Goods and Services Tax (GST)
AdvancedAlso known as: GST Goods and services tax (GST) is a consumption tax charged on most goods and services at each stage of supply, with businesses claiming back tax paid on their purchases. It is the name used for value-added tax in countries such as Australia, New Zealand, Canada, India and Singapore. GST works in the same way as value-added tax. Each business charges GST on its sales and claims credits for GST paid on its business purchases, passing the difference to the government. The full tax is ultimately borne by the final consumer. For example, with a 10% GST, a retailer buys goods for 100 plus 10 GST and sells them for 150 plus 15 GST. It pays the government 5, the 15 collected minus the 10 already paid. In total, the government receives 15, which is 10% of the final price. The details differ between countries. Rates, the goods that are exempt or zero-rated and the registration thresholds for small businesses vary. In Canada, a federal GST is combined in some provinces with a provincial sales tax into a harmonized sales tax. India's GST replaced many separate national and state taxes in 2017. In most GST countries, displayed prices to consumers include the tax. Because lower-income households spend more of their income, GST is generally considered regressive, which is why essentials are sometimes exempt.
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