GST (Goods and Services Tax) is a consumption tax levied on the supply of goods and services in countries such as India, Canada, Australia and Singapore, with businesses collecting it and, in most cases, claiming credit for tax they paid.
Why it matters
Businesses that sell in a GST country need to know whether they must register, how to show tax on an invoice and when to file returns. Rates, thresholds and rules differ between countries and can change, so this is a definition only, not tax advice; confirm with the official tax authority or an adviser.
Example
A seller invoices 1,000 in the currency units for a service at a hypothetical 18 percent GST rate: the tax is 180 and the customer pays 1,180. If the seller paid 50 of GST on business inputs, the seller generally accounts for the net 130, subject to local rules.
Common mistakes
- Assuming one rate applies to all goods and services.
- Forgetting that registration thresholds and rules differ by country or state.
- Leaving required tax details off invoices.
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