Goods and Services Tax GST is a lsquo Destination Based rsquo Consumption Tax This implies that ........

Economic Affairs Tax System

Goods and Services Tax (GST) is a ‘Destination-Based’ Consumption Tax. This implies that

All State GST (SGST) collected will ordinarily accrue to the State where the consumer of the goods or services sold resides.

The burden of GST collected within a state will be borne by the consumer of the goods or services within the state.

The burden of GST collected within the state will be borne by the producer of the goods or services within the state.

All State GST (SGST) collected within the state will accrue to the State where the goods or services are produced.

Indirect taxes can be either origin based or destination based.
Origin based tax (also known as production tax) is levied where goods or services are produced.
Destination based tax (consumption tax) are levied where goods and services are consumed.
The Goods and Services Tax (GST) is significantly different from the early tax system as it is a destination-based tax. In destination-based taxation, exports are allowed with zero taxes whereas imports are taxed on par with the domestic production. So as per current tax rules, the SGST collected will generally accrue to the State where the consumer of the goods or services sold resides and not to the State where the goods are produced.
One important point to note is that there would be dual GST i.e. both the Centre and theStates would concurrently levy GST across the entire goods and services supply chain on a common base.
The Centre would levy Central GST (CGST) and States would levy State GST (SGST) on every supply of goods and services within a State. Integrated GST (IGST) would be levied on all inter-state supplies by the Centre and then transferred to the Destination State.