GST

GST, or Goods and Services Tax, is a value-added tax imposed on most goods and services sold for domestic consumption. It is designed to tax the value added at each stage of production and distribution and is typically collected by a national or central tax authority.

The mechanism works by taxing each sale at a uniform rate or at multiple rates. Businesses charge GST on their output and can claim credits for GST paid on inputs. The net GST collected is remitted to the tax authority. Because tax is applied to value added at each stage, the system aims to avoid cascading taxes and reduce the tax burden on final consumption.

GST generally covers a broad range of goods and services, though jurisdictions may exempt or zero-rate certain items such as basic necessities or financial services. Many places use multiple rate structures, including standard, reduced, and zero or exempt categories. Registration thresholds determine whether a business must collect GST, and small businesses may be exempt from some obligations.

Administration is typically centralized or federal, with digital filing and periodic remittance. Requirements commonly include proper invoicing, record-keeping, and regular audits or reviews. Compliance costs and administrative complexity can vary and influence the ease of adopting GST for businesses.

The tax is intended to improve efficiency by reducing tax-on-tax effects and broadening the tax base. Critics note potential regressive effects, administrative burdens on small firms, and price impacts for consumers. Cross-border trade can be affected, prompting comparisons and harmonization efforts across jurisdictions.