Multiple choice questions for External Examination(2024-25)

UNIT-1

Introduction to the Constitutional Framework of Indirect Taxes Before GST

1. Which schedule of the Indian Constitution divides the taxation powers between the
Union and State governments?
a) Seventh Schedule
b) Eighth Schedule
c) Ninth Schedule
d) Tenth Schedule
Answer: a) Seventh Schedule
2. Which list in the Seventh Schedule of the Indian Constitution gives exclusive taxation
powers to the Union government?
a) State List
b) Union List
c) Concurrent List
d) Residuary List
Answer: b) Union List
3. Entry 54 of the State List under the Seventh Schedule empowered states to levy:
a) Excise duty
b) Sales tax
c) Service tax
d) Customs duty
Answer: b) Sales tax
4. Which entry in the Union List allowed the central government to levy excise duties?
a) Entry 84
b) Entry 92
c) Entry 54
d) Entry 97
Answer: a) Entry 84
5. Service Tax in India was introduced under which constitutional provision?
a) Article 246
b) Article 268
c) Article 269A
d) Article 366(29A)
Answer: d) Article 366(29A)
6. The power to levy taxes on the sale of goods in inter-state trade and commerce was
granted to:
a) State governments
b) Local governments
c) Union government
d) Both Union and State governments
Answer: c) Union government
7. Before GST, tax on manufacture of goods was known as:
a) Service Tax
b) Excise Duty
c) VAT
d) Sales Tax
Answer: b) Excise Duty
8. Tax on the import and export of goods is called:
a) Customs Duty
 b) VAT
c) Service Tax
d) Sales Tax
Answer: a) Customs Duty
9. Which constitutional amendment paved the way for the introduction of GST in India?
a) 101st Amendment Act
b) 99th Amendment Act
c) 100th Amendment Act
d) 102nd Amendment Act
Answer: a) 101st Amendment Act
10. Before GST, tax on services was levied by:
a) State governments
b) Union government
c) Local authorities
d) Both Union and State governments
Answer: b) Union government

2. Concept of VAT: Meaning, Variants, and Methods

11. VAT stands for:

a) Value Applicable Tax
b) Value Added Tax
c) Variable Allocation Tax
d) Voluntary Assessment Tax
Answer: b) Value Added Tax
12. Which of the following is NOT a method of calculating VAT?
a) Addition Method
b) Invoice Credit Method
c) Subtraction Method
d) Progressive Method
Answer: d) Progressive Method
13. VAT is a tax on:
a) Production
b) Consumption
c) Savings
d) Imports
Answer: b) Consumption
14. VAT is levied at:
a) Every stage of production and distribution
b) Only at the final sale
c) Only at the manufacturing stage
d) Only at the service stage
Answer: a) Every stage of production and distribution
15. Which of the following was a major disadvantage of VAT?
a) Double taxation
b) No input tax credit
c) Cascading effect
d) Increased compliance
Answer: d) Increased compliance
3. Major Defects in the Structure of Indirect Taxes Prior to GST

16. Which of the following was NOT a defect in the pre-GST tax structure?
a) Cascading effect
b) Multiple tax rates
c) Uniformity in tax rates across states
d) No input tax credit for certain taxes
Answer: c) Uniformity in tax rates across states
17. The taxation system before GST led to:
a) A simple tax structure
b) Reduction in compliance burden
c) Tax evasion and revenue loss
d) More transparency in taxation
Answer: c) Tax evasion and revenue loss
18. One of the key reasons for implementing GST was to:
a) Increase the number of indirect taxes
b) Introduce a single national tax
c) Remove direct taxes
d) Increase state revenue only
Answer: b) Introduce a single national tax

4. Overview of GST

19. GST is a tax on:

a) Income
b) Goods and services
c) Capital gains
d) Imports only
Answer: b) Goods and services
20. GST is a:
a) Direct tax
b) Indirect tax
c) Local tax
d) Environmental tax
Answer: b) Indirect tax

5. Structure of GST (SGST, CGST, UTGST & IGST)

21. SGST is levied by:

a) Union government
b) State governments
c) Local governments
d) International bodies
Answer: b) State governments
22. IGST is levied on:
a) Intra-state transactions
b) Inter-state transactions
c) Local transactions
 d) Barter transactions
Answer: b) Inter-state transactions
23. The revenue from CGST goes to:
a) State governments
b) Union government
c) Local governments
d) Both Union and State governments
Answer: b) Union government

6. GST Council

24. The GST Council is chaired by:

a) Prime Minister
b) Finance Minister
c) President
d) Chief Minister of any state
Answer: b) Finance Minister
25. Decisions in the GST Council require:
a) Unanimous vote
b) Two-thirds majority
c) Simple majority
d) Presidential approval
Answer: b) Two-thirds majority

7. GST Rate Structure and Applicability

26. Which of the following tax rates is NOT a part of the GST structure in India?
a) 5%
b) 12%
c) 18%
d) 30%
Answer: d) 30%
27. What is the highest GST rate applicable to luxury goods and sin goods?
a) 12%
b) 18%
c) 28%
d) 40%
Answer: c) 28%
28. Which of the following is NOT exempted from GST?
a) Education services
b) Healthcare services
c) Alcohol for human consumption
d) Mobile phones
Answer: d) Mobile phones
29. Petroleum products like petrol and diesel are:
a) Exempt from GST
b) Taxed at 28% GST
c) Covered under IGST
 d) Subject to SGST and CGST
Answer: a) Exempt from GST
30. What type of tax is GST?
a) Progressive tax
b) Regressive tax
c) Consumption-based tax
d) Direct tax
Answer: c) Consumption-based tax

8. GST Registration and Compliance

31. The threshold turnover for mandatory GST registration for service providers is:
a) ₹10 lakh
b) ₹20 lakh
c) ₹40 lakh
d) ₹50 lakh
Answer: b) ₹20 lakh
32. A business must register for GST if its turnover exceeds ₹40 lakh for:
a) Goods supply in a single state
b) Interstate services
c) Digital services only
d) E-commerce operators
Answer: a) Goods supply in a single state
33. Which of the following is required to collect and pay GST?
a) Small traders with a turnover below ₹10 lakh
b) Businesses registered under the Composition Scheme
c) Unregistered businesses
d) E-commerce operators
Answer: d) E-commerce operators
34. The Composition Scheme under GST is applicable for businesses with turnover up to:
a) ₹20 lakh
b) ₹40 lakh
c) ₹1.5 crore
d) ₹5 crore
Answer: c) ₹1.5 crore
35. Under the Composition Scheme, businesses cannot:
a) Claim input tax credit
b) Pay GST at a fixed percentage
c) File quarterly returns
d) Operate within one state only
Answer: a) Claim input tax credit

9. Input Tax Credit (ITC) under GST

36. Input Tax Credit (ITC) is available on:

a) Personal expenses
b) Business-related purchases
c) Purchase of alcohol
 d) Petrol and diesel
Answer: b) Business-related purchases
37. The main objective of the Input Tax Credit (ITC) mechanism is to:
a) Increase revenue for the government
b) Reduce the cascading effect of taxes
c) Improve business profits
d) Make GST compliance difficult
Answer: b) Reduce the cascading effect of taxes
38. ITC is not available for which of the following?
a) Office furniture
b) Cars purchased for personal use
c) Machinery used in production
d) Raw materials
Answer: b) Cars purchased for personal use

10. GST Filing and Returns

39. The most common GST return filed by regular taxpayers is:
a) GSTR-1
b) GSTR-2A
c) GSTR-3B
d) GSTR-9
Answer: c) GSTR-3B
40. The due date for filing monthly GST returns (GSTR-3B) is:
a) 1st of every month
b) 10th of every month
c) 20th of every month
d) 30th of every month
Answer: c) 20th of every month
41. The annual return under GST is:
a) GSTR-1
b) GSTR-3B
c) GSTR-4
d) GSTR-9
Answer: d) GSTR-9

11. GST Council and Decision-Making

42. Who is the Vice-Chairperson of the GST Council?

a) Prime Minister
b) Finance Minister of India
c) Finance Minister of any state (on rotation)
d) RBI Governor
Answer: c) Finance Minister of any state (on rotation)
43. The GST Council consists of:
a) Only Union Government members
b) Only State Government representatives
c) Both Union and State Government representatives
 d) Private sector representatives
Answer: c) Both Union and State Government representatives
44. The weightage of votes in the GST Council is:
a) 50% for Union Government, 50% for States
b) 75% for Union Government, 25% for States
c) 33% for Union Government, 67% for States
d) Equal for both
Answer: c) 33% for Union Government, 67% for States

12. GST Impact on Businesses and Economy

45. Which of the following was an expected benefit of GST?

a) Increased tax complexity
b) Higher tax burden on businesses
c) Ease of doing business
d) More cascading effect of taxes
Answer: c) Ease of doing business
46. GST has helped in:
a) Creating multiple tax rates across states
b) Reducing logistics and compliance costs
c) Increasing tax evasion
d) Reducing the need for digital invoicing
Answer: b) Reducing logistics and compliance costs
47. What is the penalty for failing to register under GST when required?
a) ₹5,000
b) ₹10,000
c) 10% of tax due (minimum ₹10,000)
d) No penalty
Answer: c) 10% of tax due (minimum ₹10,000)
48. What is the penalty for delayed GST return filing?
a) ₹10 per day
b) ₹50 per day
c) ₹100 per day
d) ₹500 per day
Answer: b) ₹50 per day
49. E-way bill is required for goods transported worth more than:
a) ₹25,000
b) ₹50,000
c) ₹75,000
d) ₹1,00,000
Answer: b) ₹50,000
50. GST was implemented in India on:
a) 1st April 2017
b) 1st July 2017
c) 1st January 2018
d) 15th August 2017
Answer: b) 1st July 2017
 UNIT-2

Definition of Supply

1. Under GST, "supply" includes:

a) Sale
b) Barter
c) Exchange
d) All of the above
Answer: d) All of the above
2. The term "supply" is defined under which section of the CGST Act, 2017?
a) Section 2
b) Section 7
c) Section 10
d) Section 15
Answer: b) Section 7
3. Supply under GST should be:
a) Made for consideration
b) In the course of business
c) Either (a) or (b)
d) Both (a) and (b)
Answer: d) Both (a) and (b)
4. Which of the following is NOT considered as a supply under GST?
a) Goods given as free samples
b) Sale of old machinery
c) Barter of goods
d) Import of services for business purposes
Answer: a) Goods given as free samples
5. Which of the following is considered as a supply even without consideration?
a) Permanent transfer of business assets
b) Temporary use of business assets
c) Goods sent on job work
d) Branch transfers within the same state
Answer: a) Permanent transfer of business assets

2. Place of Supply: Intra-State and Inter-State Supply

6. Intra-State supply under GST means:

a) Supplier and recipient are in different states
b) Supplier and recipient are in the same state
c) Goods are imported from outside India
d) Goods are exported from India
Answer: b) Supplier and recipient are in the same state
7. When goods are supplied from Uttar Pradesh to Maharashtra, the transaction is
classified as:
a) Intra-State supply
b) Inter-State supply
c) Export
d) Composite supply
Answer: b) Inter-State supply
 8. Which tax is levied on inter-state supplies?
a) SGST
b) CGST
c) IGST
d) UTGST
Answer: c) IGST
9. Place of supply for services related to immovable property is:
a) Location of the supplier
b) Location of the recipient
c) Place where the immovable property is located
d) Place where the contract is signed
Answer: c) Place where the immovable property is located
10. If goods are supplied to SEZ (Special Economic Zone), the supply is treated as:
a) Intra-State supply
b) Inter-State supply
c) Exempt supply
d) Non-GST supply
Answer: b) Inter-State supply

3. Composite and Mixed Supply

11. Composite supply includes:

a) Two or more taxable supplies naturally bundled together
b) Two independent supplies with separate prices
c) Barter transactions
d) Inter-state sales only
Answer: a) Two or more taxable supplies naturally bundled together
12. The principal supply in a composite supply determines:
a) The GST rate applicable
b) The location of supply
c) Whether the supply is exempt
d) Whether the supply is taxable or non-taxable
Answer: a) The GST rate applicable
13. An example of a composite supply is:
a) Selling a laptop with a free laptop bag
b) Selling a combo pack of chocolates and soft drinks
c) Selling books and mobile phones together
d) Providing food and hotel accommodation
Answer: a) Selling a laptop with a free laptop bag
14. Mixed supply means:
a) Two or more goods or services supplied separately
b) Two or more supplies sold as a single package at one price
c) A combination of taxable and exempt supplies
d) A supply made without consideration
Answer: b) Two or more supplies sold as a single package at one price
15. The tax rate for mixed supply is determined based on:
a) The highest tax rate applicable among the supplied items
b) The lowest tax rate applicable
c) The average tax rate
d) The rate of the main product
Answer: a) The highest tax rate applicable among the supplied items
4. Import and Export

16. Export of goods is treated as:

a) Zero-rated supply
b) Exempt supply
c) Taxable supply
d) Non-GST supply
Answer: a) Zero-rated supply
17. Import of goods is subject to:
a) IGST and customs duty
b) Only CGST
c) Only SGST
d) No GST
Answer: a) IGST and customs duty
18. GST on imported services is paid by:
a) The supplier
b) The recipient under reverse charge
c) The government
d) Nobody, as it is exempt
Answer: b) The recipient under reverse charge

5. Reverse Charge Mechanism (RCM)

19. Under RCM, who is liable to pay GST?

a) Supplier
b) Recipient
c) Government
d) None of the above
Answer: b) Recipient
20. Which of the following is liable under RCM?
a) Services by a GTA (Goods Transport Agency)
b) Sale of goods by a registered trader
c) Online sales through e-commerce platforms
d) Exported goods
Answer: a) Services by a GTA (Goods Transport Agency)

6. Time of Supply

21. Time of supply for goods is earlier of:

a) Date of invoice or date of payment
b) Date of receipt of goods
c) Date of supply agreement
d) None of the above
Answer: a) Date of invoice or date of payment
22. Time of supply for services is:
a) Date of invoice or date of receipt of payment, whichever is earlier
b) Date of contract signing
 c) Date of service completion
d) Date of receipt of order
Answer: a) Date of invoice or date of receipt of payment, whichever is earlier

7. Types of Supplies

23. Which of the following is a nil-rated supply?

a) Fresh milk
b) Packaged food
c) Alcoholic beverages
d) Tobacco
Answer: a) Fresh milk
24. Zero-rated supplies are:
a) Subject to 0% GST with ITC refund
b) Fully exempt from GST without ITC refund
c) Outside the GST scope
d) Taxed at 5%
Answer: a) Subject to 0% GST with ITC refund
25. Non-GST supplies include:
a) Petrol and diesel
b) Education services
c) Fresh vegetables
d) Packaged snacks
Answer: a) Petrol and diesel

8. Supply of Goods and Services - Definition & Scope

26. Under GST, supply includes:

a) Sale, barter, and exchange
b) Lease, rental, and disposal
c) License, transfer, and import of services
d) All of the above
Answer: d) All of the above
27. Which of the following transactions is NOT considered a supply under GST?
a) Supply of goods for personal use
b) Business assets permanently transferred without consideration
c) Goods given as gifts exceeding ₹50,000
d) Import of services without consideration for business use
Answer: a) Supply of goods for personal use
28. Which of the following is a mandatory condition for supply under GST?
a) It should be made in India
b) It should be made for consideration
c) It should be between related persons
d) It should be for personal consumption
Answer: b) It should be made for consideration

9. Place of Supply: Intra-State & Inter-State Supply

 29. When the location of the supplier and the place of supply are in the same state, it is
called:
a) Inter-State supply
b) Intra-State supply
c) Zero-rated supply
d) Exempt supply
Answer: b) Intra-State supply
30. If goods are sold from Gujarat to Tamil Nadu, the tax levied will be:
a) CGST + SGST
b) IGST
c) SGST only
d) No GST applicable
Answer: b) IGST
31. GST on international imports is levied as:
a) SGST + CGST
b) IGST + Customs Duty
c) SGST only
d) No GST applicable
Answer: b) IGST + Customs Duty

10. Composite and Mixed Supply

32. A supply consisting of two or more goods or services that are naturally bundled is
called:
a) Mixed supply
b) Composite supply
c) Exempt supply
d) Inward supply
Answer: b) Composite supply
33. In a composite supply, tax is levied at the rate applicable to:
a) The principal supply
b) The highest-rated product
c) The lowest-rated product
d) The average rate of all supplies
Answer: a) The principal supply
34. A mixed supply is determined based on:
a) The principal supply's tax rate
b) The highest tax rate among the items
c) The lowest tax rate among the items
d) The weighted average tax rate
Answer: b) The highest tax rate among the items
35. Which of the following is an example of mixed supply?
a) A pack of chocolates with a greeting card sold at one price
b) Renting a hotel room with complimentary breakfast
c) Sale of a car with insurance
d) Supplying goods with installation services
Answer: a) A pack of chocolates with a greeting card sold at one price

11. Import & Export

 36. Export of goods and services is treated as:
a) Exempt supply
b) Non-GST supply
c) Zero-rated supply
d) Intra-state supply
Answer: c) Zero-rated supply
37. Who pays GST on imported services under RCM?
a) Supplier
b) Recipient
c) Government
d) GST is not applicable
Answer: b) Recipient
38. Which of the following is NOT classified as an export of services?
a) Supplier is in India
b) Recipient is outside India
c) Place of supply is in India
d) Payment is received in foreign exchange
Answer: c) Place of supply is in India

12. Reverse Charge Mechanism (RCM)

39. Which of the following transactions is subject to Reverse Charge Mechanism (RCM)?
a) Import of services
b) Supply by an unregistered dealer to a registered dealer
c) Services by a Goods Transport Agency (GTA)
d) All of the above
Answer: d) All of the above
40. Under RCM, tax is paid by:
a) Supplier
b) Recipient
c) Government
d) Either supplier or recipient
Answer: b) Recipient
41. Which of the following is NOT covered under RCM?
a) Legal services by an advocate
b) Services by an independent director
c) Rent paid by a registered entity to an unregistered landlord
d) Sale of used goods by an individual
Answer: d) Sale of used goods by an individual

13. Time of Supply

42. Time of supply for goods is earlier of:

a) Date of invoice or payment receipt
b) Date of goods delivery or invoice
c) Date of order placement
d) Date of payment confirmation
Answer: a) Date of invoice or payment receipt
 43. Time of supply for services is earlier of:
a) Date of invoice or payment
b) Date of service completion
c) Date of agreement
d) Date of contract execution
Answer: a) Date of invoice or payment
44. If the supplier fails to issue an invoice, the time of supply is determined based on:
a) Date of goods delivery
b) Date of payment receipt
c) Date of contract
d) None

Types of Supplies: Nil-Rated, Zero-Rated, Exempted & Non-GST

45. Nil-rated supply means:

a) Taxable at 0% GST
b) Exempt from GST
c) Not covered under GST
d) Subject to Reverse Charge Mechanism
Answer: a) Taxable at 0% GST
46. Which of the following is an example of a zero-rated supply?
a) Fresh fruits
b) Exports
c) Alcohol for human consumption
d) Petroleum products
Answer: b) Exports
47. Which of the following is an exempt supply?
a) Sale of rice
b) Sale of laptops
c) Sale of packaged foods
d) Sale of bottled water
Answer: a) Sale of rice
48. Non-GST supplies include:
a) Petrol and diesel
b) Education services
c) Medical services
d) Packaged foods
Answer: a) Petrol and diesel
49. Which of the following is NOT an exempt supply under GST?
a) Services by RBI
b) Agriculture-related services
c) Sale of handmade goods
d) Sale of mobile phones
Answer: d) Sale of mobile phones
50. A registered taxpayer can claim Input Tax Credit (ITC) on:
a) Nil-rated supplies
b) Zero-rated supplies
c) Exempt supplies
d) Non-GST supplies
Answer: b) Zero-rated supplies