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GST Input Tax Credit

Description: This quiz is designed to assess your understanding of the concept of GST Input Tax Credit.
Number of Questions: 15
Created by:
Tags: gst input tax credit indian law
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What is the basic concept behind GST Input Tax Credit?

  1. The amount of GST paid on purchases can be set off against the GST payable on sales.

  2. The amount of GST paid on purchases can be claimed as a refund.

  3. The amount of GST paid on purchases is added to the cost of goods sold.

  4. The amount of GST paid on purchases is not considered in GST calculations.

Show answer
Correct Option: A
Explanation:

GST Input Tax Credit is a mechanism that allows businesses to reduce their GST liability by offsetting the GST paid on their purchases against the GST payable on their sales.

Who is eligible to claim GST Input Tax Credit?

  1. Registered businesses under GST.

  2. Unregistered businesses under GST.

  3. Individuals.

  4. All of the above.

Show answer
Correct Option: A
Explanation:

Only registered businesses under GST are eligible to claim GST Input Tax Credit.

What documents are required to claim GST Input Tax Credit?

  1. GST invoices.

  2. Purchase orders.

  3. Delivery challans.

  4. All of the above.

Show answer
Correct Option: A
Explanation:

GST invoices are the primary documents required to claim GST Input Tax Credit.

What is the time limit for claiming GST Input Tax Credit?

  1. Within 1 month from the date of purchase.

  2. Within 3 months from the date of purchase.

  3. Within 6 months from the date of purchase.

  4. Within 1 year from the date of purchase.

Show answer
Correct Option: D
Explanation:

GST Input Tax Credit can be claimed within 1 year from the date of purchase.

What is the impact of GST Input Tax Credit on the cost of goods sold?

  1. It reduces the cost of goods sold.

  2. It increases the cost of goods sold.

  3. It has no impact on the cost of goods sold.

  4. It depends on the nature of the business.

Show answer
Correct Option: A
Explanation:

GST Input Tax Credit reduces the cost of goods sold by reducing the amount of GST that is included in the cost of goods sold.

Can GST Input Tax Credit be claimed on purchases made from unregistered dealers?

  1. Yes.

  2. No.

  3. It depends on the nature of the purchase.

  4. It depends on the location of the purchase.

Show answer
Correct Option: B
Explanation:

GST Input Tax Credit cannot be claimed on purchases made from unregistered dealers.

What is the impact of GST Input Tax Credit on the profitability of a business?

  1. It increases the profitability of the business.

  2. It decreases the profitability of the business.

  3. It has no impact on the profitability of the business.

  4. It depends on the nature of the business.

Show answer
Correct Option: A
Explanation:

GST Input Tax Credit increases the profitability of the business by reducing the amount of GST that is payable to the government.

What is the difference between GST Input Tax Credit and GST Refund?

  1. GST Input Tax Credit is claimed on purchases, while GST Refund is claimed on sales.

  2. GST Input Tax Credit is claimed on purchases, while GST Refund is claimed on exports.

  3. GST Input Tax Credit is claimed on purchases, while GST Refund is claimed on services.

  4. GST Input Tax Credit is claimed on purchases, while GST Refund is claimed on capital goods.

Show answer
Correct Option: B
Explanation:

GST Input Tax Credit is claimed on purchases, while GST Refund is claimed on exports.

What is the impact of GST Input Tax Credit on the working capital of a business?

  1. It increases the working capital of the business.

  2. It decreases the working capital of the business.

  3. It has no impact on the working capital of the business.

  4. It depends on the nature of the business.

Show answer
Correct Option: A
Explanation:

GST Input Tax Credit increases the working capital of the business by reducing the amount of GST that is payable to the government.

What is the impact of GST Input Tax Credit on the cash flow of a business?

  1. It increases the cash flow of the business.

  2. It decreases the cash flow of the business.

  3. It has no impact on the cash flow of the business.

  4. It depends on the nature of the business.

Show answer
Correct Option: A
Explanation:

GST Input Tax Credit increases the cash flow of the business by reducing the amount of GST that is payable to the government.

What are the consequences of claiming ineligible GST Input Tax Credit?

  1. Penalty.

  2. Interest.

  3. Both penalty and interest.

  4. None of the above.

Show answer
Correct Option: C
Explanation:

Claiming ineligible GST Input Tax Credit can result in both penalty and interest.

What is the role of GST Input Tax Credit in the overall GST system?

  1. It promotes self-compliance.

  2. It reduces the cascading effect of taxes.

  3. It encourages investment.

  4. All of the above.

Show answer
Correct Option: D
Explanation:

GST Input Tax Credit promotes self-compliance, reduces the cascading effect of taxes, and encourages investment.

What are the challenges associated with GST Input Tax Credit?

  1. Complexity of the GST law.

  2. Lack of awareness among businesses.

  3. Inadequate infrastructure.

  4. All of the above.

Show answer
Correct Option: D
Explanation:

The challenges associated with GST Input Tax Credit include the complexity of the GST law, lack of awareness among businesses, and inadequate infrastructure.

What are the measures taken by the government to address the challenges associated with GST Input Tax Credit?

  1. Simplification of the GST law.

  2. Awareness campaigns.

  3. Improvement of infrastructure.

  4. All of the above.

Show answer
Correct Option: D
Explanation:

The measures taken by the government to address the challenges associated with GST Input Tax Credit include simplification of the GST law, awareness campaigns, and improvement of infrastructure.

What is the future of GST Input Tax Credit in India?

  1. It will continue to play a significant role in the GST system.

  2. It will be phased out gradually.

  3. It will be replaced with a new system.

  4. It is uncertain.

Show answer
Correct Option: A
Explanation:

GST Input Tax Credit is expected to continue to play a significant role in the GST system in India.

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