Question

Consider the following statements with respect to Goods and Service Tax(GST) in India :

1. While VAT was a destination based tax , GST is an origin based taxation.
2. GST implementation aimed at removing cascading effects of taxation.


Which of the above statement/s is/are correct ?

• A. None of the above
• B. 1 only
• C. Both 1 and 2
• D. 2 only

Answer 1

The correct option is D 2 only

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> GST is a destination based tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.This input tax credit provision removes presence of cascading effect from the tax structure.

Value Added Tax (VAT) is an indirect value added tax which was introduced into the Indian taxation system on 1st April 2005. VAT was an origin based taxation. The amount of VAT that the consumer pays is based on the cost of the product, minus any previously taxable costs of products used in the product.VAT replaced Sales Tax and later in 2017 GST replaced
VAT.