Q. With respect to Goods and Services Tax (GST), consider the following statements:
1. A cess is levied on the tax slab of 12% on luxury, sin and demerit goods.
2. The collection from the cess goes to a separate corpus called Compensation fund.
Which of the above given statement is/are correct?
Answer: B
Notes:
Explanation: What is the GST and its key provisions?
- The Goods and Services Tax (GST) is an indirect tax on the manufacture, sale, and consumption of goods and services throughout India;
- It was launched and 2017. It replaced the existing indirect taxes with varying rates levied by the Union and State Governments. It is a single uniform tax applicable in the whole nation;
- It is a destination-based tax applied on goods and services at the place where final/actual consumption happens;
- GST is applied to all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel, natural gas and alcohol for human consumption;
- There are four slabs for taxes for both goods and services: 5%, 12%, 18%, and 28%. Different tax slabs were introduced because goods of daily necessities could not be subjected to the same rate as luxury items;
- A cess is levied on the highest tax slab of 28% on luxury, sin and demerit goods. The collection from the cess goes to a separate corpus called Compensation fund. It is used to make up for revenue loss suffered by the States due to roll out of the GST. States were promised a compensation for 5 years if their GST collection falls short of the 14 percent compounded revenue growth.
Source: EPIC July 2022
