Goods and Services Tax (GST) is India’s unified indirect tax that is charged on the supply of goods and services. It replaced/merged many earlier indirect taxes and introduced a credit chain called Input Tax Credit (ITC), so tax is mainly collected on value addition at each stage.
In exams, this topic is commonly asked as:
You should be able to:
GST is a destination-based tax on supply. “Destination-based” means the tax revenue generally goes to the state/territory where consumption happens, not where production happens (concept).
The key idea is:
Before GST, multiple taxes existed at Central and State levels, often causing:
GST was introduced to create a more integrated national market and improve transparency in indirect taxation (concept).
Write any 5–6 points (exam style):
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Any three objectives (exam points):
Write any three points with brief explanation (concept).
GST was introduced to address problems in the earlier indirect tax system (any three):
Any three well-explained points are acceptable (concept).
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
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Goods and Services Tax (GST) is India’s unified indirect tax that is charged on the supply of goods and services. It replaced/merged many earlier indirect taxes and introduced a credit chain called Input Tax Credit (ITC), so tax is mainly collected on value addition at each stage.
In exams, this topic is commonly asked as:
You should be able to:
GST is a destination-based tax on supply. “Destination-based” means the tax revenue generally goes to the state/territory where consumption happens, not where production happens (concept).
The key idea is:
Before GST, multiple taxes existed at Central and State levels, often causing:
GST was introduced to create a more integrated national market and improve transparency in indirect taxation (concept).
Write any 5–6 points (exam style):
GST needed constitutional changes because indirect taxation powers were divided between Centre and States. The constitutional amendment:
In answer writing, you can mention:
The GST Council is the main policy forum for GST. Broadly, it:
Think of it as the “rate and policy steering committee” for GST across India.
India follows a dual GST structure:
This ensures both Centre and States get revenue while keeping one common tax base.
You will study the detailed “place of supply” rules later; for now remember this base idea.
Purchase/Input (pay GST) ──> ITC available (if eligible)
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Sale/Output (charge GST on invoice)
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Net GST payable = Output GST − Eligible ITC
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Return filing + payment (online)
Assume a seller in Maharashtra supplies goods worth 10,000 to a buyer in Maharashtra (intra-state). GST rate is 18%.
If the seller already paid GST on inputs and has eligible ITC of 1,200, then net tax payable (concept):
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GST is a destination-based indirect tax on supply of goods and services. It works as a value-added tax because eligible Input Tax Credit (ITC) is available at each stage (concept).
Conclude: GST reduces tax-on-tax and improves transparency and uniformity (concept).