Input Tax Credit, Tax Invoice and E-Way Bills: 18 MCQs with answers

B · ₹9

Output tax ₹27 minus input tax ₹18 = ₹9, which is the tax on the ₹50 value added.

C · Section 2(63)

Section 2(63) defines ITC; Section 2(62) defines input tax.

D · Tax paid under the composition levy

Composition levy tax is explicitly excluded from the definition of input tax.

D · Only a registered person

Only a registered person can claim ITC.

C · 180 days

Payment must be made within 180 days of the invoice date; otherwise ITC must be reversed with interest under Rule 37.

A · True

Under Section 16(4), ITC for a financial year must be claimed by the earlier of 30 November of the following financial year or the date of filing the annual return.

C · No, supplier filing and payment is a condition under Section 16(2)

Section 16(2) requires the supplier to have actually filed returns and paid the tax to the government.

B · GST on club and health fitness membership

Club, health and fitness membership is a personal benefit item blocked under Section 17.

A · ITC blocked unless used for cargo transport or training

Motor vehicles are blocked under Section 17 unless used for cargo transport or driving training.

D · The day before liability to register begins

Section 18 allows ITC on stock and capital goods held on the day immediately before the liability to register arises.

B · Pro rata on turnover of each recipient

Section 20 requires pro rata distribution on turnover for credit attributable to more than one or all recipients.

A · IGST credit

IGST credit is the flexible credit; CGST and SGST credits are ring-fenced from each other.

C · Earlier of 30 November of the following financial year or the annual return date

Section 16(4) sets the earlier of 30 November of the next financial year or the annual return filing date.

A · The goods are deemed supplied by the principal on the day they were sent out

Under Section 19, non-return within 1 year (inputs) or 3 years (capital goods) makes the goods deemed supplied on the original dispatch date.

D · Use CGST credit only for CGST liability

CGST credit cannot be used for SGST liability; the two are ring-fenced from each other.

C · GST ASMT-10

Form GST ASMT-10 is issued for discrepancies, stating observations, response time limit and mismatched amount.

A · ₹5,000

The taxpayer first utilizes the IGST credit of ₹20,000 against the IGST liability of ₹0, then the CGST credit of ₹5,000 against the CGST liability of ₹15,000, leaving ₹10,000 CGST liability. The SGST liability of ₹10,000 remains unpaid. Thus, they need to pay ₹5,000 in total (the remaining CGST liability).

D · ₹60,000

Under Section 18, a newly registered business can claim ITC on both inputs and capital goods held on the day before registration. Therefore, the total ITC claimable is ₹50,000 (inputs) + ₹10,000 (capital goods) = ₹60,000.