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How Indian GST model compares with GST in other Countries

How Indian GST model compares with GST in other countries

France was the first country to implement GST to reduce tax- evasion. Since then, more than 140 countries have implemented GST with some countries having Dual-GST (e.g. Brazil, Canada etc.) model. India has chosen the Canadian model of dual GST.

Particulars India (proposed) Canada UK
Name of GST in the country Goods and Service tax Federal Goods and Service Tax & Harmonized Sales Tax Value Added Tax
Standard Rate 0% (for food staples), 5%, 12%, 18% and 28%(+cess for luxury items) GST 5% and HST varies from 0% to 15% 20 % Reduced rates- 5 %, exempt, zero rate
Threshold exemption Limit 20 lakhs (10 lakhs for NE states) Canadian $ 30,000 (Approx Rs. 15.6 lakhs in INR) GBP 73,000 (Approx Rs. 61.32 lakhs)
Liability arises on Accrual basis: Issue of invoice OR Receipt of payment-earlier Accrual basis: The date of issue of invoice OR the date of receipt of payment- earlier. Accrual Basis: Invoice OR Payment OR Supply-earliest Cash basis (T/O upto 1.35mn): Payment
Returns and payments Monthly and 1 annual return Monthly, quarterly or annually based on turnover Usually quarterly. Small business option- annual
Reverse charge Mechanism Apply on goods (new) as well as services (currently under Service tax) Reverse charge applies to importation of services and intangible properties. Applicable
Exempt services Manufacture of exempted goods or Provision of exempted services (to be notified) Real estate, Financial Services, Rent (Residence), Charities, Health, Education Medical, Education, Finance, Insurance, Postal services
Particulars India (proposed) Singapore Malaysia
Name of GST in the country Goods and Service tax Goods and Service Tax Goods and Service Tax
Standard Rate 0% (for food staples), 5%, 12%, 18% and 28%(+cess for luxury items) 7% Reduced rates- Zero rated, exempt 6%
Threshold exemption Limit 20 lakhs (10 lakhs for NE states) Singapore $ 1 million (Approx Rs. 4.8 crore) MYR 500,000 (Approx Rs. 75 lakhs)
Liability arises on Accrual basis: Issue of invoice OR Receipt of payment-earlier Accrual Basis: Issue of invoice OR Receipt of payment OR Supply - earliest Cash basis:(T/O upto SGD$1mn): Payment Accrual Basis: Delivery of goods OR Issue of invoice OR Receipt of payment
Returns and payments Monthly and 1 annual return Usually quarterly Business option- Monthly returns. Large organsations- Monthly
Reverse charge Mechanism Apply on goods (new) as well as services (currently under Service tax) Reverse charge applies to supply of services Reverse charge applies to imported services
Exempt services Manufacture of exempted goods or Provision of exempted services (to be notified) Real estate, Financial services, Residential rental Basic food,Health Transportation, Residential property, Agricultural land

Thus, we find GST model across the commonwealth countries are similar with some variations. Unlike India, other countries have a much higher threshold for GST applicability thus reducing the burden for small businesses. This will bring in challenges for our SMEs.

Earlier countries implemented GST and faced many problems post-implementation.

For more information, please visit our website at Consultibs.in/