Economics · General Awareness

Indian Taxation System

2,325 Questions

The Indian taxation system comprises direct and indirect levies including income tax, goods and services tax, and property tax. Understanding these tax structures is crucial for general awareness sections in banking and government exams. The practice set covers central and state tax collections, exemptions, and capital gains rules.

Goods and Services TaxIncome tax rulesProperty tax assessmentsTax exemptionsCentral versus state taxes

Indian Taxation System Questions

Multiple choice civics introduction to gst fundamentals of gst tax journal

__________ is levied when the parties to the transactions are located in different states.

  1. CGST

  2. SGST

  3. IGST

  4. Both (A) & (B)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inter-State supply of goods or services is when the location of the supplier and the place of supply are in different states. 

Also, in cases of export or import of goods or services or when the supply of goods or services is made to or by a SEZ unit, the transaction is assumed to be Inter-State. 
In an Inter-State transaction, a seller has to collect IGST from the buyer.
Hence, C is the correct option.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST is basically designed to:
1. Enhance manufacturing system
2. Reduce the tax base
3. Expand the distribution system
4. Increase the revenue from taxes
Of the above ___________.

  1. 1 & 2 are correct

  2. only 4 is correct

  3. 1, 3 & 4 are correct

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

GST is designed to enhance the manufacturing system (by removing cascading taxes), expand the distribution system (by creating a unified market), and increase tax revenue (by broadening the tax base).

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST widens the _______ base which accordingly increases the _______ for government.

  1. revenue, cost

  2. sale, tax

  3. cost, tax

  4. tax, revenue
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

By bringing more businesses into the formal economy and simplifying compliance, GST widens the tax base, which in turn leads to higher tax revenue for the government.

Multiple choice civics introduction to gst fundamentals of gst tax journal

For the purpose of accounting, GST is broadly categorised as _________ and __________.

  1. GST paid, GST collected

  2. CGST collected, CGST paid

  3. GST charged, GST paid

  4. GST paid, GST set off
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In accounting, GST paid on purchases is recorded as an asset (Input GST), while GST collected on sales is recorded as a liability (Output GST). These represent the two primary categories for tracking tax credits and tax obligations.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Under GST, output GST(collected) is set-off against input GST(paid).

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under the Goods and Services Tax (GST) regime, registered taxpayers are allowed to claim credit for the GST they paid on their business purchases (input tax credit) against the GST they collected on their sales (output tax liability).

Multiple choice civics introduction to gst fundamentals of gst tax journal

For accounting purposes, GST paid is termed as _________.

  1. input GST

  2. output GST

  3. charge GST

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GST paid by a business on its purchases is referred to as Input GST, which represents a credit that can be used to offset tax liabilities.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input CGST cannot be set-off against output __________.

  1. CGST

  2. SGST

  3. IGST

  4. all of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the GST law, Input CGST is specifically meant to be set off against Output CGST and Output IGST. It cannot be used to pay off Output SGST.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input IGST has to be first set-off against output ___________.

  1. CGST

  2. SGST

  3. IGST

  4. Both (A) & (B)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the GST set-off rules, Input IGST must first be utilized to pay off the Output IGST liability before it can be used for CGST or SGST.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input SGST can be set-off first against output ___________.

  1. CGST

  2. SGST

  3. IGST

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Input SGST is primarily used to set off Output SGST. If any balance remains, it can then be used to set off Output IGST.

Multiple choice civics introduction to gst fundamentals of gst tax journal

For accounting purposes when GST is collected, it is termed as ___________.

  1. input GST

  2. output GST

  3. collected GST

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

GST collected from customers on sales is termed Output GST, representing a liability for the business to pay to the government.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input _________ can be set-off against any type of GST.

  1. CGST

  2. SGST

  3. IGST

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Wef 1.2.2019, the Government has changed the order in which ITC of IGST, CGST & SGST/UTGST can be adjusted from the liability payable of IGST, CGST & SGST/UTGST. Now IGST has to be fully exhausted before other taxes can be utilised. 

Multiple choice civics introduction to gst fundamentals of gst tax journal

Excess of input CGST after setting-off against output CGST, can be utilised for setting-off output ___________. 

  1. CGST

  2. SGST

  3. IGST

  4. all of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

After exhausting the Output CGST liability, any remaining Input CGST credit can be utilized to set off Output IGST liability.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Give the order in which the input IGST can be set off against the following types of output GST:
1. CGST
2. SGST
3. IGST.

  1. 1, 2, 3

  2. 3, 2, 1

  3. 1, 3, 2

  4. 3, 1, 2
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The order for utilizing Input IGST is: first against Output IGST, then against Output CGST, and finally against Output SGST.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Excess of input SGST after setting off the output SGST, can be utilised against output ________.

  1. CGST

  2. SGST

  3. IGST

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

After setting off against Output SGST, any remaining Input SGST credit can be utilized to set off Output IGST liability.