Terms & Glossaries of Shipping and Trading
GST (Goods and Services Tax)
GST is a value-added tax levied on supplies of goods or services purchased and impacts both the exporter and importer.
GST (Goods and Services Tax) is the result of an indirect tax reform that aims to make a single national market. For this purpose, the government had combined different taxes under GST. It has combined different indirect taxes like service tax, entry tax, luxury tax, entertainment tax, CST, VAT, excise duty, etc.
GST offers an extensive and continuous chain of tax set-offs. Input tax credit refers to the set-off of tax paid on purchases that you can use against the tax collected on sales. Only the balance amount of tax needs to be paid.
The supplier at each stage can use the input tax credit of GST paid on the purchase of goods and services. The business can set off this Input Tax Credit (ITC) against the GST payable on the supply of goods and services to be made.
There is no cascading effect on tax effects under the GST framework. Cascading effect refers to the system where tax is charged on every stage by including the tax previously paid on purchases. This leads to tax on tax.
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