Goods and Services Tax (GST) is a value-added tax imposed on the goods and services sold for domestic consumption. Gaining an insight into the objectives of this tax regime helps you understand the meaning of GST better.
Goods and Services Tax (GST) is not only present in India but in various other countries as well. GST was first implemented as a tax regime in 1954 in France and later adopted by several countries. More than 160+ countries follow GST/VAT with its different structures and procedures. Let’s understand the brief overview of GST in India and other countries.
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| GST in India vs. GST in Other Countries |
How is the GST in India Different from the GST in other Countries?
Goods and Services Tax is an indirect tax imposed on the supply of goods and services which gets rid of the cascading effect of tax and follows the multi-tax system.
GST, also called Single tax, is a multi-stage, destination-oriented tax levied on all value addition. GST is not only present in India but in various other countries as well. More than 160+ countries follow GST/VAT with its different structures and procedures. But the Dual GST model is followed by two countries around the world: India and Canada. With this, let’s understand the brief overview of GST in India and other countries.
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| A Brief Overview of GST in India and Other Countries |
GST in India
The introduction of GST in India is described as one of the biggest tax reforms. This tax regime has replaced multiple indirect taxes in India, including VAT, excise duty, service taxes, etc.
GST was first put forth by the Government in 2000 but later introduced on 1st July 2017 and took over VAT in India. Just like it’s said above in the Introduction, in India GST follows the Dual model structure where both the Central and the State Government collects tax from the state and at the center but governs their own bodies. When it comes to the rates, it’s divided into 5-tier slab rates 5%, 12%, 18%, and 28% where the last rate, 0% is considered a nil rate which is exempted from GST. GST has four types of taxes:
- CGST – Central Goods and Services Tax
- SGST - State Goods and Services Tax
- IGST – Integrated Goods and Services Tax
- UTGST- Union Territory Goods and Services Tax
GST in Canada
In Canada, GST was introduced on 1st January 1991. A dual GST model is also followed in Canada as well. The Federal Goods and Services Tax (GST) is the main tax charged on all goods and services in Canada. HST or Harmonized Sales Tax is taken into consideration when either federal or provincial sales tax is involved. Even the Québec Sales Tax is included along with GST in certain regions in Canada. The rate of GST is 5% while HST might change from 13% to 15% and there are certain goods and services that are exempted from GST.
GST in Australia
In Australia, GST was passed in the Legislature in June 1999 but was introduced on 1st July, 2000. Australia follows a single GST, which is charged on the supply of goods and services within Australia. The standard rate of Australian GST is 10% while certain goods and services are for 5%, with certain exemptions.
GST in Liberia
Liberia also uses the single GST model which is charged for the supply of goods and services within Liberia. The GST is charged from 7% to 10%, while for communication services it’s charged at 15%, with certain exemptions. But later it was planned that VAT would take over GST in 2018-2019.
GST in New Zealand
GST was introduced in New Zealand in 1986. New Zealand follows a system where a single tax is charged on the supply of almost all goods and services with fewer exemptions made. The tax rate charged on goods and services is 15%.
GST in Singapore
GST was introduced in Singapore on 1st April 1994. In Singapore, the rate which is charged on the supply of goods and services is 7% along with exemptions made on certain goods and services within Singapore.
GST in Malaysia
In Malaysia, GST was charged on goods and services in April 2015 at the rate of 6%, and certain goods were exempted but later it was replaced by Sales Tax and Service Tax in September 2018 as GST wasn’t very effective in the country. The present rate for sales tax is 10% and for Service Tax is 6%.
This tax is mandatory for local companies, so if you want to open a branch or a subsidiary in Malaysia you should get professional financial advice in order to find out the rules that apply in this case.
It is important to understand the basic tax structure in Malaysia. Depending on an individual’s duration and type of work, the country uses progressive and flat rates of personal income tax (PIT).
In the above given list of countries, there have been few changes made in the rates due to the Covid-19 crisis.
Read Here: Highest Paying jobs after GST Certification Courses
Conclusion
Given above are a few countries that follow GST or discontinued GST later. There are many countries that still have VAT, France was the first country to introduce VAT in 1954. In the end the whole world either follows GST or VAT with their own rates and structure. While there are few countries that neither have GST nor VAT e.g. USA etc.