GSEB Class 11 Solutions Chapter 3 Introduction to Goods and Services Tax

1. Write the Correct Option From Those Given Below Each Question:

Question 1. G'ST includes ___________ of central and state government.
(a) Indirect taxes
(b) Direct taxes
(c) Direct and indirect taxes
(d) Indirect and direct taxes
Answer: (a) Indirect taxes
In simple words: GST mainly covers indirect taxes that are collected by both central and state governments.

Exam Tip: Remember that GST replaced numerous indirect taxes previously levied by central and state authorities, simplifying the tax structure.

Question 2. Which of the following was state government indirect tax prior to GST ?
(a) Custom duty
(b) Excise duty
(c) Value added tax
(d) Service tax
Answer: (c) Value added tax
In simple words: Before GST, Value Added Tax (VAT) was an indirect tax collected by state governments.

Exam Tip: Differentiate between central and state indirect taxes that existed before GST to correctly identify which taxes were subsumed.

Question 3. Which of the following was not central government indirect tax prior to GST?
(a) Custom duty
(b) Excise duty
(c) Service tax
(d) Purchase tax
Answer: (d) Purchase tax
In simple words: Purchase tax was not an indirect tax collected by the central government; it was usually a state-level tax.

Exam Tip: Be aware of the major central government indirect taxes (like excise duty, customs duty, service tax) and state government indirect taxes (like VAT, purchase tax, entertainment tax) before GST.

Question 4. Implementation of GST year is ....................
(a) 2016
(b) 2017
(c) 2015
(d) 2014
Answer: (b) 2017
In simple words: The Goods and Services Tax (GST) system was introduced and started being used in India in the year 2017.

Exam Tip: Knowing key dates like the implementation year of GST is important for historical context and timeline-based questions.

Question 5. Which of the following is correct for supply of within state/union territory?
(a) CGST + SGST / UTGST
(b) IGST + SGST/UTGST
(c) CGST + IGST
(d) IGST - SGST / UTGST
Answer: (a) CGST + SGST/UTGST
In simple words: For goods or services sold within the same state or union territory, both Central GST (CGST) and State GST (SGST) or Union Territory GST (UTGST) are charged together.

Exam Tip: Clearly distinguish between intrastate (within state/UT) and interstate (between states/UTs) supplies, as different GST components apply to each.

Question 6. Which tax is applicable for supply of outside state/union territory?
(a) CGST
(b) IGST
(c) SGST
(d) UTGST
Answer: (b) IGST
In simple words: When goods or services are supplied between different states or union territories, the Integrated GST (IGST) is applied.

Exam Tip: Understand that IGST is collected by the central government on interstate supplies, ensuring seamless tax credit transfer across states.

2. Answer the Following Questions In One Sentence:

Question 1. In India to meet economic needs of the nation, which kind of taxes were collected by the government?
Answer: In India, to fulfil the nation's economic requirements, the government collected two main types of taxes: direct taxes and indirect taxes.
In simple words: The government in India collected direct and indirect taxes to meet the country's financial needs.

Exam Tip: Remember that direct taxes are paid directly by individuals or corporations, while indirect taxes are levied on goods and services.

Question 2. Which items are taxable under GST ?
Answer: Under the Goods and Services Tax (GST) system, the supply of goods and the completion of services are taxable, rather than the tax collection on production, sales, or service provision.
In simple words: Under GST, tax is charged on the supply of goods and services.

Exam Tip: Focus on "supply" as the key taxable event in the GST regime, replacing older concepts like "manufacture" or "sale."

Question 3. Which terminology is used for sale and purchase of goods and services under GST?
Answer: The terminology of "Supply" is utilized for the sale and purchase of goods and services under the Goods and Services Tax (GST) system.
In simple words: For selling and buying goods and services under GST, the word "Supply" is used.

Exam Tip: Grasping the precise terminology of GST, such as "supply," is essential for accurate understanding and application of the tax law.

Question 4. What is interstate supply transaction ?
Answer: When a trader conducts a supply transaction outside their own state or union territory, this is referred to as an interstate supply.
In simple words: An interstate supply happens when a trader sells or buys goods/services from outside their own state or union territory.

Exam Tip: Clearly define interstate supply, as it determines whether IGST is applicable, affecting compliance and credit mechanisms.

Question 5. Which GSTS are applicable to inter-state supply?
Answer: Only Integrated Goods and Services Tax (IGST) is applicable to an interstate supply transaction.
In simple words: For supplies between different states, only IGST is charged.

Exam Tip: Remember that IGST consolidates the central and state components of GST for interstate transactions, simplifying collection and credit flow.

Question 6. What is intrastate supply transaction ?
Answer: When a trader carries out a supply transaction within their own state or union territory, this is identified as an intrastate supply.
In simple words: An intrastate supply happens when a trader sells or buys goods/services within their own state or union territory.

Exam Tip: An accurate definition of intrastate supply is crucial for correctly applying CGST and SGST/UTGST.

Question 7. Which GSTS are applicable to intra-state supply?
Answer: Both Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST) are applicable to an intrastate supply.
In simple words: For supplies within the same state, both CGST and SGST/UTGST are charged.

Exam Tip: Understand that CGST and SGST/UTGST are levied simultaneously on intrastate supplies, with revenue shared between the central and state governments.

Question 8. Under which supply transaction, GST is distributed equally between central and respective state government?
Answer: Goods and Services Tax (GST) collected on an intrastate supply transaction is distributed equally between the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST).
In simple words: In intrastate supplies, the collected GST is shared equally between the central and state/UT governments.

Exam Tip: This equal distribution mechanism ensures revenue sharing between the central and state governments for supplies within a state or UT.

Question 9. When input GST is chargeable ?
Answer: Input Goods and Services Tax (GST) becomes chargeable when goods or services, or both, are purchased by a business.
In simple words: Input GST is charged when you buy goods or services.

Exam Tip: Remember that input GST is the tax a business pays on purchases and can typically be used to reduce output tax liability.

Question 10. When output GST is chargeable?
Answer: Output Goods and Services Tax (GST) is chargeable when goods or services, or both, are sold by a business.
In simple words: Output GST is charged when you sell goods or services.

Exam Tip: Output GST is the tax a business collects from its customers on sales, which is then paid to the government after adjusting for input tax credit.

Question 11. What is input tax credit?
Answer: Input Tax Credit (ITC) refers to the benefit where, at the time of paying tax on sales, you can reduce the tax amount you have already paid on your purchases.
In simple words: ITC means you can reduce the tax you owe on sales by the amount of tax you've already paid on your purchases.

Exam Tip: ITC is a cornerstone of GST, preventing the cascading effect of taxes by allowing businesses to claim credit for taxes paid on inputs.

Question 12. Which types of needs are considered to determine GST rates?
Answer: Goods and Services Tax (GST) rates are decided by considering the type of needs they serve, ranging from basic necessities to luxury items.
In simple words: GST rates are set based on whether things are basic needs or luxury items.

Exam Tip: Understand that GST rates are tiered to reflect the consumption pattern and socio-economic considerations, with essential goods having lower rates and luxury items having higher rates.

Question 13. What are the present slabs of GST?
Answer: The current Goods and Services Tax (GST) slabs are 5%, 12%, 18%, and 28%.
In simple words: The current GST rates are 5%, 12%, 18%, and 28%.

Exam Tip: Memorize the standard GST rate slabs as they are fundamental to calculating the tax on various goods and services.

3. Answer the Following Questions In Brief:

Question 1. Explain any two special features of GST.
Answer: The distinct features of Goods and Services Tax (GST) are as follows:
1. One tax: Goods and Services are covered under a single tax only.
2. Tax collection on supply: Tax is collected on the supply of goods and the completion of services, instead of being collected on the production or sales of goods or the provision of services.
In simple words: GST has two main features: first, it's a single tax covering both goods and services; second, tax is charged only when goods or services are supplied, not when they are made or sold.

Exam Tip: When explaining features, use clear, concise points and highlight how GST differs from previous tax systems.

Question 2. Explain any two benefits of GST.
Answer: The advantages of Goods and Services Tax (GST) are as given below:
1. One tax: Instead of different indirect taxes from both the central and state governments, these taxes are now included under just one tax.
2. Simple tax system: The indirect tax system becomes very straightforward because various indirect taxes are removed.
In simple words: Two benefits of GST are that it combines many old taxes into one, and it makes the entire indirect tax system much simpler by removing complicated taxes.

Exam Tip: Focus on how GST simplifies the tax structure and eliminates complexities, which are key benefits for businesses and consumers.