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CMA Intermediate · Direct and Indirect Taxation · Introduction to GST Law

Which of the following best describes the nature of GST as introduced in India?

GST is a destination-based, multi-stage tax on the supply of goods or services, with credit allowed for tax paid on inputs. This removes tax-on-tax, and revenue goes to the place of consumption rather than the place of origin.

  1. AA destination-based, multi-stage tax on supply of goods or services with credit for tax paid on inputsCorrect
  2. BAn origin-based tax levied only at the final retail stage
  3. CA tax on manufacture of goods only, collected at the factory gate
  4. DA cascading tax on turnover without any input tax credit

Explanation

GST is levied on supply at every stage of the supply chain and input tax credit removes cascading. It is consumption or destination based, so revenue accrues to the State where goods or services are consumed. It is not limited to manufacture or to retail sale.

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