Goods and services tax

What is GST?

Goods and services tax is an indirect tax applied to the sale of goods and services. Similar to value-added tax (VAT), GST is generally collected at multiple stages of the supply chain, with businesses charging GST on sales and generally claiming credits for GST paid on eligible business purchases. This helps prevent the same value from being taxed multiple times.

For international corporations and business owners, understanding GST is essential because businesses may be required to register for GST, collect and remit tax, file returns, and maintain specific records — even if they do not have a physical presence in that country.

GST vs. VAT: What's the difference?

GST and VAT are both consumption taxes that are collected throughout the supply chain and are generally borne by the end consumer. While the terms are often used interchangeably, the name and specific rules vary by jurisdiction. Countries such as Australia, Canada, India, New Zealand, and Singapore generally use the term GST, while many European countries use VAT.

Which countries have GST?

Countries that specifically use a GST system include Australia, Canada, India, New Zealand, and Singapore. Many other countries — including those in the European Union, the United Kingdom, and South Africa — use VAT systems that operate similarly to GST.

What is HST in Canada and how is it different from GST?

In Canada, the harmonized sales tax (HST) combines the federal GST and the participating province's provincial sales tax into a single tax. Rather than collecting and administering separate federal and provincial taxes, businesses charge one combined HST rate and remit it through a single system.

Some provinces combine GST and provincial sales tax into HST, while others administer separate provincial sales taxes alongside GST. For example, provinces such as Ontario, Nova Scotia, and New Brunswick use HST, whereas provinces such as British Columbia and Saskatchewan generally apply GST separately from their provincial sales taxes.

For businesses, this distinction affects tax rates, registration requirements, invoicing, and compliance obligations depending on where customers are located.

Is GST included when you pay the Australian Taxation Office (ATO)?

When a GST-registered business sells a taxable good or service, it collects GST — currently 10% — from customers and reports it to the Australian Taxation Office. However, the business does not usually pay the full amount of GST collected. Instead, it pays the net GST amount, which is the GST collected on sales minus any GST credits it can claim on eligible business purchases.

For example, if you collect $5,000 in GST from customers during a quarter and paid $1,500 in GST on business expenses, you would generally remit $3,500 to the ATO through your Business Activity Statement (BAS). If your GST credits exceed the GST collected, you may be entitled to a refund.

In short, GST is included in the amounts reported and settled with the ATO, but what you pay is typically the net GST liability, not the total GST you charged customers.

Who pays goods and services tax?

Businesses act as intermediaries in the GST system. They collect GST from customers on sales and may claim credits or deductions for GST paid on eligible business purchases. As a result, the tax burden typically falls on the final consumer rather than on businesses participating in the supply chain.

How is GST calculated?

GST is generally calculated as a percentage of the taxable sale price of a good or service. The applicable GST rate varies by country, and the tax amount is determined by multiplying the sale price by the GST rate.

For example, if a product costs $100 and the GST rate is 10%, the GST amount is $10, resulting in a total price of $110. Businesses typically collect GST on sales and may offset that amount with credits for GST paid on eligible business purchases, remitting the net amount to the tax authority.

When do businesses need to register for GST?

The requirements for GST registration vary by country, but businesses are generally required to register once they meet certain thresholds or establish a taxable presence in a jurisdiction. Common registration triggers include exceeding a specified level of annual revenue, making taxable sales within a country, importing goods, or providing digital products and services to customers in a jurisdiction.

For example, in Canada, most businesses are generally required to register for GST/HST once their worldwide taxable revenues exceed CAD 30,000 in a single calendar quarter or over four consecutive calendar quarters. In Australia, businesses typically must register for GST when their annual GST turnover reaches AUD 75,000. In Singapore, GST registration is generally required when taxable turnover exceeds SGD 1 million over a 12-month period. In New Zealand, businesses generally must register once annual turnover exceeds NZD 60,000, while in India, the standard GST registration threshold is generally INR 4 million (40 lakh) for suppliers of goods, although lower thresholds and different rules may apply depending on the state and type of supply.

In some countries, nonresident businesses may also be required to register for GST even if they do not have a physical presence there. For example, foreign businesses supplying digital services to consumers may be required to register and collect GST regardless of local revenue thresholds.

Because registration thresholds, deadlines, and compliance requirements differ significantly across jurisdictions, businesses engaged in cross-border trade should review local GST rules carefully to determine whether and when registration is required.

What is a GST number and how do you register for one?

A GST number is a unique tax identification number assigned to businesses that are registered to collect and remit goods and services tax. Tax authorities use GST numbers to track a business's GST obligations, filings, payments, and eligibility to claim input tax credits. The specific name and format of the number vary by country, but its purpose is generally the same. In some jurisdictions, non-resident businesses may also be required to register for GST based on their sales activity, even if they do not have a physical presence in the country.

To obtain a GST number, a business typically must register with the relevant tax authority once it meets local registration requirements, such as exceeding a revenue threshold or establishing a taxable presence in a jurisdiction. Registration processes vary by country but generally require businesses to provide information about their legal structure, business activities, and expected sales before receiving a GST registration number.

Once registered, businesses are responsible for collecting GST where applicable, filing returns, and remitting tax to the appropriate authority.

What is exempted from GST?

GST exemptions vary by country, but certain goods and services are commonly exempt or subject to special tax treatment. Examples may include certain financial services, healthcare services, educational services, residential property transactions, and supplies made by qualifying nonprofit organizations. Some jurisdictions also apply reduced rates or zero-rate essential goods such as basic food items, prescription medications, or exports.

Because GST rules differ significantly between countries, businesses should review the requirements in each jurisdiction where they operate. Understanding which transactions are exempt, zero-rated, or taxable is important for determining whether GST must be charged and whether input tax credits can be claimed on related business expenses.

Is GST a tariff?

No. Goods and services tax is not a tariff. GST is a consumption tax imposed on the sale of goods and services within a country, with the cost ultimately borne by the consumer. Businesses collect the tax and remit it to the government as part of the normal sale of goods and services.

A tariff, by contrast, is a tax imposed on imported goods as they enter a country. Tariffs are primarily used to generate government revenue, protect domestic industries, or influence trade policy. While imported goods may be subject to both tariffs and GST in some jurisdictions, the two taxes serve different purposes and are calculated separately.

What is included in GST compliance?

GST compliance encompasses the processes and controls businesses use to meet their obligations under applicable GST laws.

Depending on where a business operates, GST compliance may include:

• Registering for GST in jurisdictions where the business meets registration thresholds or has a taxable presence
• Determining the correct GST treatment and rates for taxable transactions
• Issuing invoices that satisfy local GST documentation requirements
• Collecting GST from customers and remitting it to the appropriate tax authorities
• Filing periodic GST returns and related reports by required deadlines
• Maintaining records and documentation to support GST calculations and filings
• Claiming eligible input tax credits or refunds for GST paid on business purchases
• Monitoring registration thresholds and changes in tax laws, rates, and reporting obligations
• Managing exemption certificates and special tax treatments, where applicable
• Reconciling GST collected and paid to identify discrepancies and support accurate reporting
• Preparing for audits, tax authority reviews, or requests for additional information

For businesses operating across multiple jurisdictions, effective GST compliance requires ongoing oversight and strong internal controls. Maintaining a consistent compliance process can help reduce the risk of penalties and interest, improve reporting accuracy, and support smooth cross-border operations.

What is the best GST management software?

The best GST software depends on your organization's size, transaction volume, geographic footprint, and compliance requirements. When evaluating GST software, businesses should look for capabilities such as:

• Multi-jurisdiction support
• Real-time tax determination
• ERP and accounting system integration
• Automated tax rate and rule updates
• Exemption certificate management
• Robust reporting and audit trails

By integrating tax determination directly into business systems and applying up-to-date tax rules in real time, ONESOURCE Indirect Tax Determination can improve consistency, reduce compliance risk, and help global tax teams manage indirect tax obligations more efficiently as their organizations grow and expand internationally.

Explore how to find the best indirect tax software for your business or see how AI-powered tax compliance software can support global indirect tax management.

We last updated this information on 07/03/2026.