GST in India vs GST in other countries how India differs

Updated on Jun 09, 2017 - 07:37:05 PM

Goods and service tax is taking India by the storm. GST will bring in One nation one tax to unite
indirect taxes under one umbrella and facilitate Indian businesses to be globally competitive. The Indian
GST case is structured for efficient tax collection, reduction in corruption, easy inter-state movement of
goods etc.

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.

GST in India vs GST in other countries

How Indian GST model compares with GST in other countries

Particulars India (proposed) Canada UK

Name of GST Goods and Service tax Federal Goods and Value Added Tax
in the country Service Tax &
Harmonized Sales Tax

Standard Rate 0% (for food staples), GST 5% and HST varies 20 %

5%, 12%, 18% and from 0% to 15% Reduced rates- 5 %,
28%(+cess for luxury exempt, zero rated
items)

Threshold 20 lakhs (10 lakhs for NE Canadian $ 30,000 73,000

exemption states) (Approx Rs. 15.6 lakhs in (Approx Rs. 61.32 lakhs)
Limit INR)

Liability arises Accrual basis: Issue of Accrual basis: The date Accrual Basis: Invoice OR
on invoice OR of issue of invoice OR the Payment
Receipt of payment date of receipt OR Supply
-earlier of payment- earlier. -earliest
Cash basis (T/O upto
1.35mn): Payment
Particulars India (proposed) Canada UK

Returns and Monthly and 1 annual Monthly, quarterly or Usually quarterly. Small
payments return annually based on business option- annual
turnover

Reverse Apply on goods (new) as Reverse charge applies Applicable

charge well as services to importation of
Mechanism (currently under Service services and
tax) intangible properties.

Exempt Manufacture of Real estate, Financial Medical, Education,

services exempted goods or Services, Finance, Insurance, Postal
Provision of exempted Rent (Residence), services
services (to be notified) Charities, Health,
Education

Particulars India (proposed) Singapore Malaysia

Name of GST Goods and Service tax Goods and Service Tax Goods And Services Tax
in the country

Standard Rate 0% (for food staples), 7% Reduced rates- Zero 6%

5%, 12%, 18% and rated, exempt
28%(+cess for luxury
items)

Threshold 20 lakhs (10 lakhs for NE Singapore $ 1 million MYR 500,000

exemption states) (Approx Rs. 4.8 crore) (Approx Rs. 75 lakhs)
Limit

Liability arises Accrual basis: Issue of Accrual Basis: Issue of Accrual Basis: Delivery of
on invoice OR invoice OR Receipt of goods OR Issue of invoice
Receipt of payment payment OR Supply - OR Receipt of payment
-earlier earliest
Cash basis:(T/O upto
Particulars India (proposed) Canada UK

SGD$1mn): Payment

Returns and Monthly and 1 annual Usually quarterly Large organsations-

payments return Business option- Monthly
Monthly
returns.

Reverse Apply on goods (new) as Reverse charge applies Reverse charge applies to
charge well as services to supply of services imported services
Mechanism (currently under Service
tax)

Exempt Manufacture of Real estate, Financial Basic food,Health

services exempted goods or services, Residential Transportation, Residential
Provision of exempted rental property, Agricultural land
services (to be notified)

**USA does not have GST as it ensures high autonomy for the states**

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. Readhere to find
out more.

Are you worried about how GST will impact your business? Register with us at Clear Tax to keep yourself
up to date on GST. We also have experts to help you to smoothly transit to GST.