GST

GST in India: Comparison with other Countries

In India, Goods and Services Tax (GST) is seen as one of the most influential transformations in the field of taxes. GST was introduced in 2017 with the mission of “One nation one tax” to exclude the multiple hands involved in the process. In this blog, we will compare the GST in India v/s GST in other countries.

How GST in India is different from other Countries?

Do you know? France was the first country to introduce the GST to reduce tax evasion. GST is not a new term, more than 140 countries have already implemented GST models. Indian GST model is closely similar to the Canadian model of dual GST.  Let’s try to compare the GST in India v/s GST in other countries.

DESCRIPTION	INDIA	CANADA	MALASIA	SINGAPORE	UK
DIFFERENT NAMES OF GST IN DIFFERENT COUNTRIES	Goods and Service tax	Federal Goods and Service Tax & Harmonized Sales Tax	Goods and Service Tax	Goods and Service Tax	Value Added Tax
RATE OF GST CHARGED	0%, 5%, 12%, 18% and 28% (& cess for luxury items)	5% GST and o to 15% HST	6%	7%	20%
EXEMPTION LIMIT	Up to 20 lakhs. Limit increased to 40 lakhs, w.e.f 01st April,2019	Up to Canadian $ 30,000 (INR 15.6 lakhs)	Up to MYR 500,000 (~INR 75 lakhs)	Singapore $ 1 million (~INR 4.8 crore)	Up to £ 73,000 (~INR 61.32 lakhs)
LIABILITIES	Accrual basis: Issue of Invoice	Accrual basis: Date of Invoice issued OR the payment receipt date	Accrual Basis: Delivery of goods OR Issue of invoice OR Receipt of payment	Accrual Basis: Issue of invoice OR Receipt of payment OR Supply – earliest Cash basis:(T/O up to SGD$1mn): Payment	Accrual Basis: Invoice OR Payment OR Supply
FILING RETURNS AND MAKING PAYMENTS	Monthly and 1 annual return	Monthly, quarterly, or annually, depends upon the turnover	Quarterly, Monthly	Monthly (Large organizations)	Quarterly (mostly), Annually
REVERSE CHARGE MECHANISM	Applicable to goods and services	Applicable to the import of services and intangible properties	Applicable to the imported services	Applicable to the supply of services	*Applicable
EXEMPT SERVICES	Exempted goods manufacturing or exempted services provisions	Real estate, Financial services, Rent (residence), charities, health, education	Residential property, Basic food, Agricultural land, health, transportation	Residential rental, Real estate, Financial services	Postal services, Finance, Education, Insurance, Medical

A Detailed analogy of GST in India with other countries

Do you know? India has one of the highest rates of GST in the world that is 18% as compared to other emerging market economies. If you have a business and liable to pay the GST then you must be aware of the GST rates which are distributed under five brackets: 0%, 5%, 12%, and 28%. We all have heard enough and see numbers of articles and blogs regarding GST in India.

However, how our GST is faring in relation to other countries. Further, we will go into the details of GST in countries like New Zealand, Canada, Singapore, Australia, Malaysia, and we will conclude how GST structure in India is different from other countries?

 Goods and service tax: New Zealand

• New Zealand introduced the GST in 1986. Initially, the rate of GST was 10%, which later rose to 12.5% in 1989 and finally 15% in 2010.
• The threshold limit of GST registration in New Zealand is NZ$60,000. You become liable to register if the annual turnover of your business is more than NZ$60,000 in any 12-month period.
• A registered person can opt to file returns monthly, two-monthly or six-monthly, depending upon the turnover.
• Exempted from paying GST-

1. Supplies of residential accommodation and many financial services such as paying and collecting interest
2. Goods and services received as a donation from non-profit entities
3. Financial services
4. Renting a residential dwelling etc.

Goods and service tax: Canada

Canada introduced the GST in 1991 as a multi-level VAT.  Let’s take a look at the GST rates in Canada’s provinces mentioned in the table below.

Note- Canada’s provinces are the sub-national governments which come under the geographical areas of Canada. These provinces are under the authority of the Canadian Constitution.

PST- Provincial sales tax.

HST- Harmonized sales tax.

Canada’s Province	Rate categories(HST, GST, PST)	Provincial Rate	Canada Rate	Total
Alberta	GST	0%	5%	5%
British Columbia	GST+PST	7%	5%	12%
Manitoba	GST+PST	8%	5%	13%
New-Brunswick	HST	10%	5%	15%
Newfoundland and Labrador	HST	10%	5%	15%
Northwest Territories	GST	0%	5%	5%
Nova Scotia	HST	10%	5%	15%
Nunavut	GST	0%	5%	5%
Ontario	HST	8%	5%	13%
Prince Edward Island	HST	10%	5%	15%
Quebec	GST+QST	9.975%	5%	14.975%
Saskatchewan	GST+PST	6%	5%	11%
Yukon	GST	0%	5%	5%

Goods and service tax: Singapore

Singapore introduced the GST bill in 1994 at a rate of 3%. They kept the low rate of interest so that it could be accepted by the public and minimize inflation.  And the Singapore government kept the same rate of interest for the next five years to revive consumer spending. Right now the GST rate in Singapore is 7%.

Goods and service tax: Australia

Australia implemented the GST concept in 2000 at a rate of 10%. Australia replaced the existing taxes such as wholesale sales tax, debit tax, financial institutions duty, stamp duty^[1] on shares, leases, mortgages, and cheques. But, in Australia, 10% GST rate led to the lower revenue productivity from a tax collection standpoint.

Goods and service tax: Malaysia

In Malaysia, GST was introduced in the year 2015 at a rate of 6%. They have a lower GST rate of interest in comparison to other Asian Countries. It brought down the cost of doing business in Malaysia, as it shifted the tax burden from manufacturers to consumers.

Conclusion:

Hope you have a clearer picture of GST in India in comparison to other countries. The purpose of Introduction of GST in 2017 by The Indian government is to make the tax collection more efficient, reduce the corruption, to have easier inter-state movements of goods etc. If we look at the earlier taxation process, India was not following the ideal VAT. So the central tax, imposed by the central government on sales of goods from one state to another will continue as an Integrated GST.

But on the other hand, India is still facing the problems of tax-evasion by small businesses, which are not registered, traders collecting taxes but not remitting, false claims for refunds by traders. Even so, it is always advisable to obtain the GST registration certificate before you start a business.

For the registration certificate of GST in India, please contact Enterslice.

Also, Read: GST Returns to be Filed by Different Taxpayers