II. Very Short Answer Questions

Question 1.
Define Indirect tax.
Answer:
Indirect Tax is levied on the goods and services. It is collected from the buyers by the sellers and paid by the sellers to the Government. Since it is indirectly imposed on the buyers it is called indirect tax.

Question 2.
Give any two examples for indirect taxes levied in India.

Answer:

Examples of indirect taxes are excise tax, VAT (Value added tax), service tax, custom duty, sales tax, entertainment tax and Securities Transaction Tax.

Question 3.
What do you mean by Goods and Services Taxes?
Answer:
Goods and Services Tax (GST) is the tax imposed on the supply (consumption) of goods and services. It is a destination based consumption tax and collected on those value added items at each stage of the supply chain.

Question 4.

What is CGST?

Answer:

CGST – Central Goods and Services Tax – is imposed and collected by the Central Government on all supply of goods within a state (intra – state) under CGST Act 2017.

III. Short Answer Questions

Question 1.

What are the objectives of GST?
Answer:

  1. To create a common market with uniform tax rate in India. (One Nation, One Tax, One Market)
  2. To eliminate the cascading effect of taxes, GST allows set-off of prior taxes for the same transactions as input tax credit.
  3. To boost Indian exports, the GST already collected on the inputs will be refunded and thus there will be no tax on all exports.
  4. To increase the tax base by bringing more number of tax payers and increase tax revenue.
  5. To simplify tax return procedures through common forms and avoidance of visiting tax departments.
  6. To provide online facilities for payment of taxes and submission of forms.

Question 3.
Briefly explain the functions of GST council.
Answer:

  1. The GST Council will oversee the implementation of the GST. But the Central Board of Excise and Customs is responsible for administration of the CGST and IGST Acts.
  2. The Council makes recommendations on rate of GST, apportionment of IGST, exemptions, model GST laws, etc.
  3. The Minister of State in the Finance Ministry and all Finance Ministers of the State Governments shall be its members.
  4. All decisions of the Council can be passed only with Atb of the total votes. Each state has one vote, irrespective of its size or population.

Question 4.
Explain IGST with an example.
Answer:
IGST – Inter-State Goods and Services Tax is imposed and collected by the Central Government and the revenue is shared with States under IGST Act 2017.

Question 5.
Write any three demerits of GST.
Answer:

  1.  i. Several Economists says that GST in India would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. 
  2.  ii. Another criticism is that CGST, SGST are nothing but new names for Central Excise/Service Tax, VAT and CST. Hence, there is no major reduction in the number of tax layers. 
  3.  iii. A number of retail products currently have only four percent tax on them. After GST, garments and clothes could become more expensive. 
  4.  iv. The aviation industry would be affected. Service taxes on airfares currently range from six to nine percent. With GST, this rate will surpass fifteen percent and effectively double the tax rate. 
  5.  v. Adoption and migration to the new GST system would involve teething troubles and learning for the entire ecosystem.

IV. Long Answer Questions

Question 1.
Distinguish between direct taxes and indirect taxes.
Answer:


Question 2.
Discuss the different kinds of GST.
Answer:
GST is of three kinds: CGST, SGST/UGST, and IGST.
1. CGST – Central Goods and Services Tax – imposed and collected by the Central Government on all supply of goods within a state (intra-state) under CGST Act 2017.

2. SGST – State Goods and Services Tax – imposed and collected by the State Governments under State GST Act. (Tamil Nadu GST Act 2017 passed by Tamil Nadu Govt.)

3. UGST – Union Territory Goods and Services Tax – imposed and collected by the five Union Territory Administrations in India under UGST Act 2017.

4. IGST – Inter-State Goods and Services Tax – imposed and collected by the Central Government and the revenue shared with States under IGST Act 2017.

5. IGST on exports – All exports are treated as Inter-State supply under GST. Since exports are zero rated, GST is not imposed on all goods and services exported from India. Any input credit paid already on exports will be refunded.