Ques-1 Explain the concept of Goods and Services Tax (GST) in detail.

Discuss the objectives and advantages of an Indian perspective.

Ans – GST is known as the Goods and Services Tax. It is an indirect tax
which has replaced many indirect taxes in India such as the excise duty,
VAT, services tax, etc. The Goods and Service Tax Act was passed in the
Parliament on 29TH MARCH 2017 and came into effect on 1ST JULY
2017.

GST is a value added tax levied on manufacture, sale and consumption

of goods and services. It is Destination based tax on supply of goods and
services, levied at all stages, right from manufacture up to final
consumption with credit of tax paid on previous stages available as set-
off. GST would accrue to the taxing authority which has jurisdiction over
the place of supply.

“GST is a tax on goods and services with value addition at each stage
having comprehensive and continues chain of set of benefits from the
producer’s/service provider’s point up to the retailer’s level where only the
final consumer should bear the tax.”

“GST means a tax on supply of goods or services or both except taxes

on supply of alcoholic liquor for human consumptions.”

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 Objectives of GST
 To achieve the ideology of ‘One Nation, One Tax’
 To subsume a majority of the indirect taxes in India
 To eliminate the cascading effect of taxes
 To curb tax evasion
 To increase the taxpayer base
 Online procedures for ease of doing business
 To promote competitive pricing and increase consumption.

Advantages of GST
 Unified national market.
 Boost to ‘Make in India’ Initiative.
 Buoyancy to government revenue.
 Neutrality
 Exports from India on Zero-Tax.
 Eradicate corruption.
 Tax prayer’s friendly.
 Reduce evasion.
 Boost to economic growth.
 Reduce and uniform tax rates.
 Input tax credit to each middle man.
 No GST on essential and daily used goods.

Ques-2 Explain the concept of GST rates. What are the categories of goods
and services taxed under different slabs.
Ans – GST shall be collected in such manner as may be prescribed and
shall be paid by the taxable person.

Levy and collection of IGST on imported goods: IGST on goods imported

into India shall be levied and collected in accordance with the provisions
of SECTION 3 OF THE CUSTOMS TARIFF ACT, 1975 on the value
as determined under the said Act at the point when duties of customs are
levied on the said goods.

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 Rates of GST
1) The GST council has made recommendations to the Union and the
States on:
a) Goods and services that may be subjected to, or exempted from
the GST;
b) Rates including floor rates with bands of GST;
c) Any special rate or rated for a specified period, to raise
additional resources during any natural calamity or disaster.
2) The rates of CGST and SGST has been recommended by the GST
council keeping in view:
a) The revenue considerations,
b) Total tax burden and,
c) The acceptability of the tax.

The GST regime covers about 1,300 types of goods and 500 types of
services. It is, thus, classified into mainly four, notable GST slab rates, i.e.
5%, 12%, 18%, and 28%. To ensure the effectiveness of this scheme, a
GST Council was set up to revise the rates whenever deemed necessary to
keep up with evolving times. Thus, there is a periodic change in the GST
rates on various products.

Levied GST Rate Type of Product

0.25% Cut and semi-polished stones

3% Gold

5% Household essentials, coal, Indian sweets, life-saving drugs

12% Processed foods, computers

18% Capital goods, industrial intermediaries

28% Luxury items, sin goods

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List of Goods Exempted Under GST

Milk Kajal

Natural honey Sanitary napkins

Hotel accommodation (Below ₹1,000 per day) Colouring and picture books (for children)

Children’s drawing books Manuscripts

Music books Palmyra jaggery

Preserved vegetables Hulled cereal grains, etc.

List of Items Under 5% GST Slab Rate

Products (Goods) Services

Agarbatti, Biogas, Insulin Leasing of aircrafts

Snow and ice, Walking sticks, Natural cork Renting a motor cab (without fuel)

Indian sweets (mithai) Tour operator services

Scheduled transport by air or travelling via

Edible oil and spices, Coffee and sugar, Life- chartered or non-scheduled flights (used for
saving drugs, Cashew nuts/cashew nuts in shell pilgrimage purposes only)

Goods transported in a vessel from outside the

Stamps/stamp postmarks country

Appliances/equipment that aid the disabled Print media ad space

Transport services in AC vehicles and radio taxis,

Coir mats and floor coverings, Fertilisers, etc. etc.

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List of Items Under 12% GST Slab Rate

Products Services

Hotel accommodation (Between ₹1,001 and

Frozen meat ₹7,500 /day)

Sauces/Ketchup/Mustard sauce Real estate construction for the purpose of sale

Food and beverages (at restaurants without AC

Dairy items (apart from milk) and liquor licence)

Fruit juices Intellectual Property rights on a temporary basis

Goods transported in a vessel from outside the

Sewing machines country

Rental accommodation (Above ₹1,000 and

Handmade matches below ₹2,500 per day)

Jewellery box Air travel tickets (excluding economy)

Diagnostic kits Chit fund services by foremen

Notebooks and exercise books, Plastic beads, Railway coaches, wagons, and rolling stock
Corrective glasses, etc. (sans refund of ITC)

List of Items Under 18% GST Slab Rate

Products Services

Dental wax, Aluminium foil, Toothpaste, Plastic tarpaulin, Food and drink at restaurants (with
Baby carriages AC/heating and liquor licence)

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 Products Services

Industrial electronics and transformers Supply of food and party arrangements

Power banks (Lithium-ion batteries) Government Job Contracts

Pencil kajal sticks, Headgears, Television set-top boxes, Entertainment (circus, folk theatre,
Televisions (up to 32-inch) cinema, drama)

Furniture (made from bamboo) Outdoor catering

Stationary (staplers and pencil sharpeners, etc.) Movie tickets (Above ₹100)

Hair oil, Shampoos, Weight-measuring devices (excluding Hotel accommodation (over ₹7,501 per
electronic), Computer monitors (below 17-inch), etc. day), etc.

List of Items Under 28% GST Slab Rate

Products Services

Air conditioners Ballet

Cement Go-karting

Washing machines Racecourse

Lotteries (state-owned/authorised) Gambling

Paint Casinos

Aerated beverages, Caffeinated beverages Sports events (IPL, ISL, etc.)

Yachts, Aircrafts, Tobacco products, etc. Food and drinks (5-star hotels), etc.

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Ques-1 Define Debentures. Describe various kinds of Debentures.
Ans – According to Justice Chitty, “debenture means a document which
either creates a debt or acknowledges it and any documents which fulfils
either of these conditions.”
Section 2(30) of the Companies Act, 2013 lays down that “Debenture”
includes debenture stock, bonds or any other instrument of a company
evidencing a debt, whether constituting a charge on the assets of the
company or not.
Debentures refer to long-term debt instruments issued by a government
or corporation to meet its financial requirements. In return, investors are
compensated with an interest income for being a creditor to the issuer.
Kinds/types of Debentures

On the Basis of security –

Secured Debentures - The debentures that are secured by a charge on
the assets of the company are known as secured or mortgaged debentures.
If default is made on due date, the debenture-holder can realise his
amount from the assets charged.
Unsecured Debentures- The debenture which has no security on
payment of principle amount and interest thereon, known as unsecured
debenture. Such debentures are only acknowledgement of indebtedness
of the company under its common seal.

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On the Basis of Tenure –
Redeemable Debentures - The debentures which are repayable after a
fixed period are known as Redeemable Debentures.

Irredeemable Debentures - The debentures which are not repayable

during the life time of the company are known as irredeemable debentures.
They are repayable only when the company goes in to liquidation.

On the Basis of Convertibility –

Convertible Debentures - If you hold convertible debentures, you have
the choice of converting your debentures into equity shares of the
company on or before a specified time* on account of the occurrence of
pre-specified trigger events. These debentures can fully or partially be
converted into shares.
Fully Convertible: In this case, you can convert all your debentures into
shares.
Partially Convertible: You can only convert some of your debentures into
shares.
The conversion to stock happens as per a pre-decided conversion ratio,
specified in the debenture certificate. A conversion ratio of 10:1 means
that you can get ten shares for every debenture that you hold and so on.

Non-Convertible Debentures - Debentures with pure debt

characteristics and no option to convert into equity shares are called non-
convertible debentures.

On the Basis of Registration –

Registered Debenture - If you hold a registered debenture, your personal
details such as name, PAN, and bank details are registered with the issuer.
You cannot transfer the debenture to someone else without getting the
details changed with the issuer. If you do not do so, the gains accrued
from the debenture will continue to be realised in your name.

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Bearer Debenture - The holders of these debentures are not registered
with the issuer. The gains, therefore, are realised by the bearer of the
debenture.
On the Basis of coupon rate (interest) –
Specific coupon rate Debentures – When debentures are issued with
a pre-determined rate of interest (coupon rate) called specific coupon rate
debentures. This rate may be fixed or floating. The floating interest is
usually tagged with the bank rate. This type of debentures are generally
issued by the companies.
Zero coupon rate Debentures – These debentures do not carry a
specific rate of interest. In order to compensate the investors, such
debentures are issued at substantial discount and the different between
nominal value and issued price is treated as the amount of interest related
to the duration of the debentures.
Ques-2 D.k. Limited Company forfeited 1,000 shares of ₹ 100 each which
were issued at a premium of ₹ 50 per share, payable as ₹ 50 on application,
₹ 70 on allotment (including premium) and ₹ 30 on first and final call.
These shares were forfeited due to non-payment of allotment and first and
final call. Pass necessary journal entries relating to forfeiture of shares.
Particulars Dr. Cr.
Shaw capital A/c 100000
Security premium A/c 50000
To shaw allotment 70000
To shaw first call 30000
To shaw forfeiture 50000
(being shares forfeited)

150000 150000
Working note –
Applicable allotment first and final call
50 70 30
1000 (20+70)
20000+50000=70000 3000

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Ques-1 What is Financial Decisions? Discuss its types.
Ans – The decisions regarding the financial matters of any organization are
known as Financial Decisions. In simple terms, it refers to the decision
regarding the investment of the funds of the business in various assets.
Financial management focuses on providing solutions to three significant
problems concerned with the firm’s financial operations corresponding to
the three questions of investment, financing, and dividend decision. In
financial terms, financial decisions refer to finding the best solutions to
financial or investment problems from various alternatives.

Types of Financial Decisions

Investment Decision - As resources are scarce, a firm has a lot more
use of resources than them being present. Thus, a firm has to decide where
to invest these resources to earn the highest possible returns for its
investors. Therefore, the investment decisions reveal how the firm’s funds
are invested in different assets. Investment decisions are of two types-
short-term and long-term. A long-term investment decision is also known
as a Capital Budgeting decision. Short-term investment decisions deal
with the decisions about the levels of cash, inventory, and receivables.
They are also known as Working capital decisions.

Financing Decision - Financing decisions are concerned with the

determination of financial sources, the amount to be obtained from each
source, and the value of each source of finance from various long-term
sources. The short-term sources come under working capital
management. Financing decisions are concerned with the identification of
various accessible sources. A firm obtains its main sources of funds from
its shareholders or by borrowing funds.

Dividend Decision - The decision that every financial manager has to

undertake is concerned with the distribution of dividends. This is known
as a dividend decision. The part of the profit which is distributed among
the shareholders is known as a dividend. A dividend decision is concerned
with how much of the profit earned by the company (after paying tax) is to
be given to the shareholders and how much of it is to be reserved by the
business. While the dividend comprises the current income, reinvestment,
as retained earnings expand the scope of the firm’s future earning.

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Ques-2 What do you understand by Investment Decisions?
Ans – The Investment Decision relates to the decision made by the
investors or the top levels management with respect to the amount of
funds to be deployed in the investment opportunities. Simply, selecting
the type of assets in which the funds will be invested by the firm is termed
as the investment decision. These assets fall into two categories:
1. Long Term Assets
2. Short-Term Assets

 The decision of investing funds in the long-term assets is known

as Capital Budgeting. Thus, Capital Budgeting is the process of
selecting the asset or an investment proposal that will yield returns
over a long period.
 The first step involved in Capital Budgeting is to select the asset,
whether existing or new on the basis of benefits that will be derived
from it in the future.
 The next step is to analyse the proposal’s uncertainty and risk
involved in it. Since the benefits are to be accrued in the future, the
uncertainty is high with respect to its returns.
 Finally, the minimum rate of return is to be set against which the
performance of the long-term project can be evaluated.

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Ques-1 “Life insurance is insurance as well as an investment.” Explain
this statement.
Ans – It's not hard to tell why life insurance is becoming more important
as an intelligent investment. If you're making future plans, it's well worth
a serious look.
Life insurance can be used in all sorts of ways, whether you're insuring
your life for medical bills or a large estate; if it's your family who will benefit
from insurance, then rest assured, knowing that you've protected them in
case something goes wrong.

Here are a few reasons why life insurance is a wise investment:

Safety Net for Your Loved Ones

This remains the most important reason for buying insurance. Remember,
your family depends on you; thus, when you are gone, you do not want
them to suffer.
You can compensate for it by replacing lost income, planning your child’s
education/marriage, or even ensuring that your spouse gets much-needed
financial security.

Dealing with Financial Liabilities

In your absence, you do not want your family to deal with financial
obligations such as housing, auto, and personal loans. If you purchase
the right life insurance policy, these liabilities are taken care of.

Achieve Long-Term Goals

There are insurance policies that provide you with some modest capital
appreciation while providing risk coverage. Thus, these policies also help
achieve your goal as you tend to remain invested long-term.

A Supplement for Retirement Goals

Often, life insurance policies are considered to supplement your
retirement goals. With some life insurance policies, you can get a regular
stream of income every month. Thus, these policies help you manage your
monthly expenses even after retirement.

Subscribing to Insurance at an Early Age is Cheaper

If you subscribe to a life insurance policy at an early age, the premium
amount is on the lower side. However, it is advisable to conduct proper

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due diligence before accepting an insurance policy to ensure the product's
suitability.

Business Needs Can be Taken Care

Life insurance is not only for an individual and their family. Some policies
safeguard your business, too, whereby the nominees of the deceased
business partner receive the amount from the existing partner instead of
the stake.

Provides Tax Benefits

Insurance policies provide tax benefits under section 80C of the Income
Tax Act. An individual subscribing to the policy is eligible for a maximum
tax benefit of Rs 1.5 lakhs. This makes it extremely attractive for people,
as everyone is eager to save as much tax as possible.

Disciplined Investment
If you opt for any income cum protection plan, such as a unit-linked policy,
you must pay the premium every month or every quarter/year, depending
on the mode of frequency opted. Thus, this practice teaches disciplined
investing with a long-term view.

Old is Not Always Gold

The fundamental principle of an insurance policy is risk coverage, and
thus these are dependent on uncertainties. Therefore, buying an
insurance policy early in life is imperative because it remains in force even
if your health deteriorates with age.

Peace of Mind
Death is the ultimate truth of life, and it is inevitable. Thus, the least you
can do to secure the family's financial future is to subscribe to an
insurance policy. This also provides peace of mind as you are accessible
concerning your family’s security.

Life insurance is one of those things that many people forget they need
until they need it. If you've gone without life insurance for some time,
though, don't just continue hoping it will never be necessary.

Checking rates on your own is a smart way to determine if you can afford
it. And even after doing that, calling a professional advisor is still a great
idea. We hope the information we provided here will be helpful to you as
you consider buying life insurance or have questions about your existing
policy.

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Ques-2 State the main features of accident benefit under a life insurance
policy. What is disability benefit?

Ans- 2- Benefits & Features of Personal Accident Insurance

An accident can occur at any time without any warning, and sometimes it
can cause serious harm. Any such untoward incident can have a
significant impact on your finances; not only can the treatment be
expensive, but if you suffer from any form of disability, it can affect your
earning potential. To protect yourself and your family from such a
situation, it is paramount that you purchase a personal accident
insurance policy.
Personal accident insurance is useful to get the financial assistance to you
and your family in the event of an accident that leads to death, bodily
injuries, temporary total disability, permanent total disability and
permanent partial disability. In the event of death, the insurance company
will pay 100% compensation (equal to the sum assured) to the appointed
nominee. Also, the insurance companies offer compensation for an
accident disability such as loss of speech, limbs and eyes.

Before, we look at the different aspects of accident insurance; let us look

at some alarming statistics related to it.

 In India, reports suggest that more than 1200 accidents occur every
day.

 As per the Ministry of Road Transport and Highways, in 2017 alone,

more than 4.64 lakh accidents were reported and nearly 1.47 lakh
people died due to road accidents.

 In 2018, as per the reports, there was a rise of 1.68% in the number
of accidents reported.

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