Page 7 - Ch1_Introduction

being followed.
Ü This may boost Indian exports thereby improving the balance of payments position. Exporters are

being facilitated by grant of provisional refund of 90% of their claims within 7 days of issue of
acknowledgement of their application, thereby resulting in the easing of position with respect to cash
flows.
Ü With a boost in exports and manufacturing activity, more employment would be generated and GDP

would increase.

CCP 01.03.11.00
GST is a destination-based tax on consumption of goods or services or both. Discuss the validity of

the statement. (Study Mat)
Answer :-
Ü The given statement is valid.
Ü GST is a destination-based tax on consumption of goods or services or both.
Ü GST is known as destination- based tax since the GST is the revenue of that state which has jurisdiction

over the place of consumption of goods &/or services which is also termed as place of supply.

CCP 01.03.12.00

Under Goods and Services Tax (GST), only value addition is taxed, and burden of tax is to be borne by
the final consumer. Examine the validity of the statement. (Study Mat)
Answer :-
Ü The statement is correct.
Ü GST is a destination-based tax on consumption of goods and services.

Ü It is levied at all stages right from manufacture up to final consumption with credit of taxes paid at
previous stages available as setoff.
Ü Thus, only value addition is taxed, and burden of tax is to be borne by the final consumer

CCP 01.03.13.00
Explain with the help of examples how a particular transaction of goods and services is taxed
simultaneously under Central GST (CGST) and State GST (SGST)? (Study Mat)
Answer :-

Ü The CGST and the SGST is levied simultaneously on every intra-State supply of goods/ services or both
made by registered persons except the exempted goods & services as well as goods & services which are
outside the purview of GST.

Ü Further, both are levied on the same price or transaction value.
Ü Example: Suppose that the rate of CGST & SGST is 10%. When a wholesaler of steel in Uttar Pradesh
supplies steel bars and rods to a construction company which is also located within the same State for ₹
100, the dealer would charge CGST of ₹ 10 and SGST of ₹ 10 in addition to the basic price of the goods. The
CGST component will go into a Central Government account while the SGST portion into the account of

the concerned State Government (ie U.P.).
He might not actually pay ₹ 20 (₹ 10 + ₹ 10) in cash as he would be entitled to set-off this liability against
the CGST or SGST paid on his eligible purchases (inputs, input services and capital goods) assuming
that all his purchases are intra-State. However, for paying CGST, he would be allowed to use only the

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