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CS Executive · Tax Laws and Practice · Concept of Indirect Taxes at a Glance

Under the constitutional scheme after the 101st Amendment, which statement about the levy of tax on inter-State supply of goods or services is correct?

Parliament has exclusive power to make laws on GST where the supply of goods or services occurs in the course of inter-State trade or commerce. The Centre therefore levies and collects IGST, while States and Parliament share concurrent power only for intra-State supplies.

  1. AOnly the State Legislatures may levy GST on inter-State supplies
  2. BParliament has exclusive power to make laws on GST for inter-State supply of goods or servicesCorrect
  3. CMunicipalities levy GST on inter-State supplies
  4. DEach State levies its own GST on inter-State supplies independently of the Centre

Explanation

Article 246A gives Parliament and States concurrent power on GST, but Parliament alone has exclusive power for supplies in the course of inter-State trade or commerce. Hence IGST is levied and collected by the Centre. The option giving States exclusive power ignores this exclusivity.

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