IAS Prelims GS Questions and Answers - Aug 03 & 04, 2016

ANSWER: None of the above

Explanation:
Central taxes that the GST will replace

• Central Excise Duty
• Duties of Excise (medicinal and toilet preparations)
• Additional Duties of Excise (goods of special importance)
• Additional Duties of Excise (textiles and textile products)
• Additional Duties of Customs (commonly known as CVD- Countervailing Duty)
• Special Additional Duty of Customs (SAD)
• Service Tax
• Cesses and surcharges in so far as they relate to supply of goods or services.

State taxes that the GST will subsume

• State VAT/Sales tax
• Central Sales Tax (levied by the Centre and collected by the States)
• Purchase Tax
• Luxury Tax
• Octroi and Entry Tax (all forms)
• Entertainment Tax (not levied by local bodies)
• Taxes on advertisements
• Taxes on lotteries, betting and gambling
• State cesses and surcharges

ANSWER: Neither 1 nor 2

Explanation:

• GST Bill is a constitutional Amendment Bill. Rajya Sabha can make amendments to the bill.
• It is not a money bill as it makes changes to the constitution for altering the way taxes are levied, collected and divided among the centre and the state.
• The Bill amends the Constitution to give concurrent powers to Parliament and state legislatures to levy a Goods and Services tax (GST).
• This implies that the centre will levy a central GST (CGST), while states will be permitted to levy a state GST (SGST).
• For goods and services that pass through several states, or imports, the centre will levy another tax, the Integrated GST (IGST).

ANSWER: Centre

Explanation:

• Centre cannot impose any tax on goods beyond manufacturing (Excise) or primary import (Customs) stage, while states do not have the power to tax services.
• State government has power to tax on sale of goods but centre has powers over tax on the production or manufacturing.
• Once the GST Bill is passed, there will only be a national-level central GST and a state-level GST spanning the entire value chain for all goods and services, with some exemptions.
• Centre can also levy Integrated GST for interstate trade.

ANSWER: 1, 2

Explanation:
The composition of the GST Council includes:

• The Union Finance Minister (as Chairman),
• The Union Minister of State in charge of Revenue or Finance, and
• The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.

The decisions of the GST Council will be made by three-fourth majority of the votes cast. The centre shall have one-third of the votes cast, and the states together shall have two-third of the votes cast. Mechanism for resolving disputes arising out of its recommendations may be decided by the Council itself.

ANSWER: 7^th

Explanation:

• At present India with twenty one (21) nuclear power reactors, stands seventh (7) among thirty one (31) countries with nuclear power in terms of number of reactors and thirteenth (13) in terms of electricity generation.
• The present nuclear power installed capacity of 5780 MW is expected to shortly increase to 6780 MW with the start of commercial operation of Kudankulam Unit-2 (KKNPP-2).
• India has signed nuclear agreements for cooperation in the peaceful uses of nuclear energy with Russia, United States of America (USA), France, Australia, United Kingdom, Czech Republic, Republic of Korea, Kazakhstan, Argentina, Canada, Vietnam and Sri Lanka. India proposes to sign such an agreement with Japan in future.

ANSWER: Tax imposed on interstate trade

Explanation:

• In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution.
• The IGST would roughly be equal to CGST plus SGST.
• The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another.
• The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.
• Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

ANSWER: Only 1

Explanation:

• Both Parliament, state Houses will have the power to make laws on the taxation of goods and services.
• Parliament’s law will not override a state law on GST
• Exclusive power to Centre to levy, collect GST in the course of interstate trade or commerce, or imports. This will be known as Integrated GST (IGST)
• Central law will prescribe manner of sharing of IGST between Centre and states, based on GST Council’s views.
• Alcoholic liquor for human consumption and Petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel - excluded from GST purview until GST Council decides.

ANSWER: Tax rate to get same amount of money despite changing tax laws

Explanation:

• It is the tax rate that allows the government to receive the same amount of money despite of changes in tax laws.
• In the GST regime the revenue of the government would not be same in comparison with the present tax structure due to tax credit mechanism, removal of cascading effect, or otherwise.
• Therefore an adjusted in tax rate is required to avoid reduction in revenue of the government.
• This adjusted Rate is termed as Revenue Neutral Rate (RNR). It is the rate at which tax revenue will remain same, despite allowing input tax credit and other factor.

ANSWER: Rs. 2500 annually

Explanation:

• A state legislature can impose taxes on professions, trades, callings and employments.
• But, the total amount of such taxes payable by any person should not exceed Rs. 2,500 per annum.
• Originally, this limit was only Rs 250 per annum. The 60th Amendment Act of 1988 raised it to Rs. 2,500 per annum.

ANSWER: Both 1 and 2

Explanation:

• A state legislature can impose tax on the consumption or sale of electricity.
• But, no tax can be imposed on the consumption or sale of electricity which is
  (a) consumed by the Centre or sold to the Centre; or
  (b) consumed in the construction, maintenance or operation of any railway by the Centre or by the concerned railway company or sold to the Centre or the railway company for the same purpose.
• A state legislature can impose a tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any authority established by Parliament for regulating or developing any inter-state river or river valley.
• But, such a law, to be effective, should be reserved for the president’s consideration and receive his assent.