GST Indirect Tax MCQ Test Paper
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krupasagarks16GST Indirect Tax MCQ Test Paper
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krupasagarks16Common questions
Powered by AIGST does not apply to rental income from residential properties as such services are considered to be exempt from GST. Therefore, even if the annual rent is significant, like the Rs. 50 lakhs per annum in the case of a residential property in Vasant Vihar, Delhi, GST will not be applicable on such rent . This exemption underscores the differentiation between commercial and residential rental services under GST.
Under the reverse charge mechanism, GST is paid by the recipient of goods or services instead of the supplier. This occurs in specific cases such as services supplied by an insurance agent to an insurance company located in a taxable territory and supply of security services provided by a person other than a body corporate to a composition taxpayer . The mechanism is designed to shift the tax burden to the recipient in cases where the supplier is unable to collect GST from the customer.
For M/s PQR Ltd, the taxable supply value for transportation services involves transportation by air-conditioned stage carriage (Rs. 25,00,000) and for tourism purposes (Rs. 20,00,000), while services like transportation by vessels on national waterways (Rs. 30,00,000) and non-tourism passenger transportation (Rs. 10,00,000) are exempt. Metered cab services, constituting Rs. 35,00,000, may also be taxable subject to certain conditions . Thus, the taxable supply includes the total amounts from taxable modes and purposes.
Under GST, supply involves transactions that include sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration in the course or furtherance of business. Activities that are treated neither as a supply of goods nor a supply of services include transactions like transportation of deceased and services provided by employees to employers in the course of employment . These distinctions rely on the element of consideration and the nature of the transaction in the scope of business.
A person making inter-state supplies is generally required to register for GST if they are engaged in such supplies of taxable goods, irrespective of the aggregate turnover. This is contrary to general threshold limits applicable to intra-state supplies where registration becomes mandatory only when turnover exceeds a certain threshold amount . This ensures proper compliance and tax accountability across state borders.
Mr. Ajay can opt for the composition scheme under GST if his aggregate turnover does not exceed Rs. 1.5 crore (now revised to Rs. 75 lakhs for certain states) and he is not engaged in making inter-State supplies. Given an aggregate turnover of Rs. 45 lakh in the previous year and no inter-state supply involvement, he is eligible for the composition scheme. Under this scheme, he would pay GST at a concessional rate on his turnover but cannot avail input tax credit . However, if he procures items from another state, he becomes ineligible for the scheme.
The deficiencies of the existing indirect tax system that led to the implementation of GST include the complexity due to multiple taxes, cascading tax effect where tax is levied on tax leading to increased prices for consumers, and lack of uniformity across different states which posed challenges for inter-state business operations . GST was introduced to streamline processes, bring uniformity, and reduce tax leakage.
The aggregate turnover under GST includes all taxable supplies and exempt supplies, exports of goods or services, and inter-state supplies of persons having the same permanent account number, to be computed on an all-India basis but excludes central, state, union territory taxes along with cess. For Mr. Dev Anand, who is engaged in both trading of securities (Rs. 40,00,000) and facilitating transactions in securities as a broker (Rs. 30,00,000), the aggregate turnover would be Rs. 70,00,000 since brokerage constitutes taxable turnover while trading in securities is excluded .
GST applicability on passenger transportation services varies based on the mode of transportation and nature of service. Services like transportation by inland waterways are exempt from GST, while air-conditioned stage carriage services are taxable. Services provided for tourism purposes are also taxable, whereas services such as transportation by non-air-conditioned stage carriages can be exempt . These discrepancies arise from the policy aim to promote certain environmentally friendly or essential transportation services.
The CGST Act differentiates supply based on the nature of transactions involving intangible assets. For example, renting of immovable property is considered a supply of service. Temporary transfer or use of intellectual property rights is also treated as a service, while the transfer of title in goods is classified as a goods supply. This distinction ensures that immovable and permanent transfers are separated from temporary or usage-based rights . Such classifications are critical for applying the correct GST treatment.
