Library / Goods and Services Tax: The Professional's Master Guide
Appendix G: Practice Questions with Answers
The questions cover the whole book. Numerical answers show the working. Rates are post-GST 2.0 unless stated.
Constitution, supply and levy
Q 1. Which Articles of the Constitution support GST?
Answer: Article 246A (power to make GST laws; inter-State supply for Parliament alone), Article 269A (IGST), Article 279A (GST Council) and Article 366(12A) (definition, excluding alcoholic liquor for human consumption).
Q 2. Are petrol and diesel outside GST?
Answer: Not in law. They are within GST, but tax applies only from a date the Council recommends, and none has been notified.
Q 3. Are GST Council recommendations binding on Parliament and States?
Answer: No. They are persuasive only (Mohit Minerals, Supreme Court, 2022).
Q 4. Which taxes apply to an intra-State supply in Chandigarh?
Answer: CGST and UTGST, as Chandigarh has no legislature.
Q 5. Kiran Traders of Gujarat supplies only goods within the State. Turnover is Rs. 32 lakh. It does not deal in goods excluded from the higher limit, such as ice cream, pan masala or tobacco. Is registration needed?
Answer: No. The threshold for exclusive suppliers of goods is Rs. 40 lakh, unless a section 24 category (such as inter-State supply) applies.
Q 6. Find the aggregate turnover: taxable intra-State supplies Rs. 30 lakh, exempt supplies Rs. 8 lakh, exports Rs. 5 lakh, supplies to own branch in another State Rs. 4 lakh, inward supplies under reverse charge Rs. 2 lakh, GST charged Rs. 5.4 lakh.
Answer: Aggregate turnover under section 2(6) includes taxable, exempt, export and inter-State supplies between distinct persons on the same PAN, and excludes taxes and inward reverse charge supplies.
Rs. 30 lakh + Rs. 8 lakh + Rs. 5 lakh + Rs. 4 lakh = Rs. 47 lakh.
Q 7. An employer gives an employee a Diwali gift worth Rs. 60,000. Is it a supply?
Answer: Yes. Only gifts up to Rs. 50,000 per employee per year escape para 2 of Schedule I. ITC on gifts is in any case blocked by section 17(5)(h).
Q 8. Patel Engineering sends goods from its Gujarat factory to its own Maharashtra depot. Is this a supply?
Answer: Yes. The registrations are distinct persons, and para 2 of Schedule I applies. IGST is payable; value is under rule 28, and where the depot can claim full ITC the invoice value is accepted.
Q 9. A festive box contains chocolates (5%), dry fruits (5%) and an aerated sugary drink (40%), sold for one price. What rate applies?
Answer: Mixed supply under section 8(b): the whole box is taxed at the highest rate, 40%. Selling the drink separately avoids this.
Q 10. Is the sale of land a supply?
Answer: No. Para 5 of Schedule III covers it (and completed buildings).
Q 11. Are actionable claims taxable?
Answer: No, except betting, casinos, gambling, horse racing, lottery and online money gaming, taxed at 40%.
Q 12. Is salary paid to an employee subject to GST?
Answer: No. Para 1 of Schedule III.
Q 13. How are gift vouchers treated after the Finance Act, 2025?
Answer: Vouchers are neither goods nor services (Circular 243/37/2024-GST); tax arises on the underlying supply. Sections 12(4) and 13(4) were omitted.
Q 14. A company pays sitting fees to an independent director. Who pays GST?
Answer: The company, under reverse charge (Circular 140/10/2020).
Q 15. Mehta and Co., a firm of advocates, bills Rs. 2,00,000 to a company whose turnover is above the registration threshold. Who pays GST and how much?
Answer: The company pays under reverse charge at 18%: Rs. 2,00,000 x 18% = Rs. 36,000 (CGST Rs. 18,000 + SGST Rs. 18,000 if intra-State).
Q 16. A registered trader rents a shop from an unregistered landlord for Rs. 50,000 a month. Is GST payable?
Answer: Yes, under reverse charge from 10 October 2024: Rs. 50,000 x 18% = Rs. 9,000 a month, paid by the tenant. Check later exclusions.
Q 17. A company pays freight of Rs. 80,000 to a GTA that has not opted for forward charge. What tax is due?
Answer: At 5% under reverse charge: Rs. 80,000 x 5% = Rs. 4,000 (CGST Rs. 2,000 + SGST Rs. 2,000), paid by the company in cash.
Had the GTA opted for 18% forward charge, it would charge Rs. 14,400 and claim its own ITC.
Q 18. Neha Traders, a composition trader, has taxable turnover of Rs. 30 lakh in a quarter. Compute the tax.
Answer: Rs. 30,00,000 x 1% = Rs. 30,000 (Rs. 15,000 + Rs. 15,000), through CMP-08.
Q 19. A small consultant opts under section 10(2A). Quarterly turnover is Rs. 9,00,000. Compute the tax.
Answer: Rate 6% (3% + 3%): Rs. 9,00,000 x 6% = Rs. 54,000 (CGST Rs. 27,000 + SGST Rs. 27,000).
Q 20. Can a composition dealer sell through an e-commerce operator?
Answer: Yes, for intra-State supply of goods, from 1 October 2023.
Q 21. A standalone restaurant sells food through a food delivery app. Who pays GST?
Answer: The ECO, at 5%, under section 9(5).
Q 22. Compute GST on two nights at a hotel room tariff of (a) Rs. 7,000 per night and (b) Rs. 8,000 per night.
Answer: (a) Rs. 14,000 x 5% = Rs. 700 (Rs. 350 + Rs. 350), without ITC to the hotel.
(b) Rs. 16,000 x 18% = Rs. 2,880 (Rs. 1,440 + Rs. 1,440), with ITC.
Time, value and place of supply
Q 23. Is GST payable on advance received for supply of goods?
Answer: No (except for composition taxpayers). For services, it is.
Q 24. Rahul Consultants receives an advance of Rs. 1,18,000 (inclusive of 18% GST) on 10 June for services. What tax is due and when?
Answer: Time of supply is the date of receipt, 10 June, as it is earlier than the invoice.
Tax = Rs. 1,18,000 x 18/118 = Rs. 18,000. A receipt voucher is issued.
Q 25. Under reverse charge, invoice dated 1 May, payment made 20 May. What is the time of supply for services?
Answer: 20 May, the date of payment (section 13(3)).
Q 26. A 43-inch television was delivered on 15 September 2025, invoiced on 16 September 2025 and paid for on 25 September 2025. The rate fell from 28% to 18% on 22 September 2025. Which rate applies?
Answer: Section 14(a)(ii): supply before the change, invoice before, payment after. Time of supply is the invoice date, so the old rate of 28% applies.
Q 27. Compute GST: list price Rs. 5,00,000, trade discount 10% shown on invoice, packing Rs. 5,000, freight by supplier to buyer's site Rs. 10,000.
Answer: Value = Rs. 4,50,000 + Rs. 5,000 + Rs. 10,000 = Rs. 4,65,000 (discount on invoice excluded under section 15(3)(a); packing and freight form part of the composite supply).
GST at 18% = Rs. 83,700.
Q 28. Can a supplier now reduce value for post-sale discounts without a prior agreement?
Answer: Not yet. The Finance Act, 2026 amendment to section 15(3)(b) is not notified; the old conditions apply.
Q 29. A customs broker pays customs duty for a client and recovers it. Is it part of the value of the broker's service?
Answer: No, if rule 33 pure agent conditions are met.
Q 30. A holding company gives a corporate guarantee of Rs. 20 crore for its subsidiary's loan without charging a fee. What is the value?
Answer: Rule 28(2): 1% of the guarantee amount per year or actual consideration, whichever is higher, that is Rs. 20 lakh; GST at 18% is Rs. 3,60,000. Where the subsidiary is eligible for full ITC, the proviso to rule 28(2), inserted in 2024 and explained in Circular 225/19/2024-GST, allows the invoice value to be taken as the value.
Q 31. Delhi supplier sells goods to a Mumbai buyer, who asks them to be shipped to its customer in Ahmedabad. What is the place of supply of the Delhi supplier's sale?
Answer: Maharashtra, under section 10(1)(b) of the IGST Act. IGST applies.
Q 32. A Pune architect designs a building in Goa for a Pune client. What is the place of supply?
Answer: Goa (section 12(3) of the IGST Act). IGST applies.
Q 33. What is the place of supply for admission to a concert?
Answer: Where the event is held (section 12(6) of the IGST Act).
Q 34. An Indian agent arranges sales for a German exporter and receives commission in euro. Is it an export after 30 March 2026?
Answer: Yes, if section 2(6) conditions are met. With section 13(8)(b) omitted, the place of supply is Germany.
Q 35. List the conditions for export of services.
Answer: Section 2(6) of the IGST Act: supplier in India; recipient outside India; place of supply outside India; payment in convertible foreign exchange or in Indian rupees where RBI permits; supplier and recipient not merely establishments of the same person.
Q 36. An Indian company receives staff on secondment from its foreign parent. Is GST payable?
Answer: Yes, under reverse charge (Northern Operating Systems, Supreme Court, 2022). Circular 210/4/2024 accepts the declared value where full ITC is available.
Input tax credit
Q 37. What are the conditions under section 16(2)?
Answer: Tax invoice or debit note; goods or services received; invoice appears in GSTR-2B (section 16(2)(aa)); tax actually paid by the supplier; recipient has filed the return. The time limit in section 16(4) also applies.
Q 38. An invoice dated 10 January 2026 for Rs. 1,00,000 plus GST Rs. 18,000 is unpaid. When is ITC reversed?
Answer: Rule 37: if not paid within 180 days of the invoice date, Rs. 18,000 is reversed in the return for the month in which 180 days expire (July 2026), with interest under section 50 where the credit was utilised. It is re-availed on payment.
Q 39. Is ITC available on a 7-seater car used by sales staff?
Answer: No. Section 17(5)(a) blocks ITC on motor vehicles for transport of persons with seating capacity up to 13 including the driver, except when used for further supply of such vehicles, passenger transport or training in driving.
Q 40. Can ITC be claimed on construction of a mall to be let out?
Answer: No. The Finance Act, 2025 amendment to section 17(5)(d) undid Safari Retreats retrospectively.
Q 41. Common ITC on inputs and input services is Rs. 3,00,000. Exempt turnover is Rs. 20 lakh, total turnover Rs. 1.2 crore. Inputs are also partly used for non-business purposes. Compute eligible credit under rule 42.
Answer: D1 = Rs. 3,00,000 x 20/120 = Rs. 50,000.
D2 = 5% of Rs. 3,00,000 = Rs. 15,000.
Eligible common credit = Rs. 3,00,000 less Rs. 50,000 less Rs. 15,000 = Rs. 2,35,000.
Q 42. ITC on a common capital asset is Rs. 1,80,000. Exempt turnover is 25% of total. Compute monthly reversal under rule 43.
Answer: Useful life 60 months. Tm = Rs. 1,80,000 / 60 = Rs. 3,000 per month.
Te = 25% x Rs. 3,000 = Rs. 750 per month, reversed in each month's return.
Q 43. When can a supplier reduce output tax for a credit note?
Answer: Only if the recipient has reversed the ITC (section 34(2)).
Q 44. Output tax is Rs. 10,00,000 in a month and taxable value exceeds Rs. 50 lakh. How much must be paid in cash under rule 86B?
Answer: Rs. 10,000 (1%), unless an exception applies.
Q 45. Liability: IGST Rs. 1,00,000, CGST Rs. 60,000, SGST Rs. 60,000. Credit: IGST Rs. 1,50,000, CGST Rs. 30,000, SGST Rs. 40,000. Set off.
Answer: IGST credit first: Rs. 1,00,000 against IGST; balance Rs. 50,000 against CGST Rs. 30,000 and SGST Rs. 20,000.
CGST credit Rs. 30,000 against CGST; SGST credit Rs. 40,000 against SGST.
Total CGST Rs. 60,000 and SGST Rs. 60,000 are met. Cash payable: nil.
Q 46. Is ISD registration optional?
Answer: No. It is mandatory from 1 April 2025.
Q 47. On new registration, can a business claim ITC on opening stock?
Answer: Yes, under section 18(1)(a) through ITC-01, if registration was applied for within 30 days; invoices older than one year are excluded.
Q 48. Inputs sent to a job worker on 1 June 2025 have not returned by 1 June 2026. What follows?
Answer: They are deemed supplied on 1 June 2025 (section 143); tax is payable with interest.
Q 49. Can a buyer be denied ITC when the supplier has not paid the tax?
Answer: Yes. In Bhandari Scrap Traders (Supreme Court, 24 July 2026) the Court dismissed the challenge and affirmed section 16(2)(c). ITC is restored when the supplier pays.
Q 50. What is DRC-01C?
Answer: Rule 88D intimation where ITC in GSTR-3B exceeds GSTR-2B for a period by more than Rs. 25 lakh and more than 20%; pay or explain within seven days, or GSTR-1 is blocked.
Registration, invoices and returns
Q 51. A company's turnover crossed Rs. 5 crore in FY 2022-23 but fell to Rs. 4 crore later. Must it issue e-invoices?
Answer: Yes. Crossing Rs. 5 crore in any year since 2017-18 is enough.
Q 52. What is the time limit for issue of a service invoice?
Answer: Within 30 days from supply (45 days for banks, insurers and NBFCs) under rule 47.
Q 53. What is GSTR-1A?
Answer: A form to amend the current period GSTR-1 before GSTR-3B, the route for corrections now that GSTR-3B is locked.
Q 54. What happens if a recipient takes no action on an invoice in IMS?
Answer: It is deemed accepted.
Q 55. Can GSTR-3B for July 2023, due 20 August 2023, be filed in September 2026?
Answer: No. The three-year bar applies.
Q 56. Compute late fee: GSTR-3B filed 35 days late, turnover Rs. 80 lakh. And a nil GSTR-3B 40 days late.
Answer: Non-nil: 35 x Rs. 50 = Rs. 1,750 (below the Rs. 2,000 cap for turnover up to Rs. 1.5 crore).
Nil: 40 x Rs. 20 = Rs. 800, capped at Rs. 500.
Q 57. A QRMP taxpayer paid Rs. 3,00,000 in cash for the last quarter. What is the fixed sum for each of the first two months?
Answer: 35% of cash paid in the last quarter: Rs. 3,00,000 x 35% = Rs. 1,05,000 per month through PMT-06 by the 25th.
Q 58. Who must file GSTR-9 and GSTR-9C?
Answer: GSTR-9 is optional up to Rs. 2 crore; GSTR-9C applies above Rs. 5 crore.
Q 59. On voluntary cancellation, what happens to stock?
Answer: ITC on stock and capital goods (or tax on their value, if higher) is paid under section 29(5).
Q 60. What must a casual taxable person do?
Answer: Register five days before starting and deposit estimated tax in advance.
Payment, interest and refunds
Q 61. Tax payable Rs. 5,00,000; ITC used Rs. 3,20,000; cash paid Rs. 1,80,000 late by 16 days. Compute interest.
Answer: Interest is on the net cash portion: Rs. 1,80,000 x 18% x 16/365 = Rs. 1,420.27, rounded to Rs. 1,420.
Q 62. A refund of Rs. 10,00,000 was applied for on 1 April 2026 and paid on 15 July 2026. Compute interest.
Answer: Section 56: interest at 6% after 60 days from the application date. Days from 1 April to 15 July = 105; beyond 60 days = 45 days.
Interest = Rs. 10,00,000 x 6% x 45/365 = Rs. 7,397.26, say Rs. 7,397.
Q 63. Inverted duty refund: inverted rated turnover and adjusted total turnover Rs. 1 crore each; Net ITC (inputs) Rs. 12 lakh; ITC on inputs and input services Rs. 14 lakh; tax payable on the output Rs. 5 lakh. Compute the maximum refund.
Answer: Rule 89(5): (Rs. 1 crore x Rs. 12 lakh / Rs. 1 crore) less (Rs. 5 lakh x 12/14).
= Rs. 12,00,000 less Rs. 4,28,571 = Rs. 7,71,429. Input services are excluded from Net ITC, as upheld in VKC Footsteps (Supreme Court, 2021).
Q 64. Should an exporter use LUT or pay IGST?
Answer: It depends on cash flow: LUT avoids paying tax; IGST route gives refund through the shipping bill.
Q 65. What is unjust enrichment?
Answer: Refund of tax passed on goes to the Consumer Welfare Fund (Mafatlal Industries, Supreme Court, 1997).
Q 66. Goods cleared under LUT are not exported within three months of invoice. What follows?
Answer: Rule 96A: tax is payable with interest under section 50, unless the period is extended.
Q 67. A Government department awards a contract of Rs. 10,00,000 plus GST Rs. 1,80,000 to an intra-State supplier. Compute TDS.
Answer: TDS at 2% on value excluding tax: Rs. 10,00,000 x 2% = Rs. 20,000 (CGST Rs. 10,000 + SGST Rs. 10,000).
Q 68. Net taxable supplies by sellers through an ECO in a month are Rs. 40,00,000 (intra-State). Compute TCS.
Answer: TCS at 0.5%: Rs. 20,000 (CGST Rs. 10,000 + SGST Rs. 10,000).
Demands, appeals and enforcement
Q 69. For FY 2024-25, the annual return is due on 31 December 2025. By when must a section 74A notice issue?
Answer: Within 42 months from that date, that is by 30 June 2029. The order must follow within 12 months of the notice (extendable by up to 6 months).
Q 70. For FY 2023-24 (annual return due 31 December 2024), by when must a section 73 notice issue?
Answer: Order within three years, that is by 31 December 2027; notice at least three months earlier, by 30 September 2027.
Q 71. Tax of Rs. 8,00,000 is demanded under section 74A for fraud. Penalty if paid within 60 days of notice?
Answer: 25% of tax: Rs. 2,00,000, plus tax and interest. If paid before notice, 15% (Rs. 1,20,000).
Q 72. Disputed tax is Rs. 40 lakh (CGST Rs. 20 lakh + SGST Rs. 20 lakh). Compute pre-deposit for first appeal.
Answer: 10% of disputed tax: Rs. 4,00,000 (Rs. 2,00,000 each).
Q 73. When can a writ be filed instead of an appeal?
Answer: Only in limited cases (Commercial Steel, Supreme Court, 2021).
Q 74. The State has issued an SCN on an issue. Can the Centre issue one on the same issue?
Answer: No (section 6(2)(b); Armour Security, Supreme Court, 2025).
Q 75. When can a person be arrested under section 69?
Answer: For section 132 offences, with reasons to believe and written grounds (Radhika Agarwal, Supreme Court, 2025).
Q 76. Compute e-way bill validity for 850 km of normal cargo and 90 km of over-dimensional cargo.
Answer: Normal: one day per 200 km or part: 850/200 = 4.25, so 5 days. ODC: one day per 20 km or part: 90/20 = 4.5, so 5 days.
Q 77. Goods worth Rs. 6,00,000 at 18% (tax Rs. 1,08,000) are detained. Compute penalty if the owner comes forward, and if not.
Answer: Owner: 200% of tax = Rs. 2,16,000.
Not owner: higher of 50% of value (Rs. 3,00,000) and 200% of tax (Rs. 2,16,000) = Rs. 3,00,000.
Q 78. Can a new anti-profiteering complaint be filed today?
Answer: No, not after 31 March 2025.
Q 79. What did section 128A offer?
Answer: Waiver of interest and penalty for section 73 demands of FY 2017-18 to 2019-20, on paying tax by 31 March 2025.
Q 80. Tax payable on notified goods is Rs. 3,00,000 and track and trace rules are breached. Compute penalty under section 122B.
Answer: Higher of Rs. 1,00,000 and 10% of tax (Rs. 30,000): Rs. 1,00,000.
© Vipin Nair. This guide is for reading online only. Copying, downloading, printing and redistribution are not permitted. For study and general reference; not legal, tax or investment advice.