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December 30, 2022
By
Swathi v prabhu

How GST in India differs from GST in other countries

 GST, also known as good and service tax, is a comprehensive tax system that came into effect on 1st July 2017 and abolished many previous existing taxes, such as service tax, central excise duties, etc. The goods and service tax is an indirect tax levied on goods and services. The burden of paying the tax is on the final consumer. It is a comprehensive, multi-stage, destination-based tax system that is levied on every value addition. GST is a single indirect tax for the entire country.

The first country to implement GST was France. After this, around 160 countries around the world implemented the same. Some countries even have dual GST models e.g.:- Brazil, Canada, and India.

What is the difference between GST in India VS GST in other countries?

   One of the major differences between GST in India and GST in other countries is that GST in India is charged under two government authorities, central and state, as India is a federal country. Both central and state governments are charged with the authority of collecting taxes at various levels. In GST India, the three important taxes under the regime are as follows:-

1. CGST

 The tax is collected by the state government on an intra-state basis.

2. SGST

The tax is collected by the state government on an intra-state basis.

3. IGST

The tax is collected by the central government on an interstate basis.

Applicable GST rates in different countries

Countries

Applicable GST rates

Australia

10%

Brazil

10%

Canada

5%

China

17%

France

20%

Germany

19%

India

18%

Indonesia

10%

Japan

8%

Korea

10%

Malaysia

6%

Mexico

16%

Netherlands

21%

New Zealand

15%

Pakistan

17%

Russia

18%

Singapore

7%

Switzerland

8%

Thailand

7%

United Kingdom

20%

 

Difference between GST in India and Major Countries

 

Particulars

India

Canada

United kingdom

Singapore

Name of the GST

Goods and service tax

Federal Goods and Service Tax % Harmonized Sales Tax

Value added tax

Goods and service tax

Standard rate

0%- food items

5%, 12%, 18% and 28%+cess- for luxury items

GST- 5%

HST- 0% to 15%

20% reduced rates- 5%, exempt, zero-rated

7% reduced rates- zero rated, exempt

Threshold exemption limit

20 lakhs and 10 lakhs for north eastern region

Canadian $30,000 which is approx. equal to 15.6lakh

Approximately 61.32 lakh

Approximately  4.8 crores

Liability arises on

Issue of invoice or receipt of payment- whichever is earlier

(Accrual basis)

The date of issue of invoice or date of receipt of payment – whichever is earlier

(Accrual basis)

Invoice or payment or supply- earliest cash basis- payment

(Accrual basis)

Delivery of goods or use of invoice or receipt of payment

(Accrual basis)

Returns and payment

Monthly and one annual return

Monthly, quarterly or annually based on the turnover

Usually quarterly, small business option- annual

Usually quarterly business option- monthly returns

Reverse charge mechanisms

Applied on goods or services

Reverse charge mechanisms applies to importation of services and intangible services

Applicable

Reverse charge applies to the supply of services

Exempt services

Manufacturer of exempted goods or provision of exempted services

Real estate, financial services, rent, charities, health education

Real estate, financial services or residential rental

Basic food, transportation, health, residential property, agricultural land

 

Conclusion

In every case, GST is charged somewhere between 5% and 20%, India has taken influence over this and put in a similar pattern of tax rates. Also, the expected Indian Economy growth with the GDP has a great pace as the speculated taxpayer community is likely to get a growth of 5 to 6 times than the current economy in the coming years.

FAQS

1. How many countries have implemented GST around the world?

As of 2018, 166 out of 193 countries under the United Nations had implemented a VAT (or GST) system. This number includes all OECD members except the United States, where many of the states use a sales tax system instead

 2. Why does India have a dual model of GST?

Transactions done within a state are subject to a central GST (CGST) levy as well as a state GST (SGST) levy by the Central and state governments, respectively. Interstate transactions attract integrated GST (IGST) levied by the Central Government.

3. Which goods/sectors are out of the purview of GST?

Goods/sectors which are out of the purview of GST are alcohol and specified petroleum products like petroleum crude, high-speed diesel, motor spirit, aviation turbine fuel, and natural gas.

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