GST in India and Comparison with Other Global Countries

GST in India and Other Global Countries: Differences & Similarities

India introduced the Goods and Services Tax (GST) back in 2017. GST subsumed all other indirect taxes such as central excise, service tax, VAT, customs duty, etc.  It aims to unify the tax structure in the country and support both the government and taxpayers by streamlining taxation. Tax revenue makes up more than 50% of total government revenue in almost every country in the world. World economies keep formulating taxation rules in the country so that they can get more and more revenue contributing to the nation building. In recent years, France was the first country to implement GST and other countries followed suit and India is one of them. Today, this article will discuss the differences and similarities between GST in India and other global countries.

GST in India: A Comprehensive Guide

Under GST, goods and services are categorized under several tax slabs, the major ones 5%, 12%, 18%, and 28% whereas extremely essential commodities are exempted under GST. States where final goods are consumed and services are used will charge the tax as GST is a destination-based tax. It has eliminated the cascading effect of the previous tax system as under the earlier taxation, taxpayers had to pay tax on already taxed goods and services.

GST is charged at the same rate by the central and state/union governments. For example, if any goods or services or both come under a 12% tax slab, the central government will charge 6% while the state or union government will charge the remaining 6%. An integrated GST (IGST) applies in the case of interstate supply of goods and services. The central government charges IGST and it is apportioned to the destination state.

There is an Input Tax Credit facility available under GST. ITC allows registered taxpayers to reduce their tax liability by claiming credits on GST paid for business-related purchases. For example, a business pays out Rs 50,000 as GST on purchases, and while on selling, it collects Rs 70,000. It can claim the Rs 50,000 paid on purchase and pay only Rs 20,000 to the government now.

GST in Other Global Countries

Countries

India

Australia

France

New Zealand

Malaysia

Nomenclature

GST

Federal GST & Harmonized Sales TaxGST

GST

GST

GSTGSTApplicable

2017

19912000

1954

1986

19942015Return

GSTR

GST34BAS

VAT Return

GST 101, GST103

GST F5GST 03, GST 04Credit

ITC

ITCITC

Input VAT

ITC

ITCITCTax Slab

4

12

4

1

11Tax Rates

0%, 5%, 12%, 18%, 28%

5.5%, 10%

2.1%, 5.5%, 10%, 20%

0%, 15%

0%, 7%0%, 6%Exemptions

Curd, milk, fruit, buttermilk, etc.

Exports, some medicines, education, charity, etc.

Health and welfare, postal, etc.

Donated goods and services sold by NPO’s financial services, etc.

Agricultural products, essential items, exports, financial services, cremation, etc.Threshold Limit

₹ 20/10 lakh

AUS $ 75000/150000

€ 35,000

$ 60,000

$ 1 millionMYR 500,000

After considering the table, it can be deduced that other countries have simpler GST rates while India has multiple tax slabs. GST helps streamline taxation and reduce multiple indirect taxes. to enable small and medium businesses to grow, authorities kept the threshold limit high, reducing the compliance burden for SMEs and emerging entrepreneurs. filing GST returns, registration, ITC claims, and other compliances as well can be done online through the official GST portal.

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