GST is a consumption of goods and service tax based on.
Last updated May 13, 2026
Correct Answer:
Option D —
Destination
GST (Goods and Services Tax) is a destination-based tax (also known as a consumption tax). This means the tax is collected by the state where the goods or services are finally consumed, rather than the state where they were manufactured or produced.
Revenue Distribution: Under this principle, if goods are manufactured in State A but sold and consumed in State B, the tax revenue (SGST portion) goes to State B.
Contrast with Origin-based Tax: Before GST, many taxes were origin-based, meaning the producing state kept the tax revenue. GST shifted this to ensure the consuming state benefits from the tax collection.
Why other options are incorrect:
A) Development: While GST contributes to national development, it is not "based on" development as a tax mechanism.
B) Dividend: A dividend is a distribution of profits by a corporation to its shareholders; it has no structural relation to how GST is levied.
C) Duration: Taxes are not categorized based on "duration" in the context of their fundamental consumption nature.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
