1. Input Tax Credit (ITC) under GST CANNOT be claimed for:
Services used for setting up an office.
Goods used for furtherance of business.
Goods lost, stolen, destroyed, or written off.
Capital goods used in the factory.
Explanation:
Section 17(5) of the CGST Act blocks ITC for goods that are lost, stolen, destroyed, written off, or disposed of by way of gift or free samples.
2. India follows the "Dual GST" model. This means:
GST is levied twice on every product.
GST is applicable only to two sectors.
There are only two tax rates.
GST is levied by both Central and State Governments simultaneously on the same transaction.
Explanation:
For intra-state supply, both CGST (Centre) and SGST (State) are levied concurrently. This concurrent taxation power defines the Dual GST model.
3. A dealer opting for the GST "Composition Scheme" CANNOT:
Sell goods within the state.
Pay tax at a lower fixed rate.
Issue a Tax Invoice and collect GST from customers.
File quarterly returns.
Explanation:
Composition dealers cannot collect tax from customers or claim Input Tax Credit. They must pay a small percentage of turnover from their own pocket and issue a "Bill of Supply" instead of a Tax Invoice.
4. IGST (Integrated GST) is levied on:
Sale of alcohol.
Inter-state supply of goods and imports.
Export of goods only.
Intra-state supply of goods.
Explanation:
IGST is collected by the Centre on inter-state transactions and imports. It effectively replaces the sum of CGST and SGST.
5. Under the "Reverse Charge Mechanism" (RCM) in GST, the liability to pay tax lies with:
The Government.
The Transporter.
The Supplier of goods/services.
The Recipient of goods/services.
Explanation:
Normally, the supplier pays tax. Under RCM, the liability shifts to the recipient (e.g., a registered dealer buying from an unregistered dealer, or specific services like GTA).
6. The aggregate turnover threshold limit for mandatory GST registration for goods suppliers in most states (excluding special category) is:
?10 Lakh
?40 Lakh
?1.5 Crore
?20 Lakh
Explanation:
For exclusive suppliers of goods, the threshold is ?40 Lakh. For service providers (and some goods suppliers), it remains ?20 Lakh.
7. Which of the following is treated as a "Supply" under GST even if made without consideration?
Sale of old car.
Gifts up to ?5000.
Services by an employee to the employer.
Permanent transfer of business assets on which ITC was availed.
Explanation:
Schedule I of the CGST Act specifies activities to be treated as Supply even without consideration. This includes disposal of business assets where Input Tax Credit has been taken.
8. What is the full form of HSN Code used in GST?
Hybrid System of Numbering
High Security Number
Home State Number
Harmonized System of Nomenclature
Explanation:
HSN is an internationally accepted product coding system used to maintain uniformity in classification of goods.
9. An "E-Way Bill" is required for the movement of goods worth more than:
?25,000
?50,000
?1 Lakh
?10,000
Explanation:
Under GST, movement of goods of value exceeding ?50,000 generally requires an E-Way Bill generated from the GST portal.
10. An "Input Service Distributor" (ISD) under GST is an office that:
Receives tax invoices for input services and distributes the credit to other branches.
Distributes goods to branches.
Collects tax from customers.
Provides logistics services.
Explanation:
ISD (like Head Office) receives invoices for services used by branches and distributes the Input Tax Credit (ITC) to them proportionately.
11. UTGST (Union Territory GST) is applicable in:
All Union Territories.
Union Territories without State Legislature (e.g., Ladakh, Chandigarh).
All States.
Union Territories with Legislature (e.g., Delhi, Puducherry).
Explanation:
UTs with legislature (Delhi, J&K, Puducherry) have their own SGST Act. UTs without legislature (Andaman, Lakshadweep, etc.) are governed by the UTGST Act.
12. The "Time of Supply" fixes the point when:
Goods reach the customer.
Tax liability arises.
Payment is received.
Goods are manufactured.
Explanation:
Time of Supply determines the due date for payment of tax. For goods, it is usually the earlier of invoice date or last date to issue invoice.
13. To claim Input Tax Credit (ITC), which of the following conditions is mandatory?
Tax charged has been paid to the government by the supplier.
Possession of Tax Invoice.
All of the above.
Receipt of goods/services.
Explanation:
Section 16 of CGST Act lays down 4 conditions: 1. Possession of Invoice 2. Receipt of Goods 3. Tax paid to Govt 4. Return furnished.
14. Which of the following is NOT a standard tax slab under GST in India?
Explanation:
The standard GST slabs are 5%, 12%, 18%, and 28%. There is no 25% slab.
15. In the case of a "Composite Supply" (e.g., Mobile phone with charger), the GST rate applicable is:
The rate applicable to the "Principal Supply".
The average rate of all items.
The highest rate among the items.
The rate applicable to the ancillary supply.
Explanation:
Composite supply consists of two or more naturally bundled supplies where one is the Principal Supply. Section 8 of the CGST Act states that the tax liability shall be the rate applicable to the Principal Supply (e.g., Mobile Phone rate applies to the whole package).
16. In the case of a "Mixed Supply" (e.g., a gift hamper of chocolates, juice, and toys sold for a single price), the tax liability is determined by:
The principal supply.
The item with the lowest tax rate.
The average tax rate.
The item with the highest tax rate.
Explanation:
Mixed supply refers to two or more individual supplies sold for a single price which are NOT naturally bundled. GST law mandates that such a supply be taxed at the rate of the item attracting the highest tax rate to prevent tax evasion.
17. If a registered person fails to pay the supplier within 180 days from the date of invoice, what happens to the Input Tax Credit (ITC) availed?
It is converted to a loan.
It remains valid.
The supplier pays it back.
It must be reversed (added to output liability) along with interest.
Explanation:
To prevent recipients from enjoying tax credit without paying suppliers, GST law mandates reversal of ITC if payment is not made within 180 days. The credit can be re-availed once payment is made.
18. For banking services provided to an account holder, the "Place of Supply" under GST is:
The location of the Bank.
The location of the recipient on record.
The location of the RBI.
Anywhere in India.
Explanation:
As per IGST Act, for services to a registered person or account holder, the place of supply is the location of the recipient. If the recipient is not an account holder and location is unknown, it is the bank's location.
19. If goods purchased for business are used for personal consumption by the proprietor, the Input Tax Credit (ITC) availed on them:
Is ignored.
Can be retained.
Must be reversed (paid back).
Is doubled.
Explanation:
ITC is available only for goods/services used for business furtherance. Personal consumption is a non-business use, so the proportionate credit must be reversed.
20. Supply of goods where the location of the supplier and the place of supply are in two different states is called:
Intra-State Supply
Local Supply
Inter-State Supply
Exempt Supply
Explanation:
Cross-border transactions between states are Inter-State supplies and attract IGST.
21. The "Taxable Event" under GST is:
Sale of goods.
Removal of goods.
Manufacture of goods.
Supply of goods or services.
Explanation:
GST replaced multiple taxable events (like manufacture, sale, provision of service) with a single event: "Supply".
22. Under GST, if a principal sends goods to a job worker, the goods must be returned within _____ to avoid being treated as a "Supply".
2 years for all goods
6 months
5 years
1 year (for inputs) and 3 years (for capital goods)
Explanation:
If inputs/capital goods are not returned within 1 year/3 years respectively, it is deemed that the principal has supplied them to the job worker on the day they were sent out, and tax becomes payable with interest.
23. The "Anti-Profiteering" measure in GST ensures that:
Suppliers do not sell below cost.
Government collects maximum tax.
The benefits of Input Tax Credit or tax rate reduction are passed on to the recipient by way of commensurate reduction in prices.
Exports are taxed higher.
Explanation:
Section 171 mandates that any reduction in tax rate or benefit of ITC must be passed on to the consumer. The Competition Commission of India (CCI) now oversees this.
24. For taxpayers with aggregate turnover of more than ?5 Crore, mentioning how many digits of HSN Code on B2B tax invoices is mandatory?
8 Digits
2 Digits
6 Digits
4 Digits
Explanation:
Taxpayers with turnover > ?5 Cr must declare 6 digits of HSN code. For turnover up to ?5 Cr, 4 digits are required for B2B.
25. A "Casual Taxable Person" (e.g., a trader setting up a stall in an exhibition in another state) must obtain GST registration:
Within 30 days of starting business.
After turnover crosses ?20 Lakhs.
At least 5 days prior to the commencement of business.
Registration is not required.
Explanation:
Casual Taxable Persons do not have the benefit of the turnover threshold. They must compulsorily register 5 days before starting business and pay advance tax.
26. Which of the following services is EXEMPT from GST?
Services by an arbitrator.
Services by the Department of Posts (Speed Post).
Services by way of renting of residential dwelling for use as residence.
Services of a Real Estate Agent.
Explanation:
Renting a residential house for residential purposes is exempt. However, renting it for commercial purposes is taxable.
27. For supply of services, the Tax Invoice must be issued within:
30 days from the date of supply.
At the time of supply.
15 days from the date of supply.
45 days from the date of supply.
Explanation:
The general rule is 30 days. For banking and financial institutions (NBFCs), the time limit is extended to 45 days.