GST : One Nation, One Tax, One Market

Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses. It has replaced large number of taxes on goods and services levied on production/sale of goods or provision of service.

As there have been a number of intermediate goods/services, which were manufactured/ provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC).

Five petroleum products have been kept out of GST for the time being but with passage of time, they will get subsumed in GST. State Governments will continue to levy VAT on alcoholic liquor for human consumption. Tobacco and tobacco products will attract both GST and Central Excise Duty. Under GST, there are 6 (six) standard rates applied i.e. 0%, 3%, 5%, 12%, 18% and 28% on supply of all goods and/or services across the country.

Goods and Service Tax (GST) is a :

Indirect tax

The correct answer is option (3) : Indirect tax

Let's elaborate on each option :

1. Income Tax : Income tax is a direct tax imposed on individuals or entities based on their income. It is a tax on the income earned, and individuals or businesses are required to report their earnings to the government, which then determines the tax liability.

B Direct taxes are taxes that are levied directly on individuals or entities. Income tax is a common example of a direct tax. These are paid directly by the taxpayer to the government.

3. Indirect Tax : Indirect taxes are imposed on gods and services rather than on income or profits. GST is a classic example of an indirect tax. It is not directly paid by the consumer to the government but is instead collected by intermediaries in the supply chain and then remitted to the government.

4. Country Tax : There isn't a specific category known as "Country Tax " in conventional tax terminology.