GST ITC: 16 MCQs with answers

C · Deduct tax paid on inputs from tax collected on output

ITC allows a registered person to subtract the tax paid on inputs from the output tax liability, paying only the net amount to the government.

B · Section 16

Section 16 of the CGST Act deals with eligibility and conditions for taking input tax credit.

C · Reduces tax liability on value addition

ITC avoids cascading effect and ensures tax is paid only on value addition, reducing overall tax liability.

B · False

ITC is not available for tax paid under the composition levy, as per the definition of input tax under Section 2(62).

D · Possession of a tax invoice or debit note

Section 16(2) requires possession of a tax invoice or debit note issued by a registered supplier, among other conditions.

D · 180 days from invoice date

As per Section 16(2), payment to the supplier including GST must be made within 180 days from the invoice date to retain ITC.

A · GST paid on food and beverages for personal consumption

Section 17 blocks ITC on goods or services used for personal consumption, including food and beverages, unless used for outward taxable supply as part of a composite supply.

B · 30 days

Section 18(1)(a) allows ITC on inputs held in stock if registration is applied within 30 days of becoming liable to register.

D · 1 year

As per Section 19(3), inputs sent for job work must be received back within one year, failing which they are deemed supplied.

C · 3 years

Section 19(5) states that capital goods sent for job work must be received back within three years, otherwise deemed supplied.

C · Central tax or integrated tax

Section 20(1) allows ISD to distribute credit of central tax as central tax or integrated tax, and integrated tax as integrated tax or central tax.

A · IGST liability

Rule 88A specifies that IGST credit shall first be utilized towards IGST liability, then remaining towards CGST and SGST.

B · 30th November of the following year or annual return, whichever is earlier

Section 16(4) sets the last date as the earlier of 30th November of the following financial year or the date of filing the annual return.

A · GST ASMT-10

Form GST ASMT-10 is used to communicate discrepancies in ITC claims to the taxpayer, including observations and time limit for response.

A · 180 days

Rule 37 requires reversal of ITC along with interest if payment is not made within 180 days from the invoice date.

A · True

Section 16(2) requires that the supplier has actually paid the tax and filed returns for the recipient to be eligible for ITC.