economics medium Fill in the Blank

In the GST regime, Integrated GST (IGST) is levied by the Centre on inter-state supply of goods and services. The revenue collected under IGST is ultimately apportioned based on the ___ principle, ensuring the tax reaches the consuming state.

  1. seigniorage
  2. Paper Gold
  3. government spending (or autonomous expenditure)
  4. destination

Answer: destination

GST is a destination-based consumption tax. When goods move from State A to State B, the Centre collects IGST. However, since the goods are consumed in State B, the Centre retains its share and transfers the remainder to State B (the destination state), ensuring that manufacturing states do not unfairly hoard the tax revenues generated by consuming states.

Topic Public Finance - GST
Exam Relevance UPSC Prelims, SSC CGL, Banking
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