Goods & Services Tax — Assertion-Reason Type Questions

Assertion (A): The entire tax collected under IGST is paid to the account of central government.

Reason (R): The GST collected on the supply of goods or services in case of interstate trade within India or in case of imports/exports is called IGST.

1. Both A and R are true, and R is the correct explanation of A.

2. Both A and R are true, and R is not the correct explanation of A.

3. A is true, but R is false.

4. A is false, but R is true.

Answer

We know that,

The GST collected on the supply of goods or services in case of interstate trade within India or in case of imports/exports is called IGST.

∴ Reason (R) is true.

IGST is shared between the Central Government and the Consumer State as per the law.

∴ Assertion (A) is false.

Hence, Option 4 is the correct option.

Assertion (A): GST payable = Output GST + ITC

Reason (R): Input Tax Credit (ITC) is a provision of reducing the GST already paid on inputs in order to avoid the cascading of taxes.

1. Both A and R are true, and R is the correct explanation of A.

2. Both A and R are true, and R is not the correct explanation of A.

3. A is true, but R is false.

4. A is false, but R is true.

Answer

We know that,

Input Tax Credit (ITC) is a provision of reducing the GST already paid on inputs in order to avoid the cascading of taxes.

∴ Reason (R) is true.

By formula,

GST payable = Output GST - ITC

∴ Assertion (A) is false.

Hence, Option 4 is the correct option.

Assertion (A): A shopkeeper in Agra sells a mobile phone to a customer in Agra at ₹ 8,400. If the rate of GST is 18%, then SGST is ₹ 756.

Reason (R): For any intrastate supply (supply within the state) of goods or services CGST is levied.

1. Both A and R are true, and R is the correct explanation of A.

2. Both A and R are true, and R is not the correct explanation of A.

3. A is true, but R is false.

4. A is false, but R is true.

Answer

We know that,

For any intrastate supply (supply within the state) of goods or services GST is divided in two parts CGST and SGST.

∴ Reason (R) is true.

Given,

A shopkeeper in Agra sells a mobile phone to a customer in Agra at ₹ 8,400.

Rate of GST = 18%

This in an intra-state transaction.

CGST rate = SGST rate = $\dfrac{GST}{2} = \dfrac{18}{2}$% = 9%.

SGST = $\dfrac{9}{100} \times 8400$ = ₹ 756.

∴ Assertion (A) is true.

∴ Both A and R are true, and R is not the correct explanation of A.

Hence, Option 2 is the correct option.