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CA Intermediate · Taxation · GST in India - An Introduction

Which of the following is a feature of GST as a destination-based consumption tax, as opposed to an origin-based tax?

GST is destination-based, meaning the tax revenue accrues to the State where goods or services are finally consumed, not where they are produced. It is a multi-stage tax on supply with credit for input tax, rather than a levy only at manufacture or retail.

  1. ATax revenue accrues to the State where the goods are manufactured
  2. BTax revenue accrues to the State where the goods or services are finally consumedCorrect
  3. CTax is levied only at the stage of manufacture
  4. DTax is levied only at the stage of retail sale

Explanation

GST is a destination-based tax, so revenue goes to the State of consumption. This is why IGST on inter-State supplies is ultimately apportioned to the destination State through credit settlement. Manufacture-stage or retail-only levy describes other tax designs, not GST.

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