Sage-Tips

Why GST is called as destination based tax instead of origin based tax?

GST or goods or service tax is a destination-based tax because there goods and services get consumed. In GST, exports are permitted with zero taxes whereas imports are taxed on par with the domestic production.

Why is GST a destination based tax?

GST is a destination based tax, i.e., the goods/services will be taxed at the place where they are consumed and not at the origin. So, the state where they are consumed will have the right to collect GST. Therefore, place of supply is crucial under GST as all the provisions of GST revolve around it.

Why GST is destination based tax Quora?

GST is a destination based tax because it is to be paid at the destination of the goods or service. It can also be called consumption tax. If the goods are supplied inside the boundary of a particular state then there will be basically no difference in the procedure both under VAT and GST.

How is GST different from other taxes?

Under GST, all the central and state taxes will be subsumed and a single tax will be levied on all commodities and services apart from motor spirit, petroleum, natural gas and high-speed diesel. Under VAT, tax will be levied at the place where goods are manufactured or sold, or the place at which services are rendered.

What kind of tax is GST called as?

Goods and Services Tax
GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

What is origin based taxation?

Origin based tax is levied where goods or services are produced not where consumed. Imports would not be taxed in the territory where they have been imported for consumption, as origin based taxation only provides for levy of tax on the goods and services on the basis of territory where they are produced.

Is GST supply based tax?

GST on services is a tax on supply and the liability to pay GST arises in terms of Section 13 of the CGST Act. The revenue is remitted to the state where the service is consumed based on the place of supply as determined under the IGST Act.

What is taxable territory?

A taxable territory means the territory to which the provisions of the GST law applies. Accordingly, in case of CGST law, the taxable territory would cover all locations covered under the extent of the law – i.e., whole of India.

What is the difference between destination and origin?

Origin-sourced sales are taxed where the seller is located, while destination-sourced sales are taxed at the location where the buyer takes possession of the item sold. As a seller, it is important to know whether you are located in an origin-sourced state or a destination-sourced state.

What is the difference between destination-based taxation and GST?

In destination-based taxation, exports are allowed with zero taxes whereas imports are taxed on par with the domestic production. GST is said to be destination-based or consumption-based tax. Hence, the place of consumption will decide the State that will collect tax.

Is GST production based or consumption based?

GST, VAT or any indirect tax can be either origin/production based or destination/consumption based. It makes more sense to tax consumption rather than tax production. This is because the person is willfully consuming a product and needs to pay the tax.

Is California a destination-based sales tax state?

* California is a modified-origin state, where state, county, and city taxes are based on the origin of the sale, while district taxes are based on the destination of the sale. What is Destination-Based Sales Tax?

What is an origin-based tax rate?

In these origin-based states, if the location of the company selling the product has, say, a 6.5\% tax rate, then all shipments within that state are taxed at 6.5\%, regardless of the tax rate at the location where the product is being shipped.