Tax on Goods and Services

Goods and Services Tax (GST) is an indirect tax system implemented by many

The Goods and Services Tax (GST) is an example of an indirect tax, not a direct tax. Indirect taxes are imposed on the production, distribution, and consumption of products and services; unlike direct taxes, which are placed directly on individuals or businesses and cannot be transferred, their effects can be felt by the final consumer.

GST is a tax on the supply of goods and services that is dependent on consumption. It is intended to be a comprehensive, destination-based tax that will take the place of several separate indirect taxes that were previously imposed at various supply chain stages.


Generally speaking, GST is a multi-stage tax, meaning it is gathered at every point in the supply and manufacturing chain. The tax is meant to be value-added.


Since GST is applied on both goods and services, a wide range of economic activity is included.

Tax Based on Destination:

It is a destination-based tax since it is imposed at the location of ultimate consumption. This guarantees that the state where the ultimate consumption takes place receives the tax income.

Credit for Input Taxation:

A fundamental aspect of GST is the ability to claim Input Tax Credit (ITC). Companies are able to deduct the GST they paid on purchases from the GST they are able to collect on sales. 

GST Incentives:

Several tax rates are typically used while implementing GST in order to classify various goods and services. Standard rates are usually applicable, with reduced rates for necessities and occasionally higher rates for luxuries.

 GST at the federal and state levels:

GST is applied as a dual system in many nations, including India, consisting of Central GST (CGST) and State GST (SGST). The same transaction is subject to separate GST levies by the federal and state governments.