What kind of a tax is GST?

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NTPC CBT-I (Held On: 29 Dec 2020 Shift 1)
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  1. Value Added Tax
  2. Indirect Tax
  3. Direct Tax
  4. Income Tax

Answer (Detailed Solution Below)

Option 2 : Indirect Tax
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Detailed Solution

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The correct answer is Indirect Tax.

Key Points

  • 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.
  • Multi-staged as it is imposed at every step in the production process but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax.
  • It is collected from point of consumption.

Important Points

  • About GST:
    • The tax came into effect on 1 July 2017.
    • It is One Hundred and the first Amendment of the Constitution of India.
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