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GST in India vs GST in other countries – how India differs

Updated on :  

08 min read.

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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.

How Indian GST model compares with GST in other countries

ParticularsIndia (proposed)CanadaUK
Name of GST in the countryGoods and Service taxFederal Goods and Service Tax & Harmonized Sales TaxValue 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 rated
Threshold exemption
Limit
20 lakhs (10 lakhs for NE states)Canadian $ 30,000 (Approx Rs. 15.6 lakhs in INR)£ 73,000
(Approx Rs. 61.32 lakhs)
Liability arises onAccrual 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 returnMonthly, quarterly or annually based on turnoverUsually 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 servicesManufacture 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
ParticularsIndia (proposed)SingaporeMalaysia
Name of GST in the countryGoods and Service taxGoods and Service TaxGoods And Services Tax
Standard Rate 0% (for food staples), 5%, 12%, 18% and 28%(+cess for luxury items)7% Reduced rates- Zero rated, exempt6%
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 onAccrual 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 returnUsually 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 servicesReverse charge applies to imported services
Exempt servicesManufacture of
exempted goods or Provision of exempted services (to be notified)		Real estate, Financial services, Residential rentalBasic food,Health Transportation, Residential property, Agricultural land

**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.

Read here 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.

An edited version of this article has been published in Business Insider.

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