VAT/GST framework

Value-added tax (VAT) or Goods and Services Tax (GST) is a consumption tax added at each stage of production and sale. Businesses charge this tax on their sales (output tax) and pay it on their purchases (input tax). The difference—tax collected from customers minus tax paid on inputs—is remitted to the government. This system ensures tax is paid incrementally along the supply chain, with final consumers bearing the full cost. It encourages transparency and reduces tax evasion, as businesses regularly report and reconcile the tax they collect and claim back.