Professional Documents
Culture Documents
Effects of Implementing
What is GST
GST is Goods and Services Tax. In other
countries this tax also known as value added
tax(VAT)
GST is a tax levied for each transaction.
Transaction is any exhange of goods or services
between two or more parties, either involves the
exchange of money or not.
GST rate set by the government determine how
much tax is borne by consumers.
Under the law, the GST is imposed on each
transaction unless the transaction is exempted
from the scope of GST.
Implementation mechanism
Example: How GST affects the cost and price of school shoes
Manufacturers only
collect GST from
distributors that
buy shoes, on
behalf of
Distributors
governmentonly
collect GST from
store that buy
shoes, on behalf
of government
Shop only collect
GST
from consumers
buy shoes, on
behalf of
government
Manufactur
ers
Distribut
ors
Shops
Sales &Services
Tax (SST)
Stage of tax
Stages.
At each stage, the
GST is applied &
trader can get GST
credits.
One stage.
The tax only
applies at the
factory once only.
Scope of
implementation
Rate
6% for standard
Different. Some 6%
rated, 0% for zero
(services tax) and
rated*.
some
(sales)
*Zero rated- the dealer
does not have to charge
GST10%
on the
goods / services sold but can get the GST credit on purchase.
Stricter
compliance
requirements
increase the
dealer costs.
Taxable goods
and services
also increase
the dealer cost.
Sco
pe
Transacti
on costs
Inflatio
n
When almost
all goods &
services are
taxed, and the
transaction
costs rise, this
resulted in
increasing of
inflation and
the prices.