Introduction to GST in India: Concept, Objectives, Constitutional Framework and Dual GST Model (Basics) Questions

Question 1

Define GST.

Accepted Answer

GST is a **destination-based indirect tax** levied on the **supply** of goods and services, with credit available through **Input Tax Credit (ITC)** (concept).

Question 2

What is meant by ‘destination-based’ tax in GST?

Accepted Answer

It means GST revenue generally accrues to the place of **consumption/destination**, not the place of origin/production (concept).

Question 3

Name any one component of GST in India’s dual model.

Accepted Answer

**CGST** / **SGST/UTGST** / **IGST** (any one) (concept).

Question 4

GST is levied on ‘supply’ rather than manufacture. (True/False)

Accepted Answer

True. Under GST, the taxable event is **supply** (concept).

Question 5

What is ITC (Input Tax Credit)?

Accepted Answer

**ITC** is the credit of **GST paid on inputs/input services** that can be used to reduce **output GST liability** (subject to conditions) (concept).

Question 6

GST Council recommends rates and promotes uniformity. (True/False)

Accepted Answer

True. The **GST Council** is the key coordinating body for rates and policy uniformity (concept).

Question 7

State any three objectives of GST (exam points).

Accepted Answer

Any three objectives (exam points):

- remove **cascading effect** through **ITC**
- create a more **uniform tax structure** (one nation, one tax concept)
- promote an **integrated national market** by easing inter-state trade
- improve **compliance** and widen tax base through technology-driven reporting

Write any three points with brief explanation (concept).

Question 8

Explain why GST was introduced in India (any three reasons) using a small table.

Accepted Answer

GST was introduced to address problems in the earlier indirect tax system (any three):

| Problem earlier | How GST helps (concept) |
|---|---|
| **Cascading (tax-on-tax)** | credit chain through **ITC** reduces cascading |
| Multiple taxes/laws | common framework reduces complexity |
| Barriers to inter-state trade | improves movement and helps create **national market** |

Any three well-explained points are acceptable (concept).

Question 9

Differentiate intra-state and inter-state supplies in GST (brief) using a table.

Accepted Answer

Difference (basic concept):

| Basis | **Intra-state** | **Inter-state** |
|---|---|---|
| Supplier & place of supply | same State/UT | different States/UTs |
| Tax charged | **CGST + SGST/UTGST** | **IGST** |
| Revenue sharing | split between Centre & State | IGST mechanism for settlement (concept) |

Question 10

Write the dual GST model in India and explain the role of CGST, SGST/UTGST and IGST (brief) with a small flow.

Accepted Answer

India follows **dual GST** where both Centre and States levy GST (concept):

- **CGST**: levied by Centre on intra-state supplies
- **SGST/UTGST**: levied by State/UT on intra-state supplies
- **IGST**: levied by Centre on inter-state supplies and imports

Flow (concept):

```text
Intra-state supply  -> CGST + SGST/UTGST
Inter-state supply  -> IGST
```

Question 11

Explain the concept of Input Tax Credit (ITC) with a small numerical illustration (basic).

Accepted Answer

**ITC** means set-off of **input GST** against **output GST** payable (concept).

Illustration (basic):

| Particulars | Amount |
|---|---:|
| Output GST on sales | 1,800 |
| Less: eligible **ITC** on purchases | 1,200 |
| **Net GST payable** | 600 |

Thus, GST is effectively collected on **value addition** (concept).

Question 12

List any three key features of GST (brief) and add one-line meaning for each.

Accepted Answer

Any three features (brief):

- **Destination-based**: tax follows the place of consumption.
- **Value-added with ITC**: credit chain reduces cascading.
- **Dual GST**: Centre and States both levy GST (CGST/SGST).
- Technology-driven compliance: online registration, returns and payments (concept).

Write any three with one-line meaning (exam style).

Question 13

Explain GST: meaning, objectives and key features (write an exam-style answer with a table).

Accepted Answer

### Meaning
**GST** is a **destination-based indirect tax** on **supply** of goods and services. It works as a **value-added tax** because eligible **Input Tax Credit (ITC)** is available at each stage (concept).

### Objectives (any four)
- remove **cascading effect** through **ITC**
- create a more **uniform** indirect tax system
- promote an **integrated national market** and smoother inter-state trade
- improve **compliance** and widen the tax base through technology (concept)

### Key features (table)

| Feature | What it means (concept) |
|---|---|
| **Destination-based** | tax revenue goes to place of consumption |
| **ITC chain** | credit of input GST reduces output tax payable |
| **Dual model** | intra-state: **CGST + SGST/UTGST**; inter-state: **IGST** |
| Technology-driven | online registration, returns and payments |

Conclude: GST reduces tax-on-tax and improves transparency and uniformity (concept).

Question 14

Describe the dual GST structure in India (CGST/SGST/IGST) and explain intra-state vs inter-state taxation with a flowchart.

Accepted Answer

### Dual GST structure
India follows **dual GST**, where both Centre and States levy GST on the same tax base (concept).

- **CGST**: Central tax on **intra-state** supplies
- **SGST/UTGST**: State/UT tax on **intra-state** supplies
- **IGST**: Integrated tax on **inter-state** supplies and imports (concept)

### Intra-state vs inter-state (quick table)

| Case | Tax charged |
|---|---|
| **Intra-state** | **CGST + SGST/UTGST** |
| **Inter-state** | **IGST** |

### Flowchart (concept)

```text
Identify supply -> Check place of supply
        |
        +-- Same State/UT  -> CGST + SGST/UTGST
        |
        +-- Different State/UT -> IGST
```

Conclusion: This structure ensures revenue sharing while maintaining one common GST framework (concept).

Question 15

Explain the constitutional framework of GST and the role of the GST Council (exam-style) using a table.

Accepted Answer

### Constitutional framework (idea)
GST required constitutional support because indirect tax powers were divided between Centre and States. The constitutional amendment enabled a common GST system and created the **GST Council** as a constitutional body (concept).

### Role of GST Council
The **GST Council** is the main cooperative federal forum for GST policy. It recommends rates, exemptions and key procedural rules, helping achieve **uniformity** across India (concept).

### Table (exam-friendly)

| Area | What it covers (concept) |
|---|---|
| Constitutional enablement | permits levy of GST by Centre and States in a coordinated framework |
| **GST Council** creation | policy coordination and recommendations |
| Rate/exemption guidance | recommends rate slabs and exemptions |
| Uniformity | reduces state-to-state differences and supports national market |

Conclusion: Constitutional backing + GST Council together make GST a coordinated national indirect tax system (concept).

Introduction to GST in India: Concept, Objectives, Constitutional Framework and Dual GST Model (Basics)

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