GST Introduction (Goods & Services Tax)

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Goods and Services Tax (GST)

What Is the Goods and Services Tax (GST)?

The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.

KEY TAKEAWAYS

  • The goods and services tax (GST) is a tax on goods and services sold domestically for consumption.
  • The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller.
  • The GST is a common tax used by the majority of countries globally.
  • The GST is usually taxed as a single rate across a nation.

Understanding the Goods and Services Tax (GST) 

The goods and services tax (GST) is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product, and a customer who buys the product pays the sales price plus the GST. The GST portion is collected by the business or seller and forwarded to the government. It is also referred to as Value-Added Tax (VAT) in some countries.

How the Goods and Services Tax (GST) System Works

Most countries with a GST have a single unified GST system, which means that a single tax rate is applied throughout the country. A country with a unified GST platform merges central taxes (e.g. sales tax, excise duty tax, and service tax) with state-level taxes (e.g. entertainment tax, entry tax, transfer tax, sin tax, and luxury tax) and collects them as one single tax. These countries tax virtually everything at a single rate.


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