GST
Basic Introduction
- GST full form:
Goods and Services Tax
- Implemented on:
1st July 2017
- Type: Indirect,
comprehensive, destination-based, value-added tax
- Objective:
One Nation, One Tax
- Canadian Model of Dual GST
- Destination based tax on consumption of
goods and services
- Bill was approved by the President of
India on 08 September 2016
- 101th constitutional amendment and bill
was 122th
- Members are in GST Council – 33
- First state : Assam
- Committee – Vijay Kalkar
- 17 Indirect taxes and 23 cess included
- GST Registration no. – 15 digit (first
two digit – state code, next 10 digit PAN no of tax payer and last 3 digit
firm no of state)
- Chairman of drafting committee of GST
bill – Mr. Asim Das Gupta
- Voting rights – states 2/3 and centre 1/3
- Frist country – France (1954)
- India is 155th Country
- GST defaulter – imprisonment 5 years
- GST council was established – 12 September
2016
- Full form of HSN – harmonized System of Nomenclature
-
Structure of GST
|
Type |
Collected by |
Applicable on |
|
CGST |
Central Govt |
Intra-state supplies |
|
SGST/UTGST |
State/UT Govt |
Intra-state/Union Territory supplies |
|
IGST |
Central Govt |
Inter-state supplies & imports/exports |
Taxes Subsumed under GST
Central Taxes:
- Central Excise Duty
- Service Tax
- Additional Excise Duty
- Special Additional Duty of Customs (SAD)
- Countervailing Duty (CVD)
State Taxes:
- VAT/Sales Tax
- Entry Tax/Octroi
- Purchase Tax
- Luxury Tax
- Entertainment Tax (not levied by local
bodies)
GST Council
- Constitutional Body under Article 279A
- Chairman:
Union Finance Minister
- Members: State
Finance Ministers
- Function:
Recommend rates, rules, exemptions, threshold limits, etc.
Important GST Forms
|
Form |
Purpose |
|
GSTR-1 |
Details of outward supplies (sales) |
|
GSTR-3B |
Monthly summary return |
|
GSTR-4 |
Composition scheme return |
|
GSTR-9 |
Annual return |
GST Rate Slabs
- 0% – Essential goods (milk, eggs,
fruits)
- 5% – Railways, economy class air
tickets, packaged foods
- 12% –
Computers, processed foods
- 18% – Most
services, electronics
- 28% – Luxury
goods (cars, cigarettes, ACs)
Input Tax Credit (ITC)
- Credit for tax paid on inputs
(purchases) used to reduce liability on outputs (sales)
- Available only to regular taxpayers
(not composition scheme)
- Conditions: Invoice, receipt of
goods/services, tax paid, return filed
Composition Scheme
- For small taxpayers (turnover < ₹1.5
crore)
- Flat tax rate:
- 1% – Traders
- 2% – Manufacturers
- 5% – Restaurants
- No ITC available
GSTN (GST Network)
- IT backbone for registration, returns,
refunds, etc.
- Managed by Goods and Services Tax
Network (non-profit)
Who Needs to Register for GST?
- Businesses with turnover > ₹40 lakh
(₹20 lakh for special category states)
- Inter-state suppliers
- Casual/non-resident taxable persons
- E-commerce operators
- Agents and input service distributors
(ISD)
Constitutional & Legal Aspects
- GST introduced via 101st
Constitutional Amendment Act, 2016
- Article 246A:
Power to make laws on GST
- Article 269A:
IGST on inter-state trade collected by Centre & shared with States
- Article 279A:
Formation of GST Council
Latest Updates (as of 2025)
- e-Invoicing mandatory
for businesses over ₹5 crore turnover
- Biometric Aadhaar authentication
in some states for new GST registrations
- GST on online gaming, cryptocurrency
being reviewed
- Petroleum, liquor still outside GST
Advantages of GST
- Eliminates cascading effect
- Uniform tax structure
- Simplified compliance
- Boosts interstate trade
- Transparent and tech-driven system
Challenges
- Initial compliance burden
- IT issues on GSTN portal
- Delay in refunds
- Rate changes causing confusion
Quick Facts to Remember
- GST Day: 1st July
- First GST Law Committee Head:
Arvind Subramanian
- Revenue sharing of IGST:
50:50 between Centre and State
- Highest GST slab:
28%
- GST is a dual tax system:
Centre + State
Multiple
Choice Questions
1.
GST is a:
o
A) Direct Tax
o
B) Indirect Tax
o
C) Capital Tax
o
D) Wealth Tax
Answer: B) Indirect Tax
2. GST is levied on:
o
A) Manufacturing
only
o
B) Sale only
o
C) Supply of
goods and services
o
D) Purchase of
goods
Answer: C) Supply of goods and
services
3. GST is a ______ based tax:
o
A) Origin
o
B) Destination
o
C) State-specific
o
D) Dual
Answer: B) Destination
4. GST replaced how many indirect taxes approx.?
o
A) 10
o
B) 12
o
C) 17
o
D) 15
Answer: C) 17
5. GST was implemented on:
o
A) 26th January
2016
o
B) 1st April 2017
o
C) 1st July 2017
o
D) 15th August
2017
Answer: C) 1st July 2017
6. GST was introduced through which constitutional
amendment?
o
A) 100th
o
B) 101st
o
C) 102nd
o
D) 103rd
Answer: B) 101st
7. Article related to formation of GST Council is:
o
A) 246A
o
B) 279A
o
C) 286
o
D) 254
Answer: B) 279A
8. Who chairs the GST Council?
o
A) Prime Minister
o
B) RBI Governor
o
C) Union Finance
Minister
o
D) CAG
Answer: C) Union Finance Minister
9. Power to levy GST is given under:
o
A) Article 246A
o
B) Article 300A
o
C) Article 368
o
D) Article 239A
Answer: A) Article 246A
10.IGST Act is passed by:
- A) Parliament only
- B) State Legislature only
- C) Both Parliament and States
- D) President by ordinance
Answer: A) Parliament only
11.CGST is collected by:
- A) State Government
- B) Central Government
- C) Both
- D) Municipal Corporation
Answer: B) Central Government
12.SGST is applicable on:
- A) Exports
- B) Imports
- C) Intra-state transactions
- D) Inter-state transactions
Answer: C) Intra-state transactions
13.IGST is applicable on:
- A) Intra-state supplies
- B) Inter-state supplies
- C) Local sales
- D) None of the above
Answer: B) Inter-state supplies
14.In intra-state supply, tax is divided into:
- A) 50% SGST, 50% CGST
- B) 100% SGST
- C) 100% CGST
- D) 25% SGST, 75% CGST
Answer: A) 50% SGST, 50% CGST
15.GST registration is mandatory if turnover exceeds:
- A) ₹10 lakh
- B) ₹20 lakh
- C) ₹40 lakh (goods)
- D) ₹50 lakh
Answer: C) ₹40 lakh (for goods in most states)
16.For special category states, threshold is:
- A) ₹10 lakh
- B) ₹20 lakh
- C) ₹30 lakh
- D) ₹40 lakh
Answer: A) ₹10 lakh
17.A person making inter-state taxable supply is:
- A) Exempt from GST
- B) Must register under GST
- C) Optional registration
- D) Covered under Excise
Answer: B) Must register under GST
18.How many primary GST slabs are there?
- A) 2
- B) 3
- C) 4
- D) 5
Answer: C) 4 (5%, 12%, 18%, 28%)
19.Which of these goods attracts 0% GST?
- A) Milk
- B) Mobile phones
- C) Chocolates
- D) Soap
Answer: A) Milk
20.What is the GST rate for most services?
- A) 5%
- B) 12%
- C) 18%
- D) 28%
Answer: C) 18%
21.Luxury items like cars are taxed at:
- A) 18%
- B) 28%
- C) 12%
- D) 5%
Answer: B) 28%
22.ITC is available on:
- A) Final consumption
- B) Registered business inputs
- C) Cash transactions only
- D) Services only
Answer: B) Registered business inputs
23.Can composition scheme taxpayers claim ITC?
- A) Yes
- B) No
Answer: B) No
24.Which of the following is not eligible for ITC?
- A) Personal use goods
- B) Capital goods
- C) Business services
- D) Raw materials
Answer: A) Personal use goods
25.GSTR-1 is for:
- A) Purchases
- B) Sales (Outward supply)
- C) Annual return
- D) Composition return
Answer: B) Sales (Outward supply)
26.GSTR-3B is a:
- A) Quarterly return
- B) Monthly summary return
Answer: B) Monthly summary return
27.GSTR-9 is:
- A) Weekly return
- B) Annual return
- C) Refund form
Answer: B) Annual return
28.Eligibility for Composition Scheme (turnover):
- A) ₹20 lakh
- B) ₹40 lakh
- C) ₹1.5 crore
- D) ₹5 crore
Answer: C) ₹1.5 crore
29.Tax rate for manufacturers under Composition Scheme:
- A) 1%
- B) 2%
- C) 5%
Answer: B) 2%
30.Restaurants (non-alcohol serving) under Composition
pay:
- A) 1%
- B) 2%
- C) 5%
Answer: C) 5%
31.GST Network (GSTN) is a:
- A) Govt department
- B) Non-profit private company
Answer: B) Non-profit private company
32.e-Invoicing is mandatory for businesses with turnover
above:
- A) ₹10 crore
- B) ₹5 crore
Answer: B) ₹5 crore (as of 2025)
33.Which of the following is outside the purview of GST?
- A) Petroleum
- B) Telecommunication
- C) Education services
Answer: A) Petroleum
34.GST Day is celebrated on:
- A) 1st July
- B) 2nd October
Answer: A) 1st July
35.The term ‘One Nation, One Tax’ is associated with:
- A) Income Tax
- B) GST
Answer: B) GST