Question:
Goods and Services Tax (GST) is
Goods and Services Tax (GST) is
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GST is a destination-based indirect tax that is a modified form of VAT, and it is designed to eliminate the cascading effect of taxes.
Updated On: Dec 19, 2025
- a ‘destination based’ consumption tax
- an origin based tax assigned to the State of origin where the sale takes place
- an indirect tax
- a modified form of value added tax
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The Correct Option is A, C, D
Solution and Explanation
Step 1: Understanding GST.
GST, or Goods and Services Tax, is a comprehensive, destination-based consumption tax that replaces many indirect taxes in India. It is applied at every step of the production and distribution chain, but the final tax burden is borne by the consumer.
Step 2: Analyze the Options.
- (A) A ‘destination-based’ consumption tax means the tax is levied at the point of consumption rather than at the point of production. GST is indeed a destination-based tax.
- (B) An origin-based tax assigned to the State of origin does not describe GST. GST is not based on the origin of the sale but the place where the consumption happens.
- (C) GST is an indirect tax because the tax is collected from intermediaries (e.g., producers and sellers) but ultimately paid by the final consumer.
- (D) GST is a modified form of value-added tax (VAT), as it allows input tax credit for all purchases made by the seller, which makes it more comprehensive than the traditional VAT system.
Step 3: Conclusion.
The correct answers are (A), (C), and (D) as they correctly describe the features of GST.
GST, or Goods and Services Tax, is a comprehensive, destination-based consumption tax that replaces many indirect taxes in India. It is applied at every step of the production and distribution chain, but the final tax burden is borne by the consumer.
Step 2: Analyze the Options.
- (A) A ‘destination-based’ consumption tax means the tax is levied at the point of consumption rather than at the point of production. GST is indeed a destination-based tax.
- (B) An origin-based tax assigned to the State of origin does not describe GST. GST is not based on the origin of the sale but the place where the consumption happens.
- (C) GST is an indirect tax because the tax is collected from intermediaries (e.g., producers and sellers) but ultimately paid by the final consumer.
- (D) GST is a modified form of value-added tax (VAT), as it allows input tax credit for all purchases made by the seller, which makes it more comprehensive than the traditional VAT system.
Step 3: Conclusion.
The correct answers are (A), (C), and (D) as they correctly describe the features of GST.
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