Practicing Success
Based on following paragraph answer the question : Goods and service tax is the single comprehensive indirect tax implemented on July 1, 2017. It is a destination based tax that has Input Tax Credit in the supply chain. GST is applicable throughout the country. GST is considered the biggest tax reform since independence. It is implemented through $101^{th}$ Constitutional Amendment Act. The aim of GST is to reduce the cost of business operations and cascading effect of various taxes. By implementing GST it is expected that GDP will rise by about 2%. Compliance will also be easier as all tax payment related services are available online through a common portal. GST has expanded the tax base and introduced higher transparency in the taxation system. |
GST is destination based tax because : |
Tax calculated at final consumption It has input tax credit system It is levied on final consumer It is having more transparency |
It has input tax credit system |
The correct answer is option (2) : It has input tax credit system GST is a destination-based tax, levied at each stage of the supply chain, from the manufacturer to the consumer. It is applied to the value addition at each stage, allowing for the seamless flow of credits and reducing the tax burden on the end consumer. |