Goods and

Services Tax 7
(GSI)
OVERVIEW
Goods and Services Tax (GST) - Meaning
Characteristics of GST
D Objectives of GST
DSimple GST Calculations
INTRODUCTION
Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in
India. The tax came into effect from lst July, 2017. GST is said to be national tax because it is a
uniform tax across allstates of the country. Theslogan one tax, one nation, one market' iscarried by
GST.

GOODS AND SERVICES TAX (GST) - MEANING

GST is a tax on supply of goods and services. Under it, no distinction is made between goods
and services for levying of tax. Broadly speaking, GST is one tax subsuming (replacing) all the
indirect taxes in the country.
GST isasingle tax at anational levelto be levied at all stages right from manufacture up to final
consumpion. Under GST, every person is liable to pay tax on his output (sale) and is entitled to get
input tax credit (ITC) on the tax paid on its inputs (purchase). Therefore, it is a tax on value
addition only. Ulimately the final consumer shall bear the burden of tax under GST.
"Dual GST Model"
In India a "Dual GST Model" has been adopted. Therefore, Tax under the GST laws will be
Imposed in the following manner:
Intra-State Supplies
When there is supply of goods and services within a State or Union-Territory, the Central
Government and State Government will simultaneously levy GST. Hence, in case of intra-state
Supplies of goods and services, GST has two components:
 7.2
()
Accountarncy- X|
One that is levicd by the Centre which is known as Central Goods and Services Tax or

CGST, and
(i) The otheris levied by the State which is known as State ( Goods and Services Tax or SGST,
In case of intra-state (sale within the state) both CGST and SGST are charged at half the
prescribed rate of GST. For example, when GST has to be charged @12% on supply or sale
levied (@6% too.
goods, thenCGST is levied (@6% and SGST is
Inter-State Supplies
When the supply of goodsand services takes place between the states, Integrated Goods .
Services Tax or IGST is levied by the Central Government.
The 'Dual GST Model' can be further explained with the help of following diagram:
GST

Intra-State Inter-State
Supplies Supplies

CGST SGST IGST

CHARACTERISTICS OF GST
The important characteristics related with GST are explained as below:
1. Taxable Event under GST: Taxable event is an event on happening of which tax liability
arise. Simply, taxable event under GST system is supply of goods and/or services.

Supply of Goods

Supply of
Services Supply Taxable Event
under GST

Supply of Goods
and Services

2. Applicable on Supply: GST is applicable on "supply" of goods or

concept of tax on the manufacture of goods or on sale of services as aga1nst the
Supply is wider term which includes allforms of goods or on provision of services.
sale, transfer, barter, exchange, supply of goods or services or both such as
3. Tax Levied on the Basis of
licence, rental, lease or disposal.
Nature of Supply: GST is levied on
services and nature of supply helps in "supply" of goods
determination
relation between both. Hence, CGST and SGST are which tax to levy and their
and IGST is levied in case levied in case of intra-stateimpot
supp
of inter-state
supplies.
Goods and Sevices la (GS) 7.3

4. Uniform Tax: GSTisa nitomtax aCOSs all states of the ountty, In

simple words, only
one rate will prevail on one setof goods aoss all parts of the country. GSTis asirngle taKat
a national levcltobe levied at allsagesright from manufacture upto
5.
finalconsumption
Comprehensive Tax Levy on Supply: Go00ds and Services lax (CST) is a conprehensve
tax levv on supply of goods and services at a
national level.
6. Mostly Substitute all Indirect Taxes: GST mosly substitutes all indirect taxes levied on
goods and services by the Central and State goverDments in India. Hence, all the indiret
taxes, 1.¬.,Sales tax, Service tax, VAT, Central Excise are replaced by
GSI.
7. Components of GST: The 'Dual GST Model' makes place for the prominent componens
of GST. They include CGST, SGST and
IGST.
8. Based on the Principle of Destination: GST is a destination based tax. Accord1ng to
prnciple of destination, all goods and services are taxed if they are consumed within the
country.

9. Tax on Value Addition: Under GST only value addition will be taxed and burden of taxX IS
to be borne by the final consumer.
10. Remove Cascading Effect: The introduction of Goods and Services Tax (GST) would be a
very significant step in the field of indirect tax reforms in India as it will eliminate
cascading effect. Cascading effect can be cleared with the help of following example:
Manufacturer Old Indirect Tax GST
Price
10,000 10,000
Add: Excise Duty (10%) 1,000
Total 11,000 10,000
Add: CST (2%) 220
Add: GST (assumed 12%) 1,200
Tax to be paid to Government 11,220 11,200
Difference of 11,220- 11,200 = 20 is due to cascading effect which means tax on tax and it
is eliminated by GST.

0BJECTIVES OF GST
1. One Country- One Tax: The most important objective of GST is to embrace the 'one
nation, one tax, one market' regime. With one tax rate prevailing for one set of goods
across all partsof the country, the tax rates do not differ from state to state.GST unifies the
country's large economy and population of more than 1.3 billion people into a common
market.
2. Subsume all Indirect Taxes: Subsuming and replacing all the indirect taxes in the
economy is one of the most important objectives of GST. It abolishes all indirect and
multiple taxes (except basic custom duty) and levy dual GST (CGST and SGST)by the
Central and State Governments.
3. Eliminate the Cascading Effect of Indirect Taxes: The main aim of GST is to reduce the
cascading effect of the taxation and allow input credit for the taxes paid at each stage.
4. Improving the Competitiveness of Goods and Services: GST aims to improve the
competitiveness of original goods and services in the market by introducing input credit,
single point tax and removing the cascading effect of taxation.
7.4

5. Uniformity in Tàx Procedures: Another impotant objective of CGST is to have

law involving all the ax bases, laws and administuation proedues aCTOSs the
6. Reduce làx Evasion and Corruption: Reduingtax evasion:and
the man obtivesot GSLUnderthe GSTregime, details ol allinvoesare corrupionis
mentonet and all he tansations ate heked in letail at the GST po tal. As
there wll be automai teduion in cases of tax evasion and coplon as there quredtohe
would not be able to fake daims andevade taxes.
bste
7. Increase Compliance: GST is aimed andexpected toincrease
improve the economy of the country. complance,resulingn
revenuc boost for the government from higher collections, which) (ould help to funhetg
8. Increase in Productivity and Efficiency: GSTis seen as the key to inreased prodr
and efficiency. I is expected to act as an important factorthat will build upon
foundation forincrease in productivity and efliciency. The unified tax systemthe primary
should
signiticant opportunities for productivity. ofer
9. Increase in GDP: Another important objective of GST is to increase the governmes
revenue and GDP in the long-term with the help ofincrease in tax compliance and bete
productivity.
10. Reducing Economic Distortions and Unhealthy Competition: One of the purposes of
GST is to reduce economicdistortions and unhealthy competition among the states due to
taxes and revenues.

Accounts to be Maintained under GST

Under GST, the traders and business organisations need to maintain following accounts (apart
from accounts like purchase account, sales account, stock, etc.):
(1) Input CGST Account
(2) Output CGST Account
(3) Input SGST or UTGST Account
(4) Output SGST or UTGST Account
(5) Input IGST Account
(6)Output IGST Account
(7) Electronic Cash Ledger
(8) LTGST - Union Territory Goods and Services Tax
Tax Calculation and Computation Under GST
Before understanding the calculation and computation of GST, it is important to understau
the following terms related with GST:
1. Input CGST: The CGST paid on intra-state purchases of goods and services is known
Input CGST. Itcan be set off against OutputCGST (CGST collected)and Output I
(JGST Collected) in that sequence.
2. Output CGST: The CGST collected on intra-state sale (supplies) of goods andservices is
known as Output CGST.
3. Input SGST: The SGST paid on intra-state purchases and services is known as
e
SGST. It can be set-off against Output SGST (SGST collected) and Output IGST(1GST
collected) in that sequence.
Coods and Services Tax (GST) 7.5
4. Output SGST: The SGST collected on intra-state sale
(supplies) of g0ods and services is
known as Output SGST.:
5. Input IGST: The 1GST paid on inter-state purchase of
goods and services is known as
Input IGST. Itcan be set-ofl against Output IGST (IGST collected), Output CCST
collected), Output SGST (SGST collected) in that sequence. (CGST
6. Output IGST: The lGSTcollected on the inter-state sale (supplies) of
goods and services is
known as Output IGST

GST AS AN ASSET AND LIABILITY

1. Input GST: Input GST, 1.e., GST paid on purchase of goods and services is an asset for the
business. However, it is notconsidered as anasset when it is not allowed to be set off. Input
GST is debited to Input CGST Account, Input SGST Account, Input
according to its nature and type. IGST
Account
2. Output GST:Output GST, i.e., GST collected on the sale of goods and services is a
for business. Output GST is credited to Output CGST Account, Output SGST Account,
lability
Output IGST Account according to its nature and type.
Concept of Input Tax Credit Mechanism: Input tax credit means at the time of paying tax on
output, the business can reduce the tax, it has already paid on inputs and pay the balance amount to
the government.
As stated earlier, GST is essentially a tax on value addition covering the entire range of
production activity from manufacturer tothe consumer. If the producer pays GST on the purchase
of inputs, he can avail of GST credit (input credit) when he converts inputs into output and there is
value addition. Thus, if Good-X passes through 3stages of value addition (before becoming afinal
good), the consumer is loaded with GST only at the third stage when it is purchased for final
consumption. At the other two stages [which are intermediate stages of production (and during
which output of one firm is used as input by the other)] tax burden will automatically be siphoned
of. Thus, there is no cascading (compounding) of taxload on the consumer. The following example
illustrates this point:
DFirm A manufactures household furniture.
DIt buysinputs from different firms.
Firm Abuys some inputs from Firm Band pays GST=10,000.
DFirm Abuys some more inputs from Firm Cand pays GST = 20,000.
Firm Abuys another set of inputs from Firm Dand pays GST = 30,000.
Firm Asells its final output to the households for 10,00,000 and charges 10% GST
10
x10,00,000 =1,00,000.
100
DGST liability of Firm A = GST charged - GST paid
=1,00,000-60,000(*10,000 + 20,000 + 30,000)
=740,000.
DGST of T60,000 paid by Firm Aon the purchase of inputs is adjusted against GST charged by
it (i.e., T1,00,000). This is called adjustment of 'GSTcredit' or 'input credit.'
 76 inal inodence (impa)ofGSTonthe onmners - AecomnManey
I,00,000 whichiss I0% of the vallle

the inal Prnduct (the end users of

,00,00 homthe houscholds
havinghonale
sehra
ollets GSTot the govement
Brcth. Firm A I.00,000 60,000- ?10,000 with
it deposts Fin Ato Firm B, Canel
frnitur), and
mdt of 0,000 Input oedit is equalto GST paid bythis point:
tor input tlow hart further elaborates
purhaseof inputs The tollowing
GST Flow Chart

Gstpaid by im A
o Firm Bbr the
purcha se of inputs
10,000

LimA
- FinalSale to Households -t10,00,000
-GST charged from Households
10% of 10,00,000 -? 1,00,000
GsT pasd by Pirm A input Credit 10,000
to Frm c for the 4 20,000
purchase of inputs " 30,000
20,000
60,000
Net GST pald tothe Government =1,00,000
60,000
40,000
STpaid by Firm A
tO Firn Dfor the
purchase f inputs
30,000
Note: If GST amount charged by a firm on the sale of its
by it on the purchase ofinputs, the firm can output is less than the GST amount paic
claim refund of GST from the government.
To sum up, GST Computation can be
If Output GST is more than Input explained
as:

GST, it is called
Output GST - Input GST = GST Payable GST payable:
IfInput GST is more than
Output GST, it is
Input GST- Output GST =GST Creditcalled GST Credit:
Hence, itcan be understood as:
Particulars
Output GST (GST on Sales)
Less: Input GST Credit (GST on )
GST Payable (If output is Purchases/Expenses)
more than Input)

Sequence for the Utilisation of Input Tax Credit

The available
amount of
output tax in the following Input Tax Credit can be
manner: used for making any payment toward
Goods and Services Tax (GST)
7.7
Amount of ITC
on account of Utlised towards payment of oetOrder of Adjustment against
Input IGST
Output IGST, CGSI,
SGST/UTGST 1 IGSt
2CGST
Input CGST 3. SGST/UTGST
Output CGST & GST 1 CGSI
Input SGST 2. 1G9T
Output SGST &IGST 1 SOST
Input UTGST Output UTGST &IGST 2. IGST
1. UTGST
2. IGST
Setting off InputGST against Output GST:
(a) Input IGST: The amount of lnput IGST shall first be
adËusted against Output ICST ard
the amount remaning, if any, may be adjusted against
case may be, UTGST, in that order. Output CGST and SGST, or asthe
amount of ITC of first be utilised
towards payment Secondly utilised Thirdiy uoised
towards payment towards payment
"IGST "IGST "CGST "$GST

Example: The tax credit of IGST 12,00,000 is available with the supplier and output
SGST is R2,00,000, output IGST is 1,00,000, and output CGST is 2,00,000. Manner of
Utilisation of ITC is below:
DFirstly pay output liability of IGST =1,00,000
DSecondly balance will be used for CGST = 2,00,000
Lastly balance will be used for SGST = 2,00,000
DRemaining Balance of ITC (CGST) = 12,00,000 -1,00,000 2,00,0002,00,000
=7,00,00
(b) Input CGST: The amount of Input CGST available shall first be adjusted against Output
CGST and the amount remaining, if any, may be adjusted against Output IGST.
amount of lTC of frst beutilhsed Secondly ublhsed
towards payment towards payment
"CGST "CCST "IGST

(c) Input SGST: The amount of Input SGST available shall first be adjusted against Output
SGST and the amount remaining, if any, may be adjusted against Output IGST.
amount of ITCof irst be ntihsed Secondly utihsed
towars payent towards payment
"$GST "SGST "IGST
 available shall first be
Accountancy -X
UTGST adjusted
of Input be adjusted against
Outputagans
7.8 may
amount any,
Input UTGST: The amount remaining,if
(d) OutputUTGSTandthe
IGST.
first be utilised Secondly utilhsed
towardspayment towards payment
of
amount ofITC "IGST
"UTGST
"UTGST

Headds a profit
produced goodsfor ? 20,000. marg1n of
a manufacturerin Delhi wholesalerY'in Jaipur. The IGSTis @12%. Calculate the
PROBLEM Mr. 'X', the goodsto
1
l0% on cost. He sells
'Y'.
amount the wholesaler
paid by
Solution:
Particulars
20,000
Cost of Production 2,000
20,000) 22,000
Add: Profit margin (10% of
2,640
Add: IGST @ 12% 24.640
Invoice Value

pay ? 24,640. margin of

Thus, the Wholesaler Y' has to
produces goods for 1,00,000. After adding the profit
falls under the
PROBLEM Amanufacturer, Mr. John in the other state. Assume the goods Value.
the goods to a retailer retailer as Invoice
15%, he sells the amount paid by the
category of GST @ 18%. Calculate
Solution:
1,00,000
Particulars 15.000
Cost of Production
1,15,000
Add: Profit 15%
20,700
7,35
700
Add: IGST @ 18%
Invoice Value

Thus, the amount paid by the retailer is 1,35,700.

@4,000eachto
Muusic
PROBLEM Surbhi Traders, a retailer in Uttar Pradesh sells 5 violins and 10 guitarsthe Parinda,
3 Parinda, a music band in the same state. Calculate the amount paid by
band if the rate of GST is @ 18%.
Solution:
20
000
Particulars
40,000
Cost of Violins (5 x4,000)
60,000
Cost of Guitars (10 x4,000)
5,400

Add: CGST @ 9%
Coods and Services lax (GST) 7.9

SGST @ 9% 5,400
Invoice Value 70,800

Thus. the music band has to pay 70.800.

PROBLEM Mani, a nanutacturer purchases raw materials 'A' and paid Integrated GST Z900. He
4
further purchases raw materials 'B' and paid Integrated GSTT 600. He acquires services for
the production of goods and is required to pay IGSTZ 700 on services. Final product is sold
to Vani who is required to pay R2,500 as Integrated GST. Calculate the amount of input tax
Credit claimed by Maniand his GST Liability.
Solution:
Total Input IGST Input IGST on Raw Materials A' + Input IGST on
Raw Material 'B' + Input IGST on Services acquired
= 900 + 600 + 700
=72.200
Output IGST =2,500
Input Tax Credit (to be claimed) = 2,200
GST Liability of Mani = Output IGST - Input IGST
=2,500 2,200
=?300

Note: Accounting Journal Entries related to GST are explained in chapter Journal' in detailed
manner.

When GST paid on purchase of goods andservices can be set off against GST collected:
GST paid on purchase of goods and/or services is called Input GST and it is debited to a
separate account which can be categorised into Input CGST, InputSGST or Input IGST. Thus,
Input GST can be set off againstOutput GST which is collected on the sale of goods and/or services.
When GST paid on purchase of goods and services cannot be set off against GST collected:
GST paid on purchase of goods andservicescannot be set off against the Output GST or GST
collected when GST is paid on the final products consumed by the consumer. In that case, GST is
not debited to Input GST Account but GST is treated as cost. In other words, GST paid in these
Cases, is debited with the expense accountor asset account.
For example, when a person purchases a Television set for his household, the GST paid on
Television is treated as cost of Television and not debited to Input GST Account.
Following are the examples zuhen GSTpaid is considered cost of the product forabusiness organisation:
(i) Purchase of goods and/or services for personal or staff consumption.
(ü) Purchase of goods and/or services for sale by the organisation which are exempt from GST.
(ii) Purchase of Electrical items and furniture for use in the organisation and not for resale.
(iv) Purchase of vehicles for use and not for resale.
() Repairsand Maintenance of Plant, Machinery and Building.
(vi) Gifts to staff.
7.10

When Input or paid GST is

reversed:
reversed:
Ac ountaney-XI
following cases, input or paid GST is
Inthe
(i) Goods destroyed by fire
(ü) Goods lost or stolen
(üi) Goods withdrawn as drawings
free samples
(iv) Goods given as charity or as
(v) Purchases return
(vi) Rebate received on purchases
When Output or Collected GST is reversed
(i) Sales Return
(ii) Rebate allowed on Sales

Items and services which are exempt from Levy of GST:

staff and teacher
(i) Educational services, including transportation of students,
(ii) Health care services by a clinical establishment, a doctor or para-medical
(ii) Fresh fruits and vegetables,roots, tublers, cereals,cane jaggery
(iv) Printed books including Braille books, newspapers, maps
(v) Stamppapers
(vi) Electricity and Water Services
(vii) Salaries and Wages
(viii) Interest

MERITS OF GST
The government claims the following merits of GST:
(1) Common Man Friendly: Acommon man should get following benefitsof GST:
(i) GST Act provides that the common items of consumption of the common a
remain tax-free. Thus, no tax is levied on items like milk, curd, fresh fruits, vegetables
and the like. This should give a big relief to the common man.
(ii) Only a moderate tax of 5% is levied on items like tea, coffee and medicines which s
another set of items being commonly used by most people of the country.
Briefly, the essentials of life of a common man are either tax-free or
taxed. moderaley
(2) Advantages for Trade and Industry
In this context, we may note the following observations:
() Procedure for filing GST returns has been simplified. Facility for filing e-returns will
definitely save lot of time of the traders and the industrialists.
(ii) There shall be an uninterrupted flow of 'input credit'. So that. the
incidence o
taxation does not cascade (compound). The traders and the industrialists can cla
'input credit' themselves while filing GST returns.
Goods and Services Tax (GST) 7.11

(ii) A cut in taxation (compared to the earlier tax structure) would enhance
competitive
market.
power of the traders and the industrialists in the international goods
(iv) Tax-exemption
market
on many commonly used items would offer a more favourable
environment to the small traders who deal in these items.
(3) Benefits to the Economy
Following points highlight the benefits of GST to the economy:
(i) GST is expected to create one unified market for most goods and services in the
country. It means that for every producer in the economythesize of the market will
expand.
(ii) If the prices of goods and services tend to fall in the domestic economy (as is
expected by the government), exports will rise, leading to higher earnings of
foreign exchange.
(iii) Aunified market is expected tolead to Balanced Regional Growth.
(iv) With the growth of market size, GST is expected to raise the level of economic
activity in the economy. Implying faster GDP growth. It would also mean faster
generation of the opportunities of employment.
(v) GST is expected to improve tax compliance. Because:
(a) Input credit will be available to only those who buy their inputs from
GST-compliant firms.
(b) There is to be a digital record and monitoring of value addition at stages of
production activity.
Higher degree of tax compliance would mean:
(a) higher tax-GDP ratio, and
(b) gradual elimination of the 'shadow economy' or the black money economy.
(4) Creating One Economic India
With unified market and free movement of goods across all parts of the country, GST will help
create one 'Economic India'. This would mean level playing field' for all buyers and sellers in the
Country. Domestic economy would become more competitive. Higher thedegree of competition,
greater the need for innovations. Innovative economy is always better placed for 'takes-off and
'sustained growth'.
Demerits of GST
GST is not free from criticism. Following points are raised against this tax:
(0) Due to compulsions of tax compliance, small and marginal producers of the shadow
economy (where tax is evaded) may find it difficult to continue their business operations.
(1) If the small and marginal producers are eliminated, production activity will decline. Still
harder will be the impact on employment. Because, it is production activity in the shadow
economy which generates most employment opportunities in the country.
(m) he government proposes to set up 'Anti-profiteering Authority' to monitor that the
Denetitsof lower taxation is actually passed on to the consumers. This authority shall have
the right to cancel registration of such business establishments which are found to be
exploiting the consumers by charging higher price. The business community has
7.12

expressed their serious resentmen over this issue. They are

Anti-profiteering Authority will mean the return of Inspetor Raj' feaingtothata
coTruption. leadng
(iv) It is teared that thec operating cost of smalland marginal producers will rise
owingto tte
maintenance of records at all levels ol sale and purchase ofgoods and services
(v) There is a detinite possibility that post-GST,the prices ofsomegoods and services vwl
This might contribute to inflationary spiral in the country. Inflationary spiral isal,
Owing to the fact that post-GST ncarly 75% goods and services will bear the
(impact) of taxation. inodence
(vi) According to some economic experts, small, medium and microscale
enntrepreneurs
not GST-prepared. Even whenGST is a tax-reform, its introduction should have Waited are
these entrepreneurs fully understand the pros and cons of this tax. These entrepreneur
according to Chidambaram, are still notclear as to who is levying GST-state or the centre
(vi) Petroleum and Electricity are out ofthe ambit of GST, even when these products constitue
nearly 35-40% of the economy. This is aserious demerit or deficiency of GST.

Analysing, Evaluating, Creating and HOTS (Higher Order Thinking Skils)

Q. 1. After the implementation of GST, consumers of goods and services need not to pay many
taxes. Name such taxes.
Ans. After the implementation ofthe GST Act, consumers of goods and services are not required
to pay Sales Tax, Service Tax, Value Added Tax (VAT), Central Excise and many other
indirect taxes.
Q. 2. What are the different components of GST?
Ans. Prominent components of GST are Central GST (CGST), State GST (SGST) ant
Integrated GST (IGST).
Q.3. What are the two components of GST in case of supplies of goods and services within the
state of Delhi? Why?
Ans. In case of supplies of goods and services within Delhi, it is acase of intra-state supp%
Therefore, main components of GST are Central GST and State GST in this case.
Q. 4. Explain Tax on Value Addition' as a feature of GST?
Ans. As per the concept "Tax on Value Addition' under GST, only value addition will be taxeu
and burden of tax is tobe borne by the final consumer.
Q. 5. For a firm 'Monestry and Developers Ltd.' Output GST is 32,000 and Input GI
T27,000. What is the GST liability of the firm?
Ans. GST payable = Output GST - Input GST
= 32,000 27,000
=75,000
0. 6. Is it correct that under GST a person cannot avail of GST credit?
creditithe, sd
Ans. No, it is not correct. Under GST, a person can avail of CST credit or input
producer of goods and services, pays GSTon the purchase of inputs.
 (GST) 7.13
Goods and Services Tax
o2 Awholesaler of refrigerators in Nagpur supplies refrigerators to the city of Pune. In his
invoice, he charges IGST from the retailer. Is he correct?
Ane should
No. itischarge
not correct. As NagpurandPune fallin the same state Maharashtra, the wholesaler
Central GST and State GST in the invoice of the retailer.

AsSESS YOURSELF
Typology of Questions Remembering, Understanding and Application Based
THEORETICAL QUESTIONS
Very Short Answer Type Questions
A. Multiple Choice Questions (MCQs) (Point out the correct answer):
1. Which of the following taxation system was enforced by Government of India in July,
2017:
(a) Value Added Tax (VAT) (b) Goods and Services Tax (GST)
(c) Income Tax Act (d) All of the above
2. Goods and Services Tax (GST) is a tax on
(a) Salaries (b) Property
(c) Goods and Services (d) Wealth
3. GST in India replaces:
(a) All indirect taxes (b) All direct taxes
(c) All Corporate taxes (d) All of the above
4. In case of Intra-state supplies, which of the following is levied on the goods and services?
(a) CGST (b) SGST
(c) Central and State GST both (d) IGST
5. Incase of Inter-state supplies, which ofthe following is levied on the goods and services?
(a) CGST (b) SGST
(c) IGST (d) None of the above
6. Which of the following is replaced by GST?
(a) Sales Tax (b) VAT
(c) Central Excise (d) All of the above
7. Tax paid on purchases by manufacturer or seller of goods and services is known as:
(a) Output GST (b) Input GST
(c) Sales Tax (d) All of the above
O. 1ax received by seller or manufacturer on goods and services is known as:
(a) Output GST (b) Input GST
(c) Sales Tax (d) All of the above
|Ans. 1. (b), 2. (c), 3. (a), 4. (c), 5. (c), 6. (d), 7. (b), 8. (a).]
7.14

B. Match the
following Columns:
Nc ntaney-X
1. (i) Input CGST
(i) Output CGST (a) Payable on
(ii) Input IGST (b) Payable on intra-state purchases
2.
() Input GST () inter-state
Receivable on intra-statepurchases
(a) Sale
(ii) OutputGST Goods taken by
(ii) GST Reversed (b) GST collected on saleproprietor for personal
[Ans. 1. (i) - (a), (c) GST paid on
purchases
purpse
(i) - (c), (ii) (b)
2. (i)-(c),
(ii) (b),
C. Answer the (iii) (a)]
1.
following
questions briefly:
Define Goods and Services Tlax (GST).
2.
Name the tax which
3. Give one main replaced almost all the indirect taxes in
characteristic of Goods and India.
4. How is GST called a Services Tax (GST).
5. 'uniform tax'?
What the main objective of
is
6. What do you understand by GST?
7. What do you understand by 'Input GST?
8. Name three items on which, 'Output GST'?
no GST will be
9.
What is the main advantage of imposed by Government.
10. What is the main GST?
limitation of GST?
11. How will you
12. Name two
calculate GST payable?
accounts maintained under GST in case of
13. How can GST inter-state sale.
facilitate better Tax Management?
14. Name two services which are
exempt from levy of GST.
Answers
1. Goods and Services Tax (GST) is an
in India.
indirect tax levied on the supply of goods and servces
2. Goods and Services Tax (GST).
3. Goods and Services Tax (GST) is a
uniform tax levied on the goods and services.
4. GST is a uniform tax as only
one rate prevails on one set of goods across all parts of tt
country.
5. The most important objective of GST is to adopt the 'one
regime in the
nation, one tax, one nai
bycountry a uniform tax across all the states of the country.
6. Input GST is the tax paid by the manufacturer or the seller on their purchase of i
materials, etc.
7. Output GST is the tax on the sale received by the manufacturer or seller and paidbvthe
Consumer of the goods and services.
 (GST)
Goods and Services Tax 7.15

8. No tax will be imposed on items ike (i) electricity, (ii) fruits and vegetables, (ii)
newspapers.
9. The main advantage of GST Act is that the commonitems of consumption ofthe common
man remain tax-free.
10. The main limitation of GST Act is that small and marginal producers finds the GsT Act
complex.
11. GST Payable = Output GST - Input GST
12. () Output IGST Account (i) Input IGST Account.
13. Better tax managementcan be facilitated under GST regimne as GST is a single indirect tax
and it is administered through online system.
14. () Salaries and Wages (iü) Educational Services
Short Answer Type Questions
1. What do you understand by GST Act?
2. Give three main characteristics of GST Act.
3. How is GST helpful in removing cascading effect of tax?
4. How dothe GST bring uniformity in Tax procedures?
5. What are the main objectives of GST Act?
6. What do you understand by Input Tax Credit?
7. What are the different accounts that need to be maintained under GSTAct by a taxpayer?
8. Mention three advantages of GST.
9. Mention three limitations of GST.
10. Why GST is considered important for the growth of GDP?
Long Answer Type Questions
1. Explain in detail the 'Dual GST Model'.
Z. Mention important advantages and limitations of GST Act.
3. Critically analyse the Goods and Services Tax.
4. What doyou understand by 'Structure of GST? Explain in detail.
5. Briefly describe Concept of Input Tax Credit Mechanism'.
PRACTICAL QUESTIONS
. Mr. Akshay, amanufacturer of Pune produced goods for 30,000. He adds aprofit margin
Of 15% on cost. He sells the goods to wholesaler, Naveen in Noida. The IGST is @ 12%.
Calculate the amount paid by the wholesaler Naveen.
[Ans. IGST? 4,140, Amount paid by Naveen 38,640]
manutacturer, Mr. Bproduces goods for 2,50,000. After adding the profit margin of
ne Sells the goods to a retailer in the other state. Assume the goods falls under the
category of GST @18%. Calculate the amount paid by the retailer as Invoice value.
[Ans. Amnount paid by retailer? 3,24,500)
7.16

3. Trishna Traders sold the 120

Enterprises. IGST rate is (@ 18%.boxes of raw
materials costing I5,000
Calculatc the amount paid by Gauri cach to
IAns.
4. Tiwari Traders, a retailer in
Club @3,000 cach nthe same
the rate of GSTis 18%.
Haryana sells 8 Drums andAmount
state. Calculatee the
anount
25 video
paid by
Enterprises.
paid by Gaui? 2124
games
the
5. Evans Furniture, operating business in |Ans. Amount paid by Fitness CityFitness(City(luh
Tables (o 6,000 each to Minara Ltd., Mumbai sells 8 Cane Chairs ( Club?
6.
by Minara Ltd., if theGST is (@
12%. 8,0 0each and4Ca
Mumbai. Youare required to calculate the am
Dubey Glass Works purchased inputs for Ans. Minara Ltd. is required to pay? 9836
@12%. Calculate the GST Payable by Dubey1,40,000 and sells them for? 1,70,000, ICST
Glass Works.
7. Prakash, a manufacturer and seller JAns.GST Liability of Dubey Glass
Works3,A
2,700. He further purchases raw purchases
materials
raw materials `X* and paid
Y' and paid integrated GST Integrated CST
acquires services for theproduction of goods and is ? 1,800. H.
required
product is sold to Pandey who isrequired to pay? 7,500 as to pay IGST ? 2,100. Fina
amount of input tax credit claimed by Prakash and his GST Integrated GST. Calculate the
Liability.
[Ans.GST Liability of Prakash 90