GST Compliance Rating: Concept, Parameters, and Implications
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Kit Library / Commerce / Taxation
⚡ Topic Learning KitGST Rating 4.5
English 15 leveled MCQs Free
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All 15 questions, laddered from warm-up to topper-level, each with its answer and the reasoning behind it.
Warm-up · 6 questions
Q1. Under which section of the CGST Act, 2017 is the provision for GST compliance rating provided?
Beginner
A
Section 149
B
Section 150
C
Section 148
D
Section 151
Show the answer
A · Section 149
Section 149 of the CGST Act, 2017 provides for the GST compliance rating.
Q2. What is the range of the GST compliance rating score assigned to a taxpayer?
Beginner
A
0 to 10
B
1 to 10
C
0 to 5
D
0 to 100
Show the answer
A · 0 to 10
The compliance rating is assigned on a scale of 0 to 10, with 10 being the best.
Q3. What is the primary objective of introducing the GST compliance rating?
Beginner
A
To build trust and promote voluntary compliance
B
To reduce the number of taxpayers
C
To simplify the GST return forms
D
To increase tax rates
Show the answer
A · To build trust and promote voluntary compliance
The primary objectives include building trust, reducing departmental scrutiny, and increasing voluntary compliance.
Q4. Which of the following is a benefit of a high GST compliance rating?
Beginner
A
Guaranteed tax refunds
B
Reduced tax rates
C
Exemption from GST audits
D
Higher credibility in the market
Show the answer
D · Higher credibility in the market
A high rating brings higher credibility, priority in refunds, reduced audit chances, etc.
Q5. The GST compliance rating is currently fully implemented and operational in India.
Beginner
A
True
B
False
Show the answer
B · False
The system has been introduced in the CGST Act but has not been officially implemented yet.
Q6. A high GST compliance rating can lead to preferential treatment in government tenders.
Beginner
A
True
B
False
Show the answer
A · True
One of the benefits listed is preferential treatment in government tenders or procurement.
Building up · 9 questions
Q7. Which of the following is NOT a parameter expected to affect the GST compliance rating?
Intermediate
A
Number of employees in the business
B
Accuracy in invoice matching
C
Response to department notices
D
Timely filing of returns
Show the answer
A · Number of employees in the business
The number of employees is not mentioned as a parameter; the others are explicitly listed.
Q8. Who is responsible for the automated assessment of the GST compliance rating?
Intermediate
A
GST Council
B
Ministry of Finance
C
GST Network (GSTN)
D
CBDT
Show the answer
C · GST Network (GSTN)
The compliance rating is based on automated assessments by the GST Network (GSTN).
Q9. What is a potential disadvantage of the GST compliance rating system?
Intermediate
A
It is mandatory for all taxpayers
B
It has been fully implemented
C
Lack of transparency in rating criteria
D
It increases tax rates
Show the answer
C · Lack of transparency in rating criteria
The rating criteria are not publicly disclosed, leading to lack of transparency.
Q10. In the scenario, why did M/s Ragee Enterprises choose Cheriyan & Co over Vikas & Co?
Intermediate
A
Cheriyan & Co had a lower fee
B
Cheriyan & Co was recommended by the government
C
Cheriyan & Co had a higher GST compliance rating
D
Vikas & Co had no experience
Show the answer
C · Cheriyan & Co had a higher GST compliance rating
Cheriyan & Co had a rating of 9, while Vikas & Co had 5, and the higher rating ensured smoother ITC flow.
Q11. What does a low GST compliance rating potentially lead to for a business?
Intermediate
A
Exemption from penalties
B
Increased government tenders
C
More frequent audits
D
Faster refunds
Show the answer
C · More frequent audits
A low rating may result in more frequent audits, suspicion from buyers, and delay in refunds.
Q12. Which of the following best describes the current status of the GST compliance rating system?
Intermediate
A
Introduced in the Act but not yet implemented
B
Implemented only for large businesses
C
Fully implemented and operational
D
Proposed but not included in the Act
Show the answer
A · Introduced in the Act but not yet implemented
The system is provided in Section 149 but has not been officially implemented yet.
Q13. What role do GST Suvidha Providers (GSPs) play in relation to compliance rating?
Intermediate
A
They audit taxpayers
B
They set the rating criteria
C
They assign the compliance rating
D
They provide tools to monitor and improve compliance
Show the answer
D · They provide tools to monitor and improve compliance
GSPs offer digital tools and APIs to help businesses automate filings and monitor vendor compliance.
Q14. Which of the following is NOT a stated objective of the GST compliance rating?
Intermediate
A
To reduce departmental scrutiny for compliant businesses
B
To increase the number of GST registrations
C
To build trust in the ecosystem
D
To increase voluntary compliance
Show the answer
B · To increase the number of GST registrations
Increasing registrations is not mentioned as an objective.
Q15. What might happen if a supplier defaults and ITC is reversed?
Intermediate
A
The recipient's rating is unaffected
B
The recipient's compliance rating may be lowered
C
The supplier is exempt from rating
D
The supplier's compliance rating may increase
Show the answer
B · The recipient's compliance rating may be lowered
Reversal of ITC due to supplier default may lower the compliance rating of the recipient.
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