UPSC Prelims Practice Questions — Delivery completed

Q1. With reference to the decision-making rule of the GST Council under Article 279A of the Constitution, consider the following statements, assuming all members are present and voting: Which of the statements given above is/are correct?

  1. Even if every State votes in favour of a proposal, it cannot be carried if the Union government votes against it.
  2. The Union government, voting together with any one-third of the States, can carry a proposal against the opposition of the remaining States.
  3. Each State, irrespective of its size, can individually block a proposal by voting against it.
  • A. 1 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 2 and 3 only

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. In the Mohit Minerals case (2022), the Supreme Court held that the recommendations of the GST Council do not bind Parliament and the State legislatures when they enact GST legislation.
  2. Parliament and the State legislatures possess simultaneous power to legislate on GST, and treating the Council's recommendations as binding edicts would disrupt this fiscal federalism.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. Suppose the GST Council recommends simplifying registration and curtailing officers' powers, and some of these changes require amending provisions written into the GST statutes themselves. With reference to how such recommendations take legal effect, consider the following statements: Which of the statements given above is/are correct?

  1. The Council's resolution does not by itself amend the CGST Act; changing central tax law requires legislative action by the Union.
  2. The recommendation automatically becomes binding law in every State whose representative voted for it in the Council.
  3. Each State legislature retains its own power to enact the corresponding amendment to its SGST Act.
  4. Because the recommendations have only persuasive value, the Union government is free to disregard them even when framing rules under the CGST Act.
  • A. 2, 3 and 4 only
  • B. 1, 3 and 4 only
  • C. 1 and 2 only
  • D. 1 and 3 only

Q4. With reference to the taxing powers created for GST by the Constitution (One Hundred and First Amendment) Act, 2016, consider the following statements: Which of the statements given above is/are correct?

  1. On an intra-State supply, both the Union and the State concerned levy GST on the same transaction.
  2. The power to make GST laws operates notwithstanding Articles 246 and 254, and so is not governed by the ordinary distribution of subjects among the Seventh Schedule Lists.
  3. On an inter-State supply, GST is levied under a law made by Parliament only, though the proceeds are apportioned between the Union and the States.
  • A. 1 and 3 only
  • B. 1 only
  • C. 1, 2 and 3
  • D. 2 and 3 only

Q5. With reference to Input Tax Credit (ITC) under GST, consider the following statements: Which of the statements given above is/are correct?

  1. By allowing tax paid on inputs to be set off against output tax, ITC makes GST in effect a tax only on the value added at each stage.
  2. Because exports are zero-rated, an exporter can build up input tax credit that has to be refunded to it.
  3. Accumulation of unutilised credit due to an inverted duty structure arises when the tax rate on finished goods exceeds the tax rate on inputs.
  • A. 1, 2 and 3
  • B. 1 and 2 only
  • C. 1 and 3 only
  • D. 2 and 3 only

Q6. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Under GST, exports of goods are zero-rated so that the exporter can obtain a refund of the tax borne on its inputs.
  2. GST is an origin-based tax under which revenue accrues to the jurisdiction where goods are produced rather than where they are consumed.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q7. Complexity in an indirect tax system can arise either from its rate structure or from its compliance procedures. Consider the following measures: Which of the measures given above address complexity arising primarily from compliance procedures rather than from the rate structure?

  1. Reducing the number of tax slabs so that fewer disputes arise over which rate a product attracts
  2. Reducing how often small taxpayers must file returns
  3. Aligning the tax rates on a sector's inputs and outputs so that unutilised credit does not pile up
  4. Verifying refund claims through automated, risk-based checks instead of manual scrutiny by officers
  • A. 2, 3 and 4 only
  • B. 2 and 4 only
  • C. 1 and 3 only
  • D. 1, 2 and 4 only

Q8. Consider the following assertion: Curtailing tax officers' discretionary powers, while automating registration, return filing and refunds, can improve voluntary compliance under GST without weakening enforcement against evaders. Which of the following statements support/supports the above assertion?

  1. Reducing the number of rate slabs lowers the tax payable on most goods.
  2. Less discretion for officers narrows the scope for rent-seeking and harassment, reducing the cost of compliance for honest taxpayers.
  3. Data analytics on automated filings allows enforcement to be targeted at demonstrable non-compliance rather than at all taxpayers.
  • A. 2 only
  • B. 1, 2 and 3
  • C. 1 and 3 only
  • D. 2 and 3 only