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CA Intermediate · Taxation · GST in India - An Introduction

Sundaram Foods Ltd. of Chennai deals in packaged foods. A consultant explains the destination-based nature of GST to its finance team. Which statement correctly reflects the destination principle of GST?

The revenue accrues to the State where the goods or services are consumed. GST is a destination-based consumption tax, so the place of supply decides which State gets the tax, not the place of manufacture or the supplier's head office.

  1. ATax revenue on a supply accrues to the State where the goods are manufactured
  2. BTax revenue on a supply accrues to the State where the goods or services are consumedCorrect
  3. CTax is levied only on the final retail sale and not at earlier stages
  4. DTax is payable at the place where the supplier's head office is located regardless of consumption

Explanation

GST is a destination-based consumption tax, so the revenue goes to the State of consumption (place of supply). It is not an origin-based tax on manufacture. It is also a multi-stage tax with input tax credit, not a single-point tax on the retail sale.

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