GST Council in India
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Questions and Answers

What is the requirement for decision making in the GST Council?

  • Unanimous decision
  • Simple majority of present and voting
  • 2/3rd majority of total members
  • 3/4th majority of present and voting (correct)
  • Who is the chairperson of the GST Council?

  • Prime Minister of India
  • Minister of State in charge of Revenue
  • Union Finance Minister (correct)
  • Chief Economic Advisor
  • What is the share of the center in voting in the GST Council?

  • 33% of votes cast (correct)
  • 25% of votes cast
  • 60% of votes cast
  • 50% of votes cast
  • Who appoints the GST Council?

    <p>The President of India (C)</p> Signup and view all the answers

    What is the role of the GST Council in GST?

    <p>Making decisions on GST rates and exemptions (C)</p> Signup and view all the answers

    Which of the following statements about bonds is correct?

    <p>The investor is essentially lending money to the issuer. (D)</p> Signup and view all the answers

    How does the coupon rate affect a bond's attractiveness to investors?

    <p>The coupon rate determines the amount of interest paid periodically to bondholders. (B)</p> Signup and view all the answers

    What does a steep yield curve indicate about future interest rates?

    <p>Interest rates are expected to increase in the future. (A)</p> Signup and view all the answers

    Which factor primarily determines the credit risk of a bond?

    <p>The bond's issuing government or corporation's creditworthiness (D)</p> Signup and view all the answers

    What is the primary purpose of short-term bonds, such as T-Bills?

    <p>To manage the government's short-term cash requirements (D)</p> Signup and view all the answers

    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

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    Description

    Learn about the formation, composition, and decision-making process of the GST Council in India, as established by the Indian Constitution.

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