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GST vs. SST: What's the Difference?

Edited by Huma Saeed || By Sumera Saeed || Published on December 12, 2023
GST (Goods and Services Tax) is a comprehensive, multi-stage tax on the value addition at each stage of production or service delivery, while SST (Sales and Service Tax) is a single-stage tax levied at the point of sale or service provision.

Key Differences

GST, a value-added tax, is charged at every step of the supply chain, with final consumers bearing the tax, while SST is imposed only at the final stage of the supply chain, typically at the point of sale.
Sumera Saeed
Dec 12, 2023
GST allows businesses to claim credit for the taxes paid on their purchases, creating a chain of tax credits, whereas SST does not usually provide a mechanism for input tax credit.
Sumera Saeed
Dec 12, 2023
Under GST, both goods and services are taxed under a single unified system, offering a comprehensive tax structure, while SST often differentiates between the taxation of goods (sales tax) and services (service tax).
Sumera Saeed
Dec 12, 2023
GST implementation simplifies the tax structure by replacing multiple indirect taxes, whereas SST can coexist with other indirect taxes, leading to a potentially more complex tax system.
Harlon Moss
Dec 12, 2023
In GST, tax liability transfers across the supply chain, which reduces tax evasion, whereas in SST, being a single-stage tax, the likelihood of tax evasion can be higher.
Aimie Carlson
Dec 12, 2023
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Comparison Chart

Stage of Taxation

Multi-stage (at each supply chain level)
Single-stage (at point of sale/service)
Sumera Saeed
Dec 12, 2023

Tax Credit Mechanism

Allows input tax credits
No input tax credit mechanism
Sumera Saeed
Dec 12, 2023

Tax Structure

Unified for goods and services
Separate for goods (sales tax) and services (service tax)
Sumera Saeed
Dec 12, 2023

Tax Complexity

Simplifies by replacing multiple taxes
Can coexist with other taxes, potentially more complex
Harlon Moss
Dec 12, 2023

Tax Evasion

Reduced due to chain of credits
Higher possibility due to single-stage nature
Sumera Saeed
Dec 12, 2023
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GST and SST Definitions

GST

GST replaces several indirect taxes like VAT, excise duty, and service tax.
The introduction of GST simplified the indirect tax structure in the country.
Aimie Carlson
Nov 26, 2023

SST

SST is a single-stage tax applied to the sale of goods or provision of services.
The SST on restaurant services is added to the final bill.
Huma Saeed
Nov 26, 2023

GST

GST is levied at each stage of the production and distribution process.
Each supplier in the chain pays GST on their inputs and charges it on their outputs.
Sumera Saeed
Nov 26, 2023

SST

SST is simpler to administer but can be less efficient compared to GST.
Although simpler, SST might not be as effective in preventing tax evasion.
Harlon Moss
Nov 26, 2023

GST

GST aims to eliminate the cascading effect of taxes on goods and services.
By allowing input tax credit, GST reduces the overall tax burden on goods.
Harlon Moss
Nov 26, 2023

SST

SST comprises sales tax on goods and service tax on services.
SST in the automotive industry primarily impacts the sales price of vehicles.
Sumera Saeed
Nov 26, 2023

GST

GST is a destination-based tax, where the tax is collected by the consuming state.
GST revenues are shared between the manufacturing and consuming states.
Sumera Saeed
Nov 26, 2023

SST

SST is usually levied at the retail level or final point of sale.
Retailers charge SST on consumer goods at the point of purchase.
Sumera Saeed
Nov 26, 2023

GST

GST is a multi-stage, comprehensive tax on the supply of goods and services.
The GST on electronic goods increases the final retail price.
Sumera Saeed
Nov 26, 2023

SST

SST does not allow for input tax credit, leading to potential tax cascading.
The lack of input tax credit under SST can lead to higher costs for consumers.
Harlon Moss
Nov 26, 2023

FAQs

Can GST prevent tax cascading?

Yes, GST eliminates the cascading effect of taxes through input tax credits.
Sumera Saeed
Dec 12, 2023

Is SST easier to administer than GST?

Yes, SST is generally simpler to administer due to its single-stage nature.
Sumera Saeed
Dec 12, 2023

Can consumers claim GST credits?

No, only businesses can claim GST credits, not end consumers.
Janet White
Dec 12, 2023

Does SST increase the final cost to consumers?

SST can increase final costs due to the lack of input tax credits.
Janet White
Dec 12, 2023

How is SST different from GST?

SST is a single-stage tax levied at the point of sale or service provision.
Huma Saeed
Dec 12, 2023

Why might businesses prefer GST over SST?

Businesses might prefer GST due to input tax credit benefits.
Harlon Moss
Dec 12, 2023

Does GST replace other indirect taxes?

Yes, GST replaces several indirect taxes like VAT and excise duty.
Aimie Carlson
Dec 12, 2023

Is SST applicable on exported goods?

Typically, exported goods are exempt from SST.
Janet White
Dec 12, 2023

How does GST affect state revenues?

GST revenues are shared between manufacturing and consuming states.
Sumera Saeed
Dec 12, 2023

Are exports subject to GST?

Generally, exports are zero-rated under GST.
Harlon Moss
Dec 12, 2023

Is SST better for small transactions?

SST can be simpler for small transactions due to its straightforward nature.
Aimie Carlson
Dec 12, 2023

What is GST?

GST is a comprehensive, multi-stage tax on goods and services.
Sumera Saeed
Dec 12, 2023

Are small businesses exempt from GST?

There are exemptions for small businesses under GST, depending on the threshold.
Sumera Saeed
Dec 12, 2023

Does SST apply to both goods and services?

Yes, SST applies to both goods (sales tax) and services (service tax).
Sumera Saeed
Dec 12, 2023

Does SST contribute to tax cascading?

Yes, SST can lead to tax cascading as it doesn't allow input tax credits.
Janet White
Dec 12, 2023

Can GST rates vary for different goods?

Yes, GST rates can vary based on the type of good or service.
Aimie Carlson
Dec 12, 2023

Are services taxed under SST?

Yes, services are taxed under the service tax component of SST.
Harlon Moss
Dec 12, 2023

How does GST affect pricing strategies?

GST affects pricing by including tax in the value chain of products.
Janet White
Dec 12, 2023

Is compliance with SST simpler than with GST?

Yes, SST typically involves simpler compliance compared to GST.
Sumera Saeed
Dec 12, 2023

How does GST impact inter-state trade?

GST facilitates smoother inter-state trade by reducing tax barriers.
Janet White
Dec 12, 2023
About Author
Written by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
Edited by
Huma Saeed
Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.

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