An introduction to GST, registration, input tax credit, tax invoices and the records you must keep form the basis of this GST test. It carries 8 questions for 15 marks, with a time limit of 30 minutes, and it is set for CA Intermediate Group 1 students preparing for the January 2027 attempt. The chapters covered are Chapter 1 – GST in India – An Introduction, Chapter 8 – Input Tax Credit, Chapter 9 – Registration, Chapter 10 – Tax Invoice; Credit and Debit Notes and Chapter 11 – Accounts and Records. The questions sit in three case scenarios: a manufacturer with an additional place of business, a supplier selling across States, and a supplier dispatching goods to a customer.
The law basis is the CGST Act 2017, IGST Act 2017 and CGST Rules as amended by Finance Act 2025, notifications and circulars effective up to 28 February 2026. There is no negative marking, so a wrong answer costs nothing. Questions are prepared with AI tools and cross-checked by independent solvers; they are not reviewed by a Chartered Accountant.
8 questions across 5 chapters, 15 marks and 30 minutes in the timed paper. Every answer below is shown with the working behind it and the authority it rests on.
Law and standards used: CGST Act 2017, IGST Act 2017 and CGST Rules as amended by Finance Act 2025, notifications and circulars effective up to 28 February 2026.
Questions
8
Marks
15
Time limit
30 minutes
Attempt
January 2027
Group
Group 1
Law basis
CGST Act 2017, IGST Act 2017 and CGST Rules as amended by Finance Act 2025, notifications and circulars effective up to 28 February 2026
Content as of
2026-10-31
Chapters covered
Input Tax Credit (4 Q)
Registration (1 Q)
Accounts and Records (1 Q)
GST in India – An Introduction (1 Q)
Tax Invoice; Credit and Debit Notes (1 Q)
Questions, answers and explanations
Question 1 · 2 marks · Input Tax Credit · medium
Scenario. Meridian Components Pvt. Ltd., a manufacturer of industrial fittings, is registered in Madhya Pradesh with an Indore office (principal place) and Dewas factory (additional place). An invoice dated 5 December 2025 covers 1,000 kg of alloy compound for ₹5,00,000 plus GST ₹90,000; 400 kg arrives on 5 December, 350 kg on 19 December and the final 250 kg on 8 January 2026. A machine-maintenance invoice dated 1 September 2025 is ₹2,00,000 plus GST ₹36,000. By expiry of 180 days, Meridian has paid ₹1,00,000 of value and ₹18,000 tax; the balance remains unpaid, and reverse charge does not apply. It also buys a five-seat SUV for executives’ business travel, not for resale, passenger transport or driving instruction. February 2026 taxable supplies (excluding exempt and zero-rated supplies) are ₹60,00,000 at 18%; output tax is ₹10,80,000 and its credit ledger balance is ₹12,00,000. No Rule 86B exception applies. For FY 2024-25, the annual-return due date is 31 December 2025; no proceedings extend retention. Its paper records for Dewas are kept only at Indore. An affiliate, Nivaan Tools LLP (separate PAN), applies under Rule 8, completes Aadhaar authentication, has monthly B2B output-tax liability of ₹2,40,000 and seeks two registrations in Madhya Pradesh.
When can Meridian first avail the ITC of ₹90,000 on the alloy compound, assuming the other conditions under section 16 are satisfied?
December 2025, because the supplier issued the invoice in that month.
December 2025, when the first lot is received.
February 2026, after filing the annual return.
January 2026, when the final lot is received. (correct answer)
Answer: D — January 2026, when the final lot is received.
Explanation. The first proviso to section 16(2) postpones ITC where goods covered by one invoice are received in lots or instalments: credit becomes available only on receipt of the last lot. Meridian receives the final 250 kg on 8 January 2026, so January 2026 is the first eligible month, assuming the other conditions are met. Claiming on the December invoice or on the first two deliveries overlooks the specific last-lot rule.
Where it goes wrong. Claiming ITC on invoice issuance or receipt of the first lot instead of waiting for the final lot.
Authority. Section 16(2), first proviso
Question 2 · 2 marks · Input Tax Credit · easy
What is the eligibility of ITC on the SUV purchased by Meridian?
ITC is blocked because the vehicle has seating capacity of not more than 13 persons and none of the specified exceptions applies. (correct answer)
ITC is available in proportion to the kilometres travelled for business purposes.
ITC is available because the vehicle is owned by a registered company.
Full ITC is available because the vehicle is used in the course of business.
Answer: A — ITC is blocked because the vehicle has seating capacity of not more than 13 persons and none of the specified exceptions applies.
Explanation. Section 17(5)(a) blocks ITC on a motor vehicle for transportation of persons where approved seating capacity is not more than 13, including the driver. Business use by executives does not, by itself, create an exception. Meridian does not use the SUV for further taxable supply of such vehicles, passenger transportation or driving instruction; therefore its ITC is blocked. The tempting business-use argument overlooks the specific restriction.
Where it goes wrong. Assuming that use for business purposes automatically overrides the blocked-credit provisions.
Authority. Section 17(5)(a)
Question 3 · 2 marks · Input Tax Credit · hard
What amount of ITC on the machine-maintenance service invoice must Meridian reverse after expiry of 180 days? Ignore interest.
₹36,000
₹9,000
Nil
₹18,000 (correct answer)
Answer: D — ₹18,000
Working. Invoice value = ₹2,00,000; GST = ₹36,000; total invoice amount = ₹2,36,000.
Amount paid within 180 days = ₹1,00,000 + ₹18,000 = ₹1,18,000.
Percentage paid = ₹1,18,000 / ₹2,36,000 × 100 = 50%.
Unpaid proportion = 100 per cent − 50% = 50%.
ITC reversal = ₹36,000 × 50% = ₹18,000.
Therefore, ITC of ₹18,000 is required to be reversed, along with applicable interest.
Explanation. Meridian paid only half of the invoice value and corresponding tax within 180 days. The second proviso to section 16(2), read with rule 37, requires reversal or payment of ITC proportionate to the unpaid amount, with interest. Thus only 50% of the ₹36,000 credit is reversed. Reversing the entire ₹36,000 would incorrectly disregard the partial payment; the remaining credit can be re-availed when the balance is paid.
Where it goes wrong. Reversing the entire ITC instead of restricting the reversal to the unpaid proportion.
Authority. Section 16(2), second proviso; Rule 37 of CGST Rules, 2017
Question 4 · 2 marks · Input Tax Credit · hard
What is the minimum amount of output tax that Meridian must discharge through the electronic cash ledger for February 2026 under Rule 86B?
Nil
₹10,800 (correct answer)
₹1,08,000
₹10,69,200
Answer: B — ₹10,800
Working. Value of taxable supplies = ₹60,00,000, exceeding ₹50,00,000.
Output tax liability = ₹60,00,000 × 18% = ₹10,80,000.
Maximum discharge through electronic credit ledger = ₹10,80,000 × 99% = ₹10,69,200.
Minimum amount payable through electronic cash ledger = ₹10,80,000 × 1% = ₹10,800.
Therefore, Meridian must discharge at least ₹10,800 through the electronic cash ledger.
Explanation. February taxable supplies exceed ₹50 lakh, so Rule 86B applies on the stated facts. The rule caps electronic-credit-ledger discharge at 99% of output tax liability, requiring at least 1% to be paid through the electronic cash ledger. The September 2026 update amended the exceptions with effect from 1 February 2026; the case states that none applies. The tempting nil option ignores the mandatory cash portion.
Where it goes wrong. Ignoring the monthly taxable-supply threshold or treating the entire output tax as dischargeable through ITC.
Which statement correctly describes Nivaan Tools LLP's eligibility and registration position if it opts for Rule 14A?
It satisfies the stated liability and Aadhaar conditions, but under Rule 14A it can have only one registration per State/UT against the same PAN. (correct answer)
It is ineligible because Rule 14A applies only to persons having annual turnover below ₹40 lakh.
It is eligible and may obtain two registrations in Madhya Pradesh under Rule 14A because it operates from two outlets.
It is ineligible because the monthly output tax liability on supplies to registered persons must be below ₹2 lakh.
Answer: A — It satisfies the stated liability and Aadhaar conditions, but under Rule 14A it can have only one registration per State/UT against the same PAN.
Explanation. Rule 14A is available where an applicant has applied under Rule 8, the monthly output-tax liability on supplies to registered persons does not exceed ₹2.5 lakh, and Aadhaar authentication is completed, subject to the stated statutory exception. Nivaan meets the facts given. However, the option permits only one registration per State/UT against the same PAN and overrides Rule 11's multiple-place registration route. It cannot obtain two registrations under this option.
Where it goes wrong. Assuming that multiple places of business permit multiple registrations even after opting for Rule 14A.
Question 6 · 2 marks · Accounts and Records · medium
Which statement correctly describes Meridian's obligations regarding its Dewas records and the retention period for FY 2024-25?
It may keep the Dewas records at any business premises and retain them for 72 months from the actual date of filing the annual return.
It must keep the Dewas records at Dewas but may discard them after 72 months from 31 March 2025.
It must keep the paper accounts relating to Dewas at Dewas and retain the relevant books and records until expiry of 72 months from the annual-return due date, namely 31 December 2031. (correct answer)
It may keep all paper accounts only at Indore and retain them for 60 months from the financial year-end.
Answer: C — It must keep the paper accounts relating to Dewas at Dewas and retain the relevant books and records until expiry of 72 months from the annual-return due date, namely 31 December 2031.
Working. Retention period under section 36 = 72 months.
72 months ÷ 12 = 6 years.
Annual-return due date given in the scenario = 31 December 2025.
Expiry of 72 months from that date = 31 December 2031.
The accounts relating to the Dewas additional place of business must also be kept at Dewas under section 35(1), first proviso.
Explanation. Section 35(1) requires the registered person to maintain records at the principal place of business and, where more than one place is shown in the registration certificate, to keep the accounts relating to each place at that place. Section 36 requires retention until expiry of 72 months from the due date of the annual return. Seventy-two months is six years; from 31 December 2025 that period expires on 31 December 2031. The date is measured from the due date, not the financial year-end or actual filing date.
Where it goes wrong. Using the financial year-end or actual annual-return filing date instead of the statutory due date as the starting point for retention.
Authority. Section 35(1), first proviso; Section 36; Rule 56(7) and Rule 56(10), CGST Rules, 2017
Question 7 · 2 marks · GST in India – An Introduction · easy
Scenario. Prithvi Pumps, registered and operating in Madhya Pradesh, sells a taxable pump to a buyer in Maharashtra. The goods move from Madhya Pradesh to Maharashtra, and the place of supply is Maharashtra. Assume the transaction is neither exempt nor covered by a special rule. The buyer asks which component of GST should appear on the supplier's invoice.
Which levy applies to the transaction under the GST framework introduced in India?
CGST and SGST, as the supplier is registered in Madhya Pradesh.
Integrated Goods and Services Tax (IGST). (correct answer)
SGST and IGST together.
CGST only, because the supplier is located in Madhya Pradesh.
Answer: B — Integrated Goods and Services Tax (IGST).
Explanation. Because the supplier is in Madhya Pradesh and the place of supply is Maharashtra, the supply is inter-State under the framework described in Chapter 1. Article 269A provides that GST on inter-State supplies is levied and collected by the Government of India and apportioned between the Union and States. IGST is therefore charged. CGST plus SGST is the intra-State treatment and is the tempting but incorrect alternative.
Where it goes wrong. Confusing the supplier's State with the place of supply and applying the intra-State levy.
Authority. Article 269A of the Constitution; Chapter 1, Framework of GST as introduced in India – Inter-State supplies
Question 8 · 1 marks · Tax Invoice; Credit and Debit Notes · easy
Scenario. On 14 January 2026, Veda Pumps Ltd., a registered supplier, agrees to sell a taxable pump to a customer for delivery by road. The goods are packed and ready at its warehouse on 16 January; movement to the customer's premises begins on 17 January, and delivery is completed on 19 January. The supply involves movement of goods and no special invoicing exception applies.
By when must Veda Pumps Ltd. issue the tax invoice under section 31(1)?
Only when delivery is completed on 19 January 2026.
On or before 16 January 2026, when the goods are packed and ready.
Before or at the time of removal of the goods for supply on 17 January 2026. (correct answer)
Within 30 days after delivery, namely by 18 February 2026.
Answer: C — Before or at the time of removal of the goods for supply on 17 January 2026.
Explanation. Section 31(1)(a) requires a registered supplier of taxable goods involving movement to issue the tax invoice before or at the time of removal of goods for supply to the recipient. The goods are removed on 17 January 2026, so the invoice must be issued no later than that time. Waiting until delivery on 19 January applies the wrong event; packing the goods on 16 January is not the specified trigger.
Where it goes wrong. Confusing the time of removal with the date of delivery to the recipient.
Authority. Section 31(1)(a), CGST Act, 2017
Authorities cited in this paper
Section 16(2), first proviso · Section 17(5)(a) · Section 16(2), second proviso · Rule 37 of CGST Rules, 2017 · Rule 86B, CGST Rules, 2017 · Notification No. 20/2025-Central Tax dated 31.12.2025, effective from 01.02.2026 · Rule 14A, CGST Rules, 2017 · Notification No. 18/2025-Central Tax dated 31.10.2025, effective from 01.11.2025 · Section 35(1), first proviso · Section 36 · Rule 56(7) and Rule 56(10), CGST Rules, 2017 · Article 269A of the Constitution · Chapter 1, Framework of GST as introduced in India – Inter-State supplies · Section 31(1)(a), CGST Act, 2017
Questions people ask
What does this GST test ask me to apply?
The paper asks you to fix the month in which input tax credit arises when goods arrive in lots, to apply the blocked credit rules, to work out the credit to be reversed when an invoice is not paid in full, to find the part of the output tax to be paid from the cash ledger, to read the registration conditions, to state where records are kept and for how long, and to note when a tax invoice must be issued.
How many questions are there and how long do I have?
There are 8 questions and the paper carries 15 marks. Seven questions are worth 2 marks each and the last one is worth 1 mark. The time limit is 30 minutes. In exam mode the paper is timed and marked once at the end, so you can move between questions and return to any of them before the time is up.
Which chapters does the paper cover?
The chapters covered are Chapter 1 – GST in India – An Introduction, Chapter 8 – Input Tax Credit, Chapter 9 – Registration, Chapter 10 – Tax Invoice; Credit and Debit Notes, and Chapter 11 – Accounts and Records. The questions draw on all five, so a gap in any one of them will cost you marks. Read the scenario before you start answering.
Which law do the questions follow?
The law basis is the CGST Act 2017, IGST Act 2017 and CGST Rules as amended by Finance Act 2025, with notifications and circulars effective up to 28 February 2026. The content is stated as at 31 October 2026. Where a notification or a circular changes a rule, the change as at that date is applied in the questions, so work from your study material and the applicable statutory update.
How are the questions written?
Each question sits inside a short case scenario. You read a passage of facts, which gives the names of the parties, the amounts and the dates, and then apply the law to those facts. One passage is shared by the questions that follow it, so the same scenario usually carries more than one question. Work through the passage once and note the key figures and dates before you look at the options.
Which computations are in the paper?
Three questions ask you to work out amounts. One covers the credit that has to be reversed where only part of an invoice was paid within 180 days, and you must reverse only the share that corresponds to the unpaid part. Another covers the minimum output tax to be paid through the electronic cash ledger for a month. The third asks for the date on which a tax invoice has to be issued where goods are removed for supply.
Is there negative marking?
No. There is no negative marking, so a wrong answer costs nothing. Each question carries the marks set out above and the paper is marked on that basis. If you are unsure of an option, attempt it rather than leave it blank, because an attempt that turns out wrong does not reduce your score.
Can I take the paper without a timer?
Yes. In practice mode there is no timer, and you can read the explanation for every answer as you go, so you can pause and work through the questions at your own pace. In exam mode the paper is timed and marked once at the end, and you get a certificate carrying your name and score when the paper closes.
Do I need to sign up or pay anything?
No sign-up is needed and there is no payment. Nothing about a student is stored on a server. You can open the paper, attempt it and read the result without creating an account, and the same applies to the timed mode and the untimed mode alike.
Is this paper issued by ICAI?
No. This is a practice test by HeyArtha. It is not issued by or affiliated with ICAI, and it is written for students of CA Intermediate Group 1 preparing for the January 2027 attempt. Use it alongside your study material and the applicable statutory update, and check the position of each rule as at the date stated in the paper.
