Under GST, the Reverse Charge Mechanism (RCM) means: MCQ with Answer and Explanation

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Under GST, the Reverse Charge Mechanism (RCM) means:

A. Liability to pay tax shifts from the supplier to the recipient of goods/services

B. The government pays tax to the supplier

C. Exports are tax-free

D. The tax rate is negative

Answer: Option A

Solution (By JKSSB Mock Tests)

Normally, the supplier collects and pays GST. Under RCM, the buyer/recipient is directly liable to pay the tax to the government.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Practice More Accountancy and Book Keeping Questions

Question #1

In financial management, the 'Degree of Financial Leverage' (DFL) is calculated at a given level of EBIT as:

A. Both A and B depending on the presence of preference shares

B. EBIT / (EBIT - Interest)

C. Contribution / EBIT

D. EBIT / (EBIT - Interest - Preferred Dividend / (1 - Tax Rate))

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Correct Answer: Option A

Explanation:
DFL measures the sensitivity of EPS to changes in EBIT. If only debt is present, DFL = EBIT / (EBIT - I). If preference shares are also present, the formula includes the pre-tax equivalent of preference dividends, making D option correct.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

The 'National Pension System' (NPS) for government employees was made mandatory for those joining after:

A. 1 Jan 2015

B. 1 Jan 1991

C. 1 Jan 2004

D. 1 Jan 2010

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Correct Answer: Option C

Explanation:
NPS replaced the old defined benefit pension for central government employees joining on or after 1/1/2004.

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Question #3

Under GST, the 'Composition Scheme' is not available to a person who:

A. Makes inter-state supplies

B. Is engaged in the supply of services

C. All of the above

D. Is engaged in the manufacture of ice cream and pan masala

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Correct Answer: Option C

Explanation:
The Composition Scheme is barred for suppliers of services (except restaurants), those making inter-state supplies, casual/non-resident taxable persons, and manufacturers of specified goods like ice cream, pan masala, and tobacco. Therefore, all options apply.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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