Answer: b. Time when goods are supplied
Under GST, what is the term for the unique number assigned to
each taxpayer?
a. PAN (Permanent Account Number)
b. TIN (Taxpayer Identification Number)
c. GSTIN (Goods and Services Tax Identification Number)
d. UID (Unique Identification Number)
Answer: c. GSTIN (Goods and Services Tax Identification Number)

Which tax was subsumed under GST that was previously levied on
the transportation of goods by road?
- a. Road Tax
- b. Service Tax
- c. Central Sales Tax
- d. Entry Tax
 Unit 2

Time of Supply (TOS):

Meaning of Goods and Services:

Question: What does the term "Time of Supply" refer to in the

context of Goods and Services Tax (GST)?
A) Time when the goods or services are delivered
B) Time when payment is received
C) Time when the invoice is issued
D) Time when goods are manufactured

TOS under Reverse Charge Mechanism:

Question: In the case of reverse charge mechanism, when is the

time of supply deemed to occur?
A) Date of payment
B) Date of receipt of goods
C) Date of issue of invoice
D) Date of entry in the books of accounts
Invoicing Provisions:

Question: What is the maximum time limit for issuing an invoice for
the supply of goods under GST?
A) 7 days
B) 14 days
C) 30 days
D) 45 days

Provisions related to Changes in GST Rate:

Question: When does the new GST rate become applicable after a
change in the tax rate is notified?
A) Immediately
B) After 7 days
C) After 14 days
D) After 30 days

Place of Supply (POS):

POS Meaning:
Question: What does "Place of Supply" refer to in the context of
GST?
A) Location where goods are manufactured
B) Location where services are provided
C) Location where goods or services are deemed to be supplied
D) Location of the supplier's office
POS of Goods and Services:

Question: In the case of services, the place of supply is determined

based on the location of which of the following?
A) Supplier
B) Recipient
C) Both A and B
D) None of the above

Intra-state and Interstate Supply:

Question: What differentiates intra-state supply from interstate

supply under GST?
A) Distance between the supplier and recipient
B) Nature of goods or services
C) Whether the supply crosses state borders
D) Tax rate applicable

Value of Supply:
Question: What does the term "Value of Supply" represent in the
context of GST?
A) Cost of goods or services
B) Selling price of goods or services
C) Consideration for the supply
D) Profit earned by the supplier
Provisions Related with Determination of Value of Supply of Goods
and Services:

Question: Which factor is not considered in the valuation of goods

or services for GST?
A) Discounts
B) Transportation charges
C) Market demand
D) Taxes and duties

Determination of GST Liability:

Question: How is the GST liability determined for a taxable supply

under GST?
A) Selling price minus cost
B) Value of supply multiplied by applicable GST rate
C) Negotiation between the supplier and recipient
D) Fixed amount set by the government
 Time of Supply (TOS):

11. TOS under Forward Charge:

 Question: In the forward charge mechanism, when is the time of
supply considered to occur for goods and services?
 A) Date of payment
 B) Date of issuance of invoice
 C) Date of delivery
 D) Date of order placement
 Answer: B) Date of issuance of invoice
12. Input Tax Credit (ITC) Time Limit:
 Question: What is the time limit for availing Input Tax Credit (ITC) for
an invoice issued in a financial year?
 A) End of the financial year
 B) Within one year from the date of invoice
 C) Within six months from the date of invoice
 D) Anytime during the next financial year
 Answer: B) Within one year from the date of invoice
13. Continuous Supply of Goods:
 Question: In the case of a continuous supply of goods, when is the
time of supply considered to occur?
 A) Date of receipt of goods
 B) Date of issuance of invoice
 C) Date of completion of each supply
 D) Date of payment
 Answer: C) Date of completion of each supply
14. TOS for Composite and Mixed Supplies:
 Question: For a composite supply involving goods and services, when
is the time of supply determined?
 A) Date of delivery of goods
 B) Date of provision of the principal supply
 C) Date of payment
 D) Date of issuance of invoice
 Answer: B) Date of provision of the principal supply
 Place of Supply (POS):

15. Goods Supplied on Approval Basis:

 Question: In the case of goods supplied on an approval basis, where
is the place of supply considered to be?
 A) Supplier's location
 B) Recipient's location
 C) Location where goods are delivered
 D) Location where approval is given
 Answer: B) Recipient's location
16. POS for Immovable Property Services:
 Question: For services related to immovable property, what
determines the place of supply?
 A) Location of the property
 B) Location of the service provider
 C) Location of the recipient
 D) Location of the property and service provider
 Answer: A) Location of the property
17. Interstate Supply of Services:
 Question: When does a supply of services qualify as an interstate
supply under GST?
 A) When the service provider and recipient are in different
states
 B) When the service provider and recipient are in the same
state
 C) When the service involves cross-border transactions
 D) When the service is provided online
 Answer: A) When the service provider and recipient are in different
states
18. Change in POS for Continuous Supply:
 Question: How is the place of supply determined when there is a
change in the location of the recipient for a continuous supply of
services?
 A) Based on the old location
 B) Based on the new location
 C) Average of old and new locations
 D) Determined by the tax authorities
 Answer: A) Based on the old location
 Value of Supply:

19. Value of Supply for Related Parties:

 Question: In the case of supply between related parties, what is the
basis for determining the value of supply for GST purposes?
 A) Cost price
 B) Open market value
 C) Agreed value between the parties
 D) Maximum retail price (MRP)
 Answer: B) Open market value
20. Discounts and Value of Supply:
 Question: How are post-supply discounts treated for the
determination of the value of supply under GST?
 A) Deducted from the value of supply
 B) Added to the value of supply
 C) Ignored for GST calculation
 D) Considered separately for GST calculation
 Answer: A) Deducted from the value of supply
 Meaning of Supply:

1. Definition of Supply:
 Question: In the context of GST, what is the broad definition of "supply"?
 A) Only the sale of goods
 B) Goods and services, including barter transactions and importation
of services
 C) Services provided within a single state
 D) Only transactions involving money
 Answer: B) Goods and services, including barter transactions and
importation of services
2. Exclusion from Supply:
 Question: Which of the following is generally not considered a supply
under GST?
 A) Sale of goods
 B) Gifts without consideration
 C) Importation of services
 D) Rental of immovable property
 Answer: B) Gifts without consideration

Provisions Related with Determination of Value of Supply:

3. Valuation of Exempt Supplies:

 Question: How is the value of supply determined for goods or services that
are exempt from GST?
 A) Zero value
 B) At cost
 C) Open market value
 D) Agreed value between the parties
 Answer: A) Zero value
4. Inclusion of Packing Charges:
 Question: Are packing charges included in the value of supply under GST?
 A) Yes, always
 B) No, never
 C) It depends on the type of packing
 D) Only for interstate supplies
 Answer: A) Yes, always
 Determination of GST Liability:

5. Composition Scheme and GST Liability:

 Question: Under the composition scheme, how is the GST liability
calculated?
 A) Fixed amount irrespective of turnover
 B) Percentage of turnover
 C) Based on the type of goods or services
 D) Determined by the recipient
 Answer: B) Percentage of turnover
6. Time of Determination of GST Liability:
 Question: When is the liability to pay GST generally determined for the
supply of goods?
 A) At the time of delivery
 B) At the time of issuance of invoice
 C) At the time of receipt of payment
 D) At the time of order placement
 Answer: B) At the time of issuance of invoice

Overall Supply Concepts:

7. Composite Supply and Principal Supply:

 Question: In a composite supply, what is the principal supply?
 A) The more expensive supply
 B) The main supply that gives the essential character to the
composite supply
 C) The supply with the highest GST rate
 D) Determined by the tax authorities
 Answer: B) The main supply that gives the essential character to the
composite supply
8. Taxable Person under GST:
 Question: Who is considered a taxable person under GST?
 A) Any individual selling goods
 B) Only registered businesses
 C) Only service providers
 D) Only manufacturers
 Answer: B) Only registered businesses