The introduction of Goods and Services Tax (GST) has brought a paradigm shift in the indirect taxation landscape of India. For professionals working in taxation, finance, accounting, and compliance roles, a strong grasp of GST concepts and their practical application is essential. Whether you are preparing for an interview or aiming to deepen your knowledge, it is important to be well-versed with the frequently asked technical questions in the GST domain.

This article covers key GST-related questions commonly asked in technical interviews. The content is structured to provide clear explanations, practical insights, and recent updates that reflect the current GST framework in India.

1. Difference Between Audit by Tax Authorities and Special Audit

Understanding the different types of audits is crucial for compliance and risk management.

• Audit by Tax Authorities: This is a routine audit conducted by GST officers to verify the correctness of returns filed, ITC claimed, and tax paid. It is generally less detailed and follows a standard procedure.
• Special Audit (Section 66 of CGST Act): A special audit is ordered by the Commissioner if the tax liability is suspected to be incorrect or if the case is complex requiring expert examination. A Chartered Accountant or Cost Accountant is appointed to conduct this detailed audit, and the audit report is submitted to the tax authority.

2. Views on Simplifications in Indirect Taxation Through GST

GST simplified the indirect taxation system in India by:

• Replacing multiple taxes like VAT, excise duty, service tax with a single tax regime.
• Eliminating the cascading effect of taxes through input tax credit (ITC).
• Bringing uniformity in tax rates and procedures across states.
• Enhancing transparency and compliance through digitisation (GSTN portal, e-invoicing).
• Simplifying compliance via unified returns (GSTR-1, GSTR-3B).

Despite simplification, challenges remain, such as frequent rule amendments and complexity in rate structures.

3. Procedure for Carrying Forward Input Tax Credit (ITC) in Case of Succession, Transfer, Merger, and Acquisition

When a business undergoes restructuring through succession, transfer, merger, or acquisition, the accumulated ITC can be carried forward under GST, subject to certain conditions:

• The transfer must be pursuant to a scheme approved by the High Court or Tribunal.
• The successor entity should be registered under GST.
• Proper documentation, including a letter of intimation to the jurisdictional GST officer, is mandatory.
• ITC is transferred on a proportionate basis as per the scheme.
• In cases of transfer of a going concern, ITC transfer is permitted without reversal.

4. Difference Between Mixed Supply and Composite Supply

GST differentiates supplies into mixed and composite supplies for tax rate determination:

• Composite Supply: Two or more supplies naturally bundled and supplied together, with one principal supply that dominates. The tax rate is based on the principal supply. For example, a laptop bundled with software.
• Mixed Supply: Two or more supplies made together but can be supplied separately. The highest tax rate among the supplies is applicable. For example, a gift pack containing chocolates, toys, and clothes.

5. Recent Changes Made in GST

GST is dynamic, and understanding recent changes is vital for compliance:

• QRMP Scheme: Introduced to ease return filing for small taxpayers with turnover up to Rs. 5 crores. Allows quarterly returns with monthly payments.
• E-invoicing Threshold Update: Increased applicability threshold to include more taxpayers.
• Rule 36(4) Amendment: Limits ITC claim to invoices reflected in GSTR-2B and paid within 180 days.
• Rationalisation of GST Rates: Periodic adjustment of rates on goods and services for simplification.
• Judicial Pronouncements: Recent court rulings impacting valuation, classification, and ITC eligibility.

6. Explanation of Rule 36(4)

Rule 36(4) restricts the Input Tax Credit claim under GST to invoices and debit notes that are reflected in the taxpayer’s GSTR-2B and for which payment has been made within 180 days from the invoice date.

• The rule aims to curb fraudulent ITC claims.
• ITC exceeding this limit must be reversed with interest.
• This rule promotes timely payment to suppliers.

7. Provisions and Benefits of E-invoicing

E-invoicing under GST mandates businesses to electronically generate and report invoices to the Invoice Registration Portal (IRP) before issuing to customers.

Benefits of E-invoicing:

• Ensures authenticity of invoices.
• Auto-populates GST returns, reducing errors and reconciliation efforts.
• Seamless integration with E-way bill generation.
• Enhances transparency and combats tax evasion.
• Facilitates real-time data sharing with tax authorities.

8. Benefits of the SEIS Scheme

The Service Exports from India Scheme (SEIS) incentivises exporters of notified services by granting duty credit scrips.

• Duty credit scrips can be used for paying customs duties.
• Encourages export promotion and competitiveness.
• Benefits specific service sectors such as IT, tourism, legal, and educational services.

9. Views on GSTR-2A and 2B

• GSTR-2A: A dynamic, auto-generated purchase data statement reflecting supplier invoices as they file their returns. Changes throughout the month.
• GSTR-2B: A static, auto-populated statement generated monthly. Provides a fixed snapshot useful for monthly ITC reconciliation.

Impact: GSTR-2B simplifies reconciliation, providing certainty on ITC available, reducing disputes.

10. Topics Commonly Asked About GST Concepts

Interviewers frequently focus on core GST concepts such as:

a) Time of Supply

• Defines when the supply is deemed to have occurred.
• Determines tax liability timing.
• Varies for goods and services, with multiple scenarios (advance payment, invoice issuance, etc.)

b) Place of Supply

• Determines whether supply is intra-state or inter-state.
• Critical for deciding applicable GST (CGST/SGST vs. IGST).
• Different rules for goods and services, and special cases like imports/exports.

c) Value of Supply

• Basis for GST calculation.
• Includes transaction value, discounts, subsidies, taxes, and excluded components.
• Adjustments for related-party transactions and valuation of free supplies.

d) Input Tax Credit – Blocked Credit u/s 17(5)

• Lists supplies on which ITC cannot be claimed, e.g., motor vehicles (except certain cases), food, beverages, and entertainment expenses.
• Ensures ITC is only claimed on business-use inputs.

e) ITC Calculation Rules

• ITC is claimable only if the supplier has paid tax and filed return.
• ITC must relate to taxable supplies.
• Proper invoice and timely filing are prerequisites.

f) Refund Provisions

• Refund available for excess tax paid, zero-rated supplies, inverted duty structure.
• Specific documentation and timelines to be followed.
• Refund claims scrutinised carefully by authorities.

g) Special Economic Zones (SEZ)

• Supplies to SEZ units/developers are zero-rated.
• ITC refund is claimable for inputs used in SEZ supplies.
• Special procedures for approvals.

h) Customs and Foreign Trade Policy (FTP)

• GST interface with customs duty on imports.
• Impact of FTP schemes on tax liabilities.
• Export benefits under GST and customs laws.

11. Reconciliation Between Books ITC and GSTR-2B

• ITC claimed in accounting books must be matched with GSTR-2B data.
• Identifying mismatches reduces the risk of disallowance.
• Proper reconciliation involves supplier data verification and invoice tracking.

12. Refund Calculation on Export and Inverted Tax Structure

• Refund on exports is tax paid on inputs less tax paid on output supplies.
• For inverted duty structure, refund calculated as the difference between tax paid on inputs and output supplies.
• Ensures exporters and taxpayers are not at a disadvantage.

13. GST Returns: Names, Due Dates, and Purpose

• GSTR-1: Details of outward supplies; due 11th of next month.
• GSTR-3B: Summary return of outward supplies, ITC, and tax payment; due 20th of next month.
• GSTR-9: Annual return; due 31st December following financial year.
• GSTR-2B: Auto-populated ITC statement for reconciliation.
• QRMP Return: Quarterly return with monthly payment for small taxpayers.

Returns ensure accurate tax filing, compliance, and facilitate ITC matching.

14. Time Period and Nullification of Advance Rulings

• Advance rulings are valid for up to 3 years or until facts change.
• Can be nullified if based on incorrect or incomplete facts.
• Provides clarity on tax liability and helps avoid disputes.

15. Actions When Consideration Is Not Realised Within the Stipulated Time for Export of Services

• Interest liability under Section 50 applies on delayed payment.
• ITC reversal may be necessary if payment is not received within the prescribed time.
• Follow-up with buyers and compliance to avoid penalties.

16. QRMP Scheme Explained

• Quarterly Return Monthly Payment scheme designed for small taxpayers.
• Taxpayers file GSTR-1 monthly or quarterly; GSTR-3B filed quarterly.
• Monthly payments via challan.
• Reduces compliance burden and cash flow issues.

17. Recent Important High Court and Supreme Court Judgments

• Stay updated on recent rulings on ITC eligibility, valuation, classification.
• Examples include cases on whether ITC on motor vehicles is allowed, or treatment of composite supplies.
• Courts have clarified various contentious GST provisions.

18. Recent Circulars Issued by CBIC

• Circulars provide clarifications on procedural aspects.
• Examples include clarifications on e-invoicing, ITC claim timelines, refund processes.
• Important to stay informed of such updates.

19. Tax Implications in Case of Sale of Capital Goods and Discontinuance of Business

• ITC reversal required when capital goods are sold or business discontinued.
• Tax paid on residual value.
• Proper documentation and reporting are essential.

20. Provisions Related to Second-hand Goods Dealers

• Special valuation norms under GST for resale of used goods.
• ITC may be restricted.
• Dealer must follow rules for proper invoicing and filing.

21. Implications and Exceptions under Rule 42/43 (ITC Apportionment)

• ITC must be apportioned if inputs used partly for exempt supplies.
• Formula-based apportionment for blocking ITC on exempt portion.
• Certain exceptions apply for capital goods.

22. Provisions Related to Pure Agent Under GST

• Pure agents act on behalf of principal, incur expenses recoverable without mark-up.
• ITC on such expenses not included in taxable value.
• Requires proper documentation and agreement.

23. Common Conceptual Questions in GST Interviews

• Is GST accepted worldwide? GST is a modern indirect tax system adopted by many countries for seamless tax collection.
• Impact of GST on Income Tax/Corporate Tax? GST does not replace direct taxes but may impact compliance and overall tax planning.
• Will all goods and services be covered? Certain goods like petroleum products, alcohol remain outside GST currently.
• Rate structure proposed under GST? Multiple slabs (0%, 5%, 12%, 18%, 28%) exist to accommodate different goods/services.
• Dual GST necessity? Central GST and State GST to accommodate India’s federal structure.
• Role of IT in GST enforcement? Technology enables real-time tracking, return filing, and anti-evasion measures.
• Taxation on imports? Imports attract IGST to level the playing field.

24. TDS and TCS Provisions Under GST

• TDS (Tax Deducted at Source): Specified government entities deduct tax while making payments to suppliers.
• TCS (Tax Collected at Source): E-commerce operators collect tax while making payments to suppliers.
• Both require timely deposit and filing of TDS/TCS returns.

25. Section 50 Interest Provisions on Default in Payment

• Interest is payable on the gross tax amount due.
• Currently, the rate is 18% per annum.
• Calculated from the due date of payment till actual payment date.
• Encourages timely compliance.

26. Journal Entries for Purchase Transactions With and Without GST

• Purchase with GST:
  • Debit Purchase Account (Net value)
  • Debit Input CGST Account (CGST amount)
  • Debit Input SGST/IGST Account (SGST or IGST amount)
  • Credit Cash/Bank or Payables (Total invoice value)
• Purchase without GST:
  • Debit Purchase Account (Full amount)
  • Credit Cash/Bank or Payables (Full amount)

Correct recording ensures accurate tax reporting and ITC claims.

27. Jurisdiction of National and Regional GST Benches

• Regional benches deal with appeals within their territory.
• National bench handles cases involving inter-state issues or matters of significant importance.
• Understanding jurisdiction is essential for legal proceedings.

Conclusion

GST continues to evolve as one of India’s most significant indirect tax reforms. Preparing for GST technical interviews requires not just theoretical knowledge but also awareness of practical applications and recent developments. This article has covered a wide array of frequently asked questions, designed to equip professionals with the insights needed to excel in interviews and perform effectively in their roles.

For deeper understanding, candidates are advised to study GST law sections, rules, recent circulars, and landmark judicial rulings. Practical experience with GST returns, reconciliation, and compliance also strengthens one’s grasp on the subject.