21 GST Interview Questions You Must Know Before Your Next Interview - Part 1

1. What is GST?
   Answer: GST stands for Goods and Services Tax. It is an indirect tax charged on the supply of goods and services.
   Example: When a product is purchased, GST will be added to its total value. The business would then collect the tax and pays it to the government.

2. Why was GST introduced in India?
   Answer: Before GST, businesses had to deal with several indirect taxes, such as VAT, service tax and excise duty. GST was introduced to bring many of these taxes under a common tax system and to reduce the cascading effects of taxes.

3. Is GST a direct tax or an indirect tax?
   Answer: GST is an indirect tax.
   A direct tax, such as income tax, is generally paid directly by the person to the government. GST, on the other hand, is collected on taxable supplies by businesses and is generally borne by the end consumer.
   For example, a customer pays GST when purchasing a taxable product, and the seller accounts for that tax as required.

4. What are the different types of GST in India?
   Answer: There are four main types of GST:
   a) CGST (Central Goods and Services Tax): Collected by the Central Government on applicable intra-state supplies.
   b) SGST (State Goods and b) Services Tax): Collected by the State Government on applicable intra-state supplies.
   c) IGST (Integrated Goods and Services Tax): Applies to inter-state supplies and is administered by the Central Government.
   d) UTGST (Union Territory Goods and Services Tax): Applies to eligible intra-union-territory supplies and is collected by the Union Territory administration.

5. What is the difference between CGST, SGST and IGST?
   Answer: The main difference is the type of transaction and how the tax is levied.
   a) CGST and SGST: Generally, apply when the supplier’s location and place of supply are in the same state.
   b) IGST: Generally, applies when the supplier’s location and place of supply are in different states.
   For example, if a business in Karnataka makes a taxable sale to a customer in Karnataka, CGST and SGST generally apply. If it makes an inter-state sale to a customer in Tamil Nadu, IGST generally applies.

6. What is the difference between intra-state and inter-state supply?
   Answer: An intra-state supply generally takes place when the supplier’s location and the place of supply are in the same state or union territory.
   An inter-state supply generally takes place when these locations are in different states or union territories.

7. What is GSTIN?
   Answer: GSTIN stands for Goods and Services Tax Identification Number. It is a 15-character identification number assigned to a registered taxpayer under GST. It is used by businesses for activities such as issuing tax invoices, filing returns and carrying out other GST-related compliance.

8. What is the difference between GSTIN and PAN?
   Answer: PAN is a 10-character Permanent Account Number used for income-tax identification. GSTIN is a 15-character number used for GST registration.
   Example: PAN is used as a key identifier during GST registration, and the GSTIN includes the PAN as part of its structure.

9. What is a taxable supply under GST?
   Answer: A taxable supply is a supply of goods or services that attracts GST under the applicable law.
   Example: Selling a product that is subject to GST is generally a taxable supply. However, some supplies may be exempt or outside the scope of GST.

10. What is a GST tax invoice?
    Answer: A GST tax invoice is a document issued by a registered supplier for a taxable supply of goods or services, as required under GST rules. It contains details such as the supplier’s name and GSTIN, invoice number and date, description of goods or services, taxable value and applicable tax.

11. What is the difference between input tax and output tax?
    Answer: The difference is based on whether the tax is calculated on a purchase or a sale.
    a) Input tax: GST charged on eligible business purchases.
    b) Output tax: GST charged by a business on its taxable outward supplies.

12. What is the difference between exempt, nil-rated and non-GST supplies?
    Answer: These terms describe different GST treatments:
    a) Exempt supply: A supply that is exempt from GST under the applicable provisions or notifications.
    b) Nil-rated supply: A taxable supply to which the applicable GST rate is 0%.
    c) Non-GST supply: A supply that falls outside the levy of GST under the applicable GST framework.

13. What is Input Tax Credit (ITC)?
    Answer: Input Tax Credit, or ITC, allows a registered business to claim credit for eligible GST paid on business purchases and use that credit against its output tax liability, subject to the applicable conditions.
    Example: If a business purchases goods for ₹10,000 and pays ₹1,800 as GST. If the purchase is eligible for ITC and all required conditions are met, the business may claim ₹1,800 as credit.

14. How do you calculate GST on a sale?
    Answer: GST is calculated by applying the applicable GST rate to the taxable value of the supply. For example, suppose a product costs ₹1,000 before GST and the applicable GST rate is 18%.
    Product value: ₹1,000
    GST at 18%: ₹180
    Total invoice value: ₹1,180
    Formula: GST amount = Taxable value × GST rate ÷ 100.

15. What are the different GST tax rates in India?
    Answer: GST rates vary depending on the goods or services being supplied. The main GST rate slabs include 5%, 18% and 40%, along with 0% or nil-rated supplies.  

16. What are HSN and SAC codes?
    Answer: HSN stands for Harmonized System of Nomenclature, which is used to classify goods. SAC stands for Services Accounting Code, which is used to classify services.
    These codes help identify and classify the goods or services being supplied for GST-related purposes.

17. What is the place of supply under GST?
    Answer: The place of supply determines the location treated as the place where a supply takes place for GST purposes. It helps establish whether CGST and SGST or IGST generally applies.
    Example: When a supplier and customer are in different states, the place-of-supply rules help determine the appropriate GST treatment.

18. What is the Composition Scheme under GST?
    Answer: The Composition Scheme is a simplified GST compliance option available to eligible small taxpayers who meet the prescribed conditions. Eligible taxpayers generally pay tax at specified composition rates and follow simplified compliance requirements. However, they cannot collect GST from customers as tax in the usual manner or claim ITC on their purchases.

19. What is a GST return?
    Answer: A GST return is a statement filed by a taxpayer to report relevant details of business transactions, tax liability, tax payments or other prescribed information. Depending on the taxpayer’s category and applicable requirements, different returns or statements may need to be filed.

20. What is GSTR-1?
    Answer: GSTR-1 is a GST return or statement used by regular taxpayers to report details of their outward supplies, such as sales. It includes prescribed invoice-level and other supply details, depending on the transaction type and applicable reporting requirements.

21. What is GSTR-3B?
    Answer: GSTR-3B is a summary GST return in which eligible taxpayers report details such as their outward tax liability, eligible ITC and net tax payable, as applicable. It is used to declare the summary tax position and discharge the resulting tax liability according to the applicable rules.

Preparing for a GST interview becomes easier when you understand the basics and know how to apply them. These 21 questions cover important starting points, from the meaning of GST and its different types to tax calculations, ITC and GST returns. As you revise, try explaining each answer in your own words instead of memorising it word for word. Pay special attention to the differences between CGST, SGST and IGST, the basic GST calculation and the purpose of GSTR-1 and GSTR-3B. 

To improve your accounting efficiency and become more familiar with TallyPrime, explore TallyPrime 113 Shortcut Keys to learn useful keyboard shortcuts that can help you perform accounting tasks faster.