Are you a fresh graduate or a young professional in India looking to build a successful career in the field of taxation? In this article, we will provide you with sample answers to 10 common GST interview questions that will help you stand out during your job interviews.
1. What are the different types of GST?
GST, or Goods and Services Tax, is a comprehensive indirect tax levied on the supply of goods and services in India. There are three types of GST: Central GST (CGST), State GST (SGST), and Integrated GST (IGST). CGST is applied to intra-state transactions where the revenue goes to the central government. SGST applies to intra-state transactions as well, but the revenue goes to the state government. IGST is applicable to inter-state transactions, with the revenue being divided between the central and state governments based on pre-determined formulas.
2. What are the various accounting ledgers businesses maintain under GST?
Under GST, businesses maintain various accounting ledgers to ensure proper record-keeping and compliance. These include a cash ledger, an input tax credit ledger, an electronic liability register, and an electronic credit ledger.
3. What are the responsibilities of a Tax Accountant?
Tax accountants play a crucial role in ensuring businesses comply with GST regulations. Their responsibilities include filing returns accurately and within prescribed timelines, maintaining proper records of financial transactions related to GST compliance, verifying invoices for accuracy and legitimacy, reconciling financial data with returns filed, and resolving any discrepancies or issues with tax authorities.
4. What is the difference between a zero-rated supply and an exempt supply?
Under GST, a zero-rated supply refers to the export of goods or services or supplies made to a Special Economic Zone (SEZ) developer or unit. Zero-rated supplies are taxable, but at a rate of 0%. On the other hand, an exempt supply refers to goods or services that are not taxable under GST. The key difference between zero-rated and exempt supplies is that while businesses engaged in zero-rated supplies can claim input tax credits on their inputs and avail certain benefits, businesses engaged in exempt supplies cannot claim input tax credits on their inputs.
5. What is destination-based taxation in the context of GST?
Destination-based taxation is a fundamental principle of GST, where taxes are collected where goods or services are consumed. In other words, the tax revenue goes to the state where the final consumer is located rather than the state where the goods are produced. This ensures a fair distribution of taxes among states based on consumption patterns. Businesses need to determine the location of consumers accurately for proper tax calculations and compliance requirements.
6. What is the Reverse Charge Mechanism (RCM) in GST?
The Reverse Charge Mechanism (RCM) is a provision under GST that shifts the responsibility to pay taxes from suppliers to recipients. It applies when specified goods or services are procured from unregistered suppliers or specific registered suppliers as notified by the government. In such cases, the recipient of goods or services becomes liable to pay GST instead of the supplier. RCM affects businesses that avail services from unregistered suppliers by placing additional compliance obligations on them and increasing their involvement in tax-related processes.
7. Explain how exports and imports are treated under GST.
Exports are considered zero-rated supplies, which means they are taxable but at a rate of 0%. Businesses engaged in exports can claim input tax credits on their inputs, thereby reducing their tax liability. For exports, proper documentation and procedures need to be followed, such as filing shipping bills and submitting export invoices. Imports, on the other hand, are treated as inter-state supplies and are subject to Integrated GST (IGST) along with customs duty. Businesses importing goods or services need to comply with documentation and procedural requirements.
8. What is Input Tax Credit (ITC) and how does it work under GST?
Input Tax Credit (ITC) is an important concept under GST that allows businesses to claim credit for the taxes paid on inputs used in the production or procurement of goods or services. It helps avoid double taxation by allowing businesses to offset the taxes paid on inputs against their output tax liability. To claim ITC, certain conditions need to be met, such as possessing valid tax invoices for purchases, ensuring suppliers have filed their returns accurately, and utilising ITC within a specified time limit. ITC simplifies tax compliance for businesses by reducing their overall tax burden.
9. What are the penalties for non-compliance with GST rules?
Non-compliance with GST rules may attract penalties, depending on the nature and severity of the violation. Some common violations include late filing of returns, incorrect declaration of information in returns or invoices, failure to maintain proper records, evasion of taxes through fraudulent means, or suppression of sales. The penalties levied can range from monetary fines to cancellation of registration or even imprisonment in extreme cases involving substantial fraud. It is essential for businesses to understand and adhere to GST regulations to avoid penalties and maintain compliance.
10. What are the benefits of the composition scheme for small businesses under GST?
The Composition Scheme is a simplified tax compliance option available for small businesses under GST. It is designed to reduce paperwork and ease the tax burden for eligible businesses. Small businesses with an annual turnover below a specified threshold can opt for the composition scheme and pay taxes at a lower rate based on their turnover. The scheme allows them to file quarterly returns instead of monthly returns, freeing up their time and resources. It simplifies tax calculations and compliance requirements, making it easier for small businesses to focus on their operations and growth.
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FAQs
1. What are some common job roles in GST?
Some common job roles in GST include Tax Consultant, Compliance Officer, Tax Analyst, Accounting Manager, or Finance Manager.
2. Do I need a specific degree or certification for a career in GST?
While a degree in accounting, finance, or taxation can be beneficial, it is not always mandatory. However, completing relevant certification courses like the Goods and Services Tax Practitioner (GSTP) certification can enhance your prospects.
3. What is the average salary for professionals working in GST?
On average, entry-level positions may offer salaries starting from ₹3-4 lakhs per annum, while senior-level professionals can earn upwards of ₹10-12 lakhs per annum.
4. Are there any specialised areas within GST?
Yes, there are various specializations within GST, such as GST Audit and Assessment, GST Compliance and Filing, GST Advisory and Consulting, and Indirect Tax Litigation.
