GST or Goods and Services Tax is an indirect tax levied on the supply of goods and services in India. It has replaced multiple taxes like VAT, Service Tax, and Excise Duty. The GST system in India is complex and constantly evolving, which requires a thorough understanding.
If you are preparing for a job interview that involves GST, it’s essential to have a good understanding of the GST system and its related concepts. One way to prepare for the interview is to practice answering GST interview questions. These questions can help you demonstrate your competence in this field and set you apart from other candidates.
In this article, we have compiled a list of frequently asked GST interview questions and answers in 2023. We have also provided extensive explanations to help you grasp the topics. Whether you are a fresher or an experienced professional, this article will assist you in acing your GST-related job interview questions.
Understanding GST
GST or Goods and Services Tax is an indirect tax that has replaced various indirect taxes in India. It is a comprehensive tax levied on the supply of goods and services across the country. GST has subsumed many indirect taxes such as excise duty, service tax, and value-added tax (VAT), among others.
GST is a destination-based tax, which means that the tax is collected by the state where the goods or services are consumed, rather than the state where they are produced. GST is levied on all stages of the supply chain, from the manufacturer to the end consumer.
The GST system is divided into three categories: CGST, SGST, and IGST. CGST and SGST are levied on intra-state supplies, whereas IGST is levied on inter-state supplies. The charging sections for CGST and SGST are Section 7(1) of the CGST/SGST Act, whereas Section 4(1) of the IGST Act is the charging section for IGST.
GST has brought about many benefits for businesses and consumers alike. It has simplified the tax system, reduced the cascading effect of taxes, and increased transparency in the tax system. GST has made it easier for businesses to operate across state borders, as it has eliminated the need for multiple registrations and compliance requirements.
Overall, understanding GST is crucial for businesses and individuals alike, as it impacts the prices of goods and services and affects the economy as a whole.
GST in India
GST or Goods and Services Tax is an indirect tax levied on the supply of goods and services in India. The GST system in India is a unified tax that has replaced multiple taxes like VAT, Service Tax, and Excise Duty. The entire country has been divided into 29 states and 7 Union Territories, and GST is administered by both the Central and State Governments.
The GST Council, headed by the Union Finance Minister, is responsible for making recommendations on issues related to GST, including rates, exemptions, and thresholds. The Parliament has enacted four laws, namely the Central Goods and Services Tax Act, 2017, the Integrated Goods and Services Tax Act, 2017, the Union Territory Goods and Services Tax Act, 2017, and the Goods and Services Tax (Compensation to States) Act, 2017, to govern the GST system in India.
Under the GST system, there are three types of taxes that are levied: Central GST (CGST), State GST (SGST), and Integrated GST (IGST). CGST and SGST are levied on intra-state supplies, while IGST is levied on inter-state supplies. The charging sections are section 7 (1) of CGST/SGST Act and Section 4 (1) of the IGST Act.
The GST system in India has been designed to be simple, transparent, and technology-driven. It has reduced the burden of multiple taxes and has made it easier for businesses to comply with the tax laws. However, the GST system in India is still evolving, and there are challenges that need to be addressed, especially in the North Eastern States.
In conclusion, the GST system in India is a complex and ever-changing tax structure that demands a complete understanding. It is administered by both the Central and State Governments, and the GST Council is responsible for making recommendations on issues related to GST. The GST system has simplified the tax structure in India, but there are still challenges that need to be addressed, especially in the North Eastern States.
GST Registration
GST registration is mandatory for businesses with an annual turnover exceeding Rs. 20 lakhs. For businesses in northeastern states, the registration limit is Rs. 10 lakhs. GST registration is also mandatory for businesses involved in inter-state supply of goods and services, regardless of their annual turnover.
Under the GST Act, every registered person is assigned a unique identification number known as the GST Identification Number (GSTIN). This 15-digit alphanumeric code is based on the PAN of the business and the state code where the business is registered.
The GST registration process is entirely online and can be completed on the GST Portal. The process involves filling out the GST registration application form, uploading the necessary documents, and verifying the application using a Digital Signature Certificate (DSC) or an Aadhaar-based Electronic Verification Code (EVC).
Once the application is submitted, it is reviewed by the GST officer, who may ask for additional information or documents if required. If the application is approved, the GSTIN is issued, and the business is registered under GST.
In addition to the mandatory registration, businesses can also opt for voluntary registration under GST. This can be beneficial for businesses that want to expand their customer base by selling goods or services in other states.
Overall, GST registration is a crucial aspect of doing business in India, and it is essential to ensure compliance with the GST Act to avoid penalties and legal issues.
Types of GST
Under the GST regime, there are mainly three types of GST that are levied on the supply of goods and services in India. They are Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). Let’s discuss each type of GST in detail.
Central Goods and Services Tax (CGST)
CGST is a tax levied by the Central Government on the intra-state supply of goods and services. It is governed by the Central Goods and Services Tax Act, 2017. The tax collected under CGST is shared between the Central and State Governments. The CGST rates are the same as the SGST rates.
State Goods and Services Tax (SGST)
SGST is a tax levied by the State Government on the intra-state supply of goods and services. It is governed by the State Goods and Services Tax Act, 2017. The tax collected under SGST is shared between the Central and State Governments. The SGST rates are the same as the CGST rates.
Integrated Goods and Services Tax (IGST)
IGST is a tax levied by the Central Government on the inter-state supply of goods and services. It is governed by the Integrated Goods and Services Tax Act, 2017. The tax collected under IGST is shared between the Central and State Governments. The IGST rates are generally higher than the CGST and SGST rates.
In conclusion, understanding the different types of GST is crucial for businesses to comply with the GST laws and regulations. It is important to note that the GST rates are subject to change from time to time, and businesses must stay updated with the latest changes.
Supply under GST
In GST, the term “supply” is defined as any transaction involving the supply of goods or services or both for consideration. It includes all forms of supply, such as sale, transfer, barter, exchange, license, rental, lease, or disposal.
Supply of Goods
The term “supply of goods” refers to the transfer of ownership of goods from one person to another in the course of business for consideration. It includes all forms of supply, such as sale, transfer, barter, exchange, license, rental, lease, or disposal.
Inter-state Supplies
Inter-state supplies refer to the supply of goods or services or both from one state to another. In such cases, Integrated Goods and Services Tax (IGST) is levied on the transaction. The IGST is collected by the central government and then distributed among the states.
Intra-state Supplies
Intra-state supplies refer to the supply of goods or services or both within the same state. In such cases, Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) are levied on the transaction.
Interstate Supply of Goods and Services
Interstate supply of goods and services refers to the supply of goods and services or both from one state to another. In such cases, IGST is levied on the transaction.
In conclusion, understanding the concept of supply under GST is crucial for any business operating in India. It is important to determine the correct tax liability and comply with the GST regulations.
Tax Credit in GST
One of the most significant benefits of GST is the availability of tax credit. The tax credit system allows businesses to claim credit for taxes paid on purchases of goods or services that are used for business purposes. This credit is known as Input Tax Credit (ITC).
Input Tax Credit (ITC)
ITC is a credit mechanism that allows businesses to claim credit for the GST paid on purchases. It can be claimed for taxes paid on inputs such as raw materials, capital goods, services, etc. used in the production of goods or services. The credit can be claimed only if the goods or services are used for business purposes.
Calculation of GST Credit
The calculation of GST credit is done based on the difference between the input GST and output GST. If the input GST is higher than the output GST, then it is called the GST Credit. The calculation varies depending on the type of GST.
Claiming GST Credit
To claim the GST credit, the business must be registered under GST and should have a GSTIN. The business must also maintain proper records of all purchases and sales. The credit can be claimed in the GST return for the month in which the purchase was made.
Restrictions on GST Credit
There are certain restrictions on claiming GST credit. The credit cannot be claimed for taxes paid on goods or services that are used for personal purposes or for exempted supplies. Additionally, the credit cannot be claimed for certain goods and services such as motor vehicles, food and beverages, etc.
In conclusion, the availability of tax credit in GST is a significant benefit for businesses. It helps in reducing the overall tax burden and promotes efficiency in the supply chain. However, it is important for businesses to understand the rules and regulations related to claiming GST credit to avoid any penalties or legal issues.
GST Returns
GST returns are the periodic statements that businesses registered under GST need to file with the government. These returns contain details about the transactions made by the business, including sales, purchases, and taxes paid and collected. Failing to file GST returns can lead to penalties and legal consequences.
There are different types of GST returns that businesses need to file, depending on their turnover and nature of business. Some of the commonly filed GST returns are:
- GSTR-1: This return contains details of all sales made by the business during the period. It needs to be filed monthly or quarterly, depending on the turnover of the business.
- GSTR-3B: This is a summary return that needs to be filed monthly by businesses with a turnover of up to Rs. 5 crores. It contains details of the taxes paid and collected during the period.
- GSTR-9: This is an annual return that needs to be filed by all businesses registered under GST. It contains a summary of all transactions made during the financial year.
It is important for businesses to file GST returns accurately and on time to avoid penalties and legal consequences. In case of any errors or discrepancies, businesses can file a revised return to rectify the mistakes.
Overall, GST returns are an important aspect of GST compliance and businesses need to ensure that they file them accurately and on time.
GST Compliance
GST compliance refers to the adherence to the rules and regulations laid down by the government regarding the Goods and Services Tax. It is essential for businesses to comply with GST regulations to avoid penalties and legal issues. Here are some aspects of GST compliance that businesses should be aware of:
Tax Invoice
A tax invoice is a document issued by a registered supplier of goods or services to their buyer. It is an essential document for claiming input tax credit. As per GST regulations, a tax invoice should contain details such as the GSTIN of the supplier and the buyer, the date of issue, the description of goods or services, the value of goods or services, and the tax charged.
Invoices
Invoices are documents that contain details of the goods or services supplied by a registered supplier to their buyer. It is mandatory for businesses to issue invoices for all supplies made, including exports and supplies to unregistered persons. Invoices should be issued within a prescribed time frame and should contain all the necessary details as per GST regulations.
E-way Bill
An e-way bill is a document required for the movement of goods worth more than Rs. 50,000 within the country. It is mandatory for businesses to generate an e-way bill before the movement of goods. The e-way bill contains details such as the GSTIN of the supplier and the buyer, the date of issue, the description of goods, the value of goods, and the place of delivery.
Businesses should ensure that they comply with all GST regulations to avoid any legal issues or penalties. Maintaining proper records and documentation is crucial for GST compliance.
Composition Scheme
The Composition Scheme is a simple and easy-to-follow tax scheme designed for small businesses. Under this scheme, businesses with an annual turnover of up to Rs. 1.5 crore can pay tax at a fixed rate without having to maintain detailed records of every transaction.
Eligibility for Composition Scheme
Not all businesses are eligible to opt for the Composition Scheme. Only businesses that meet the following criteria can opt for the Composition Scheme:
- Annual turnover of up to Rs. 1.5 crore
- Only engaged in the supply of goods
- Not engaged in inter-State supplies
- Not engaged in the supply of exempt goods
- Not engaged in making any supplies through an electronic commerce operator
Composition Tax
Businesses opting for the Composition Scheme are required to pay tax at a fixed rate on their annual turnover. The rate of tax varies depending on the nature of the business. The current rate of tax for businesses dealing in goods is 1%.
Advantages of Composition Scheme
The Composition Scheme offers several advantages to small businesses, including:
- Reduced compliance burden
- Lower tax liability
- Simplified tax calculations
- Reduced record-keeping requirements
However, businesses opting for the Composition Scheme are not eligible to claim input tax credit. Also, businesses engaged in the supply of services are not eligible to opt for the Composition Scheme.
In conclusion, the Composition Scheme is a beneficial tax scheme for small businesses that meet the eligibility criteria. However, businesses must carefully evaluate the pros and cons of the scheme before opting for it.
Reverse Charge Mechanism
Reverse charge mechanism (RCM) is a mechanism where the recipient of the goods or services is liable to pay Goods and Services Tax (GST) instead of the supplier. This mechanism is applicable to supplies of both goods and services. The reverse charge mechanism is mainly applicable in the following scenarios:
- Import of services: When a GST-registered person in India receives services from a person who is located outside India, the recipient of services in India is required to pay GST under RCM.
- Purchase from an unregistered dealer: When a registered person buys goods or services from an unregistered dealer, the recipient of goods or services is required to pay GST under RCM.
- Goods and services notified by the government: The government can notify certain goods and services where the recipient of goods or services is required to pay GST under RCM.
The reverse charge mechanism requires the GST-registered recipient of the goods or services to account for GST on the goods or services as if he were the supplier. At the same time, the GST-registered recipient would be entitled to claim the GST as his input tax credit (ITC).
It is important to note that if the recipient of goods or services is not registered under GST, then the reverse charge mechanism will not apply. In such cases, the supplier of goods or services will be liable to pay GST.
In conclusion, the reverse charge mechanism is an important aspect of GST compliance that businesses need to be aware of. It is important to understand the scenarios where the reverse charge mechanism is applicable and ensure that the necessary compliance requirements are met.
GST and Business
GST has a significant impact on businesses in India. It is important for businesses to understand the basics of GST and how it affects their operations.
Aggregate Turnover
One of the most important concepts in GST is the aggregate turnover of a business. This includes all taxable supplies, exempt supplies, and exports made by a business. If a business has an aggregate turnover of over Rs. 20 lakhs (Rs. 10 lakhs for special category states), they are required to register for GST.
Transfer of Input Tax Credit
Under GST, businesses can claim input tax credit (ITC) on the tax paid on their purchases. This ITC can be used to offset the tax liability on their sales. However, ITC cannot be transferred between different GST registrations of a business. This means that if a business has multiple GST registrations, they cannot transfer ITC between them.
Local Sales and Taxable Sales
GST is a destination-based tax. This means that the tax is levied where the goods or services are consumed, not where they are produced. For local sales, the tax rate is the same as the rate applicable in the state where the goods or services are sold. For taxable sales to other states, the Integrated GST (IGST) is applicable.
Exempt Sales
Certain goods and services are exempt from GST. This means that no tax is levied on their sale. Businesses that deal with exempt goods or services are not eligible for ITC on their purchases related to those goods or services.
In conclusion, businesses need to have a good understanding of GST and how it affects their operations. It is important to keep track of the aggregate turnover, transfer of ITC, local sales, taxable sales, and exempt sales. By doing so, businesses can ensure that they are compliant with GST regulations and avoid any penalties or fines.
Role of Technology in GST
Technology has played a significant role in simplifying the GST process. The GST portal is the primary platform that enables taxpayers to register, file returns, and make payments. The portal has undergone several updates to improve its functionality and user experience.
Additionally, software such as Tally Prime has made GST compliance more accessible for businesses. Tally Prime is a popular accounting software that offers a GST module that automates the entire GST process. The software enables businesses to file returns, generate invoices, and reconcile data quickly and efficiently.
In addition to software, training courses such as Accounting and Taxation Course, Advanced Excel Training, and Income Tax Specialist Course have also been instrumental in preparing professionals for GST compliance. These courses provide in-depth knowledge of GST regulations, filing procedures, and best practices for GST compliance.
The use of technology has made GST compliance more accessible, efficient, and accurate. It has reduced the burden on taxpayers and enabled them to focus on their core business activities. The government has also taken several initiatives to promote the use of technology in GST compliance, such as the introduction of e-invoicing and e-way bills.
Overall, technology has played a crucial role in simplifying the GST process, and it will continue to do so in the future. As technology continues to evolve, it is expected that it will bring even more significant changes to the GST compliance process.
| Entity | Role in GST Compliance |
|---|---|
| GST Portal | Primary platform for registration, return filing, and payments |
| Tally Prime Course | Accounting software with a GST module for automation of GST compliance |
| Accounting and Taxation Course | Provides in-depth knowledge of GST regulations and filing procedures |
| Advanced Excel Training | Enables efficient data management for GST compliance |
| Income Tax Specialist Course | Provides knowledge of GST regulations and best practices for GST compliance |
GST and Economy
The implementation of GST has had a significant impact on the Indian economy. It has streamlined the indirect tax system by replacing multiple taxes with a single tax, thereby reducing the cascading effect of taxes on the prices of goods and services. GST has also helped in improving the ease of doing business in India by simplifying the tax compliance process.
One of the major advantages of GST is that it has brought more businesses under the tax net, thereby increasing the tax revenue of the government. This increase in revenue has helped in funding various developmental projects in the country.
Moreover, GST has also helped in curbing tax evasion by making the tax system more transparent. The introduction of GST has made it mandatory for businesses to maintain proper records and file regular returns, which has made it easier for the tax authorities to track tax evaders.
In conclusion, GST has had a positive impact on the Indian economy by improving the efficiency of the tax system, increasing tax revenue, and curbing tax evasion.
Interview Preparation for GST
Preparing for a job interview can be a daunting task, especially when it comes to the Goods and Services Tax (GST). Here are some tips to help you prepare for a GST interview:
1. Research the company
Before the interview, it’s important to research the company and its operations. This will help you understand the company’s GST requirements and how you can contribute to its success. You can also use this information to tailor your responses to the company’s specific needs.
2. Understand GST basics
Having a solid understanding of GST basics is essential for any GST-related job interview. You should be familiar with the different types of GST, the registration process, GST returns, and GST compliance requirements. This will demonstrate your competence in the field and set you apart from other candidates.
3. Review common GST interview questions
Reviewing common GST interview questions can help you prepare for the interview and feel more confident during the process. Some common GST interview questions include:
- What is GST and how does it work?
- What are the different types of GST?
- What are the GST registration requirements?
- How do you calculate GST?
- What are the GST compliance requirements?
4. Practice your responses
Practicing your responses to common GST interview questions can help you feel more confident and prepared during the interview. You can also ask a friend or family member to conduct a mock interview to help you refine your responses and improve your interview skills.
5. Dress professionally
Finally, it’s important to dress professionally for the interview. This will demonstrate that you take the interview seriously and are committed to the job. Make sure your clothes are clean, ironed, and appropriate for the job.
By following these tips, you can feel more confident and prepared for a GST job interview. Remember to stay calm, be confident, and answer the questions to the best of your ability.