Understanding Supply under GST

What is Input Tax Credit (ITC) in GST?

• Input Tax Credit (ITC) is a mechanism in GST that allows businesses to reduce their tax liability by claiming credit for the tax paid on inputs.

• A tax imposed on services only

• A penalty for late tax payments

• A tax refund for exported goods

List the different types of supply under GST.

• Supply of Raw Materials

• Supply of Goods, Supply of Services, Composite Supply, Mixed Supply

• Supply of Equipment

• Supply of Inventory

How is taxable supply defined under GST?

• Taxable supply includes only goods sold at a discount under the GST Act.

• Taxable supply is any supply of goods or services chargeable to tax under the GST Act.

• Taxable supply refers only to services provided by government entities under the GST Act.

• Taxable supply is any supply of goods or services exempt from tax under the GST Act.

What are the categories of exempt supply?

• Real estate services

• Luxury goods

• Transportation services

• Categories of exempt supply include financial services, healthcare services, educational services, and certain goods like food and books.

Explain the Reverse Charge Mechanism in GST.

• Only government agencies are required to pay GST under this mechanism.

• The supplier pays the GST instead of the recipient.

• In the Reverse Charge Mechanism, the recipient of goods/services pays the GST instead of the supplier.

• The Reverse Charge Mechanism applies only to exports.

Can ITC be claimed on exempt supplies? Why or why not?

• ITC can be claimed if the exempt supplies are below a certain threshold.

• Yes, ITC can be claimed on exempt supplies under certain conditions.

• No, ITC cannot be claimed on exempt supplies.

• ITC can be partially claimed on exempt supplies.

What is the significance of the place of supply in GST?

• It specifies the payment methods accepted.

• The place of supply is significant in GST as it determines the applicable tax jurisdiction and compliance requirements.

• It indicates the type of goods being sold.

• It determines the price of the goods or services.

How does the nature of supply affect GST liability?

• The nature of supply affects GST liability by determining applicable rates, classification, and timing of tax obligations.

• The nature of supply only affects income tax, not GST.

• GST liability is solely based on the location of the supplier.

• The nature of supply has no impact on GST liability.

What are the conditions for a supply to be considered taxable?

• A supply is taxable if it is for consideration, made in the course of business, and not exempted by law.

• A supply is taxable if it is for personal use.

• A supply is taxable if it is free of charge.

• A supply is taxable only if it is made by a government entity.

Describe the impact of Reverse Charge Mechanism on suppliers and recipients.

• It increases compliance for suppliers and decreases input tax credits for recipients.

• The Reverse Charge Mechanism reduces compliance for suppliers and enhances input tax credits for recipients, impacting cash flow and tax management.

• It has no effect on cash flow or tax management for either party.

• It only benefits suppliers by simplifying their tax obligations.