The Goods and Services Tax (GST) is significantly different from the early tax system as it is a destination-based tax.
Basically a tax can either be origin based or destination based. Origin based tax or production tax is levied where goods or services are produced. Destination based tax or consumption tax are levied where goods and services are consumed.
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 the States 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.
