Answer to Question #260024 in Accounting for Ritu

Question

GST is called as consumption based tax. Discuss and verify this statement with the help of a relevant example. Also, elaborate on the different categories of GST.

Answer 1

Solution:

GST is called a consumption-based tax, since it is payable to the state in which goods or services are actually consumed. Therefore, the tax revenue is levied and collected by the consuming state and this aids the consuming state in protecting its tax base.

Examples include the tax levied on goods or services consumed at their destinations.

 

The different categories of GST include the following:

·        Central GST – This is levied by the central government.

·        State GST – This is levied by the state government.

·        Integrated GST – This is levied by the Central government on an inter-supply of goods and services.