IIMB GST Assessment 2 Answers 2025

📚 Assessment 2 – Goods and Services Tax (GST)

Due date: 7th September 2025, 23:59 IST
Status: Assignment not submitted

Q1. GST was introduced in India in which year?

2014
2016
✅ 2017
2018

Explanation:
GST came into effect on 1st July 2017, replacing multiple indirect taxes and creating a unified tax system in India.

Q2. Which tax was introduced through the Finance Act, 1994?

VAT
CST
✅ Service Tax
Excise Duty

Explanation:
Service Tax was first introduced in India via the Finance Act, 1994, applied initially to a limited number of services.

Q3. Which indirect tax allowed Input Tax Credit but had different rates across states?

CST
✅ VAT
Service Tax
Excise Duty

Explanation:
Value Added Tax (VAT) allowed input credit but its rates varied from state to state, causing tax fragmentation.

Q4. Which of the following best explains the cascading effect of taxation?

Tax applied at one stage of the supply chain
✅ Tax on tax due to lack of input credit
Subsidy removal by the government
Multiple taxes on income

Explanation:
The cascading effect means paying tax on an already taxed amount, due to lack of proper input credit.

Q5. What is one limitation of GST faced by small businesses?

Decreased tax base
✅ Complexity in digital filing and classification
Higher direct taxes
Elimination of input tax credit

Explanation:
Small businesses often struggle with complex online compliance, frequent filings, and classification issues under GST.

Q6. Which of the following accurately reflects the limitations of GST to the government?

Improved transparency in tax collection
Increase in tax evasion
✅ Exclusion of key sectors like petroleum and alcohol
Simplified refund processing

Explanation:
Certain major revenue sectors like petroleum, alcohol, and electricity are excluded from GST, limiting its coverage.

Q7. Which Article of the Indian Constitution deals with the amendment process?

Article 356
✅ Article 368
Article 370
Article 395

Explanation:
Article 368 provides the procedure for amending the Indian Constitution.

Q8. Which of the following amendments require ratification by at least half of the State Legislatures?

Formation of new states
Change in fundamental duties
✅ Change in distribution of powers between Centre and States
Salary of Members of Parliament

Explanation:
Amendments that impact federal structure (e.g., Centre–State power sharing) need ratification by at least half of the states.

Q9. The GST Council is a:

Statutory Body
✅ Constitutional Body
Advisory Body
Quasi-judicial Body

Explanation:
The GST Council was created as a Constitutional Body under the 101st Constitutional Amendment.

Q10. Which of the following best explains the need for a Constitutional Amendment to implement GST in India?

The Constitution already allowed both Centre and States to levy indirect taxes jointly
A new constitutional body needed to be created for regulating trade
✅ The previous structure did not permit simultaneous taxation by both Centre and States on the same transaction
India did not have an indirect tax system before 2017

Explanation:
Before GST, the Constitution did not allow both Centre and States to levy tax on the same supply; hence, a Constitutional Amendment was required.

Q11. The Constitutional Amendment Bill that introduced GST was initially introduced in which year?

2016
2015
2014
✅ 2013

Explanation:
The 122nd Constitutional Amendment Bill (2014), based on the original draft introduced in 2013, eventually became the 101st Constitutional Amendment Act, 2016, which enabled GST.

Q12. In the Dual GST model, who levies and collects taxes on intra-State supplies?

Only Centre
Only State
✅ Both Centre and State
GST Council

Explanation:
For intra-State supplies, both CGST and SGST are levied and collected by Centre and State respectively.

Q13. Which country follows a non-concurrent dual GST model?

India
USA
Australia
✅ Canada

Explanation:
Canada follows a non-concurrent dual GST model, where both federal and provincial GSTs may apply, but not always simultaneously.

Q14. How does the Dual GST model support the concept of fiscal federalism?

It limits State governments’ power to tax
✅ It provides equal power to both Centre and States to tax and collect GST
It centralizes tax collection with no revenue sharing
It allows only States to collect GST and share with the Centre

Explanation:
India’s Dual GST Model ensures both Centre and States share taxing powers, maintaining federal balance.

Q15. What is one major reason for criticism of the destination-based nature of GST?

It increases central government’s tax share
It benefits exporting states more
✅ It leads to revenue loss for manufacturing states
It creates uniform pricing

Explanation:
Since GST is destination-based, manufacturing states lose revenue as tax goes to the consuming state.

📌 Summary of Key Learnings (Assessment 2)

GST in India was introduced in 2017 after a major Constitutional Amendment.
It replaced multiple indirect taxes like Service Tax, VAT, and CST.
The cascading effect was a key problem solved by GST.
India follows a Dual GST Model, giving equal power to Centre and States.
The GST Council is a Constitutional Body formed to regulate GST.
Despite benefits, GST excludes major sectors like petroleum and alcohol, and manufacturing states face revenue loss due to the destination-based model.