DIGITAL TAX BUDDY

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GOODS AND SERVICES TAX

GOODS AND SERVICES TAX

Goods and Services Tax (GST) is a consumption-based tax levied on the supply of goods and services in many countries around the world. It is designed to be a comprehensive indirect tax that replaces multiple taxes previously levied by the government, such as sales tax, value-added tax (VAT), and excise duty.

The primary objective of GST is to create a unified and simplified tax structure by eliminating the cascading effect of taxes and promoting a more efficient tax system. Under GST, taxes are levied at each stage of the supply chain, allowing for the input tax credit mechanism, which means that businesses can claim credits for the taxes paid on their inputs and reduce their tax liability.

GST is typically imposed on the final consumer of goods or services, but the burden of the tax is shared across all stages of the supply chain. This means that businesses are responsible for collecting and remitting the tax to the government, and they can recover the tax paid on their purchases by offsetting it against the tax collected on their sales.