10 Questions
What is the requirement for decision making in the GST Council?
3/4th majority of present and voting
Who is the chairperson of the GST Council?
Union Finance Minister
What is the share of the center in voting in the GST Council?
33% of votes cast
Who appoints the GST Council?
The President of India
What is the role of the GST Council in GST?
Making decisions on GST rates and exemptions
Which of the following statements about bonds is correct?
The investor is essentially lending money to the issuer.
How does the coupon rate affect a bond's attractiveness to investors?
The coupon rate determines the amount of interest paid periodically to bondholders.
What does a steep yield curve indicate about future interest rates?
Interest rates are expected to increase in the future.
Which factor primarily determines the credit risk of a bond?
The bond's issuing government or corporation's creditworthiness
What is the primary purpose of short-term bonds, such as T-Bills?
To manage the government's short-term cash requirements
Study Notes
GST Council
- Established by the President under Article 279A of the Indian Constitution
- A joint forum of the center and states
Composition of GST Council
- Chairperson: Union Finance Minister
- Members:
- Union Minister of State in charge of Revenue
- Minister in charge of Finance or Taxation
- Any Minister nominated by the State Government
Decision Making Process
- Decisions are made through voting
- Requires 3/4th majority of present and voting members
- Center's share in voting is 33% of votes cast
Role of GST Council
- Decision maker in various aspects of GST, including:
- Tax rates
- Revenue sharing
- Exemptions
Dated Securities
Bonds
- Represent a loan from the investor to the borrower (issuer)
- Issued with a face value (principal) and a coupon rate (interest rate)
- Investor receives regular interest payments (coupon payments) and the face value at maturity
Key Features of Bonds
- Face value (principal) is the amount borrowed
- Coupon rate (interest rate) is the percentage of the face value paid periodically
- Maturity date is the date when the bond expires and the issuer repays the face value
Coupon Rates
- Expressed as a percentage of the face value
- Can be fixed or floating
- Affects the bond's attractiveness to investors
Maturity Dates
- Can range from a few months to several years
- Short-term bonds (less than 1 year) are referred to as short-term paper
- Long-term bonds (over 1 year) are referred to as long-term paper
Yield Curves
- Graphical representation of the relationship between yield and maturity
- Shows the expected return on investment for bonds with different maturities
- Used to estimate the cost of borrowing for issuers and return on investment for investors
Credit Risk
- Risk that the issuer may default on loan obligations
- Can lead to a reduction in the bond's value and a higher yield
- Measured by credit rating agencies such as Moody's and Standard & Poor's
Government Securities
G-Secs (Government Securities)
- Bonds issued by the government to finance its activities
- Considered very low-risk and liquid investments
- Used by central banks to implement monetary policy
T-Bills (Treasury Bills)
- Short-term government securities with maturities ranging from a few weeks to a year
- Issued at a discount to their face value and pay the full face value at maturity
- Used to manage the government's short-term cash requirements
Cash Management Bills
- Short-term government securities with maturities less than 1 year
- Used to manage the government's daily cash requirements
- Similar to T-Bills but with shorter maturities
Learn about the formation, composition, and decision-making process of the GST Council in India, as established by the Indian Constitution.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
