Question 1

What is input tax credit (ITC)?

Accepted Answer

Input Tax Credit allows businesses to reduce the tax they pay on sales by the amount of GST tax they have already paid on purchases. This avoids double taxation in supply chains.

Question 2

How is interstate GST charged?

Accepted Answer

For sales within a state, CGST (Central) and SGST (State) are charged equally. For sales across state borders, IGST (Integrated) is charged.

Question 3

What is the absolute difference between direct and indirect taxes?

Accepted Answer

Direct taxes (like income tax) are paid directly by individuals to the government. Indirect taxes (like GST) are collected by businesses from consumers on purchases and then remitted to the tax authority.

Question 4

Can businesses claim a GST refund?

Accepted Answer

Yes, businesses can claim refunds on excess input tax credit when the tax paid on inputs is higher than the tax liability on finished goods sales.

Question 5

Who is exempt from registering under GST?

Accepted Answer

Small businesses with annual aggregate turnover below threshold limits (e.g. ₹40 Lakhs for goods and ₹20 Lakhs for services in India) are exempt from registering for GST.

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