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QUIZ on Central Sales Tax (CST) and Karnataka Value Added Tax (K VAT)

 

Karnataka Value Added Tax is a tax on sale of goods.

Central Sales Tax (CST) is a tax on sales of goods levied by the Central Government of India. CST is applicable only in the case of inter-state sales. Inter-state sale happens when a sale or purchase constitutes movement of goods from one state to another.

CST is administered by Sales Tax authorities of each state. Thus, the State Government Sales Tax officer who assesses and collects local (state) sales tax also assesses.

 

 Here is a Quiz on Central Sales Tax (CST) and Karnataka Value Added Tax (K VAT)

 

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Question 1

Tax on intra-state sale is levied by

A
Central Government
B
State Government
C
Both
Question 1 Explanation: 
Answer – b) Tax on intra-state sale (within state) is levied by State Government of the State in which sale takes place.
Question 2

CST rate on sale of goods

A
2% against C Form
B
2% against H Form
C
10%
Question 2 Explanation: 
Answer – a) CST is payable on inter-state sales @2%, if the declaration in Form C is obtained. No CST is payable if Form H or I is obtained from purchaser. Normal CST rate without obtaining any Forms is same as applicable to sale within the State.
Question 3

A company from Bangalore is selling goods to a Special Economic Zone (SEZ) situated at Chennai. While selling, the unit in SEZ (the buyer) has offered to issue form I against purchase of goods. So, according to you, what is the rate of CST to be charged –

A
2%
B
0%
C
10%
Question 3 Explanation: 
Answer b) The interstate sale to units situated in SEZ or developers of SEZ against Form ‘I’ are exempt as per Section 8 of CST Act.
Question 4

Mr. Mahesh has started a company selling Glue sticks in Bangalore. As per the information given to him by the consultant, he needn’t register under Local Value Added Tax (VAT) Laws if his turnover is less than Rs.7.5 Lakhs. Now, he wants to sell Rs.40,000 worth of goods to Gujarat. While invoicing, the buyer has asked him to mention CST number. Should he get registered under CST?

A
Yes
B
No
Question 4 Explanation: 
Answer – a) There is no threshold limit for registration under CST Act and hence irrespective of quantum of turnover, a dealer on making inter-state sale will be liable for registration.
Question 5

The central sales tax is collected in a state where

A
The movement of goods commences
B
The goods are delivered
C
The goods are manufactured
Question 5 Explanation: 
Answer – a. The tax follows the goods. So, the state where the origin of movement of goods takes place will collect CST
Question 6

Ramnath and Company is a trader in electronic items at J P Nagar, Bangalore. While filing monthly VAT return, he has considered input credit of VAT paid towards purchase of stationery to his office. Is he right?

A
Yes
B
No
Question 6 Explanation: 
Answer – b. No, Schedule 5 of K VAT Act deals with restriction on Input Tax credits. Purchase of stationery is one such item appearing in this schedule. Hence, Input Tax credit is not eligible
Question 7

How many digits are there in TIN number?

A
9
B
10
C
11
Question 7 Explanation: 
Answer – c, 11. Tax Identification Number (TIN) is a 11 digit number. The first 2 digit represents State Code; (29 for Karnataka), the next 2 digit represents check digit and the remaining 7 digit indicate running number of the dealer
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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]