Fairfield Institute of Management and Technology

IS GST AN ACCEPTED SYSTEM OF TAXATION

ACROSS THE WORLD
GOODS & SERVICE TAX
(Sub code :309)

Submitted to: Submitted by:

MS. KIRAN ASIF HUSSAIN

Enroll no: - 00651401717

BBA-G- 5th Sem

Section - D

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 IS GST AN ACCEPTED
SYSTEM OF TAXATION
ACROSS THE WORLD?

TABLE OF CONTENTS

Content Page No.

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Title……………………………………………………………………2

Introduction……….………………………………………………….4

Objective………………………………………………………………9

Conclusion…………………………………………………………….10

Bibliography…………………………………………………………..11

INTRODUCTION

WHAT IS GST?

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  Goods and service tax (GST) is a comprehensive tax levy on manufacture, sale and
consumption of goods and service at a national level.
 GST is a tax on goods and services with value addition at each stage.
 GST will include many state and central level indirect taxes.
 It overcomes drawback present tax system.
 The GST is a common tax used by the majority of countries globally.
 The GST is usually taxed as a single rate across nation.
 The tax is included in the final price and paid by consumers at a point of sale and
passed to the government by the seller.
 The goods and service tax (GST) is a tax on goods and service sold domestically for
consumption.

HOW THE GOODS AND SERVICE TAX (GST) SYSTEM WORKS

Most countries with GST having single unified GST system, which means that a single tax
rate is applied throughout the country. A country with a unified GST platform merges central
taxes (e.g., sales tax. Excise duty tax. And service tax) with state-level taxes (e.g.,
entertainment tax, entry tax, transfer tax, sin tax, and luxury tax) and collects them as a one
single tax. These countries tax virtually everything at a single rate.

TAX STRUCTURE IN INDIA

 DIRECT TAX,
e.g., Income Tax, Corporate Tax, Wealth Tax

 INDIRECT TAX
e.g., Excise duty, custom duty, Service Tax, Octrai Tax, VAT

METHOD OF TAXATION

 Progressive Tax,
Increasing rate of tax for Increasing value or Volume.
 Regressive Tax,
Decreasing rate tax for Increasing Value or Volume.

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  Proportional Tax
Fixed rate of tax for every level of income or production.

DUAL GOODS AND SERVICE TAX(GST) STRUCTURES

Only handful of countries, such as Canada and Brazil, have a dual GST structure. Compared
to a unified GST economy where tax is collected by the federal government and then
distributed to the states, in dual system, the federal GST is applied in addition to the state
sales tax. In Canada, for example, the federal government levies a 5% tax and some
provinces/states also levy a provincial state tax (PST) which varies from 7% to 10%. In this
case, a consumer’s receipt will clearly have the GST and PST rate that was applied to their
purchase value.

SHORT COMINGS IN CURRENT TAX SYSTEM

 Tax Cascading (Tax on Tax)

 Complexity
 Taxation at Manufacturing Level
 Exclusion of Services
 Tax Evasion
 Corruption

WHICH COUNTRIES COLLECT THE GOODS AND SERVICE TAX (GST)?

France was the first country to implement the GST in 1954; since then, an estimate 160
countries have adopted this tax system in some form or another. Some of the countries with
GST includes Canada, Vietnam, Australia, Singapore, United Kingdom, Monaco, Spain,
Italy, Nigeria, Brazil, South Korea, and India.

HISTORY OF GST IN INDIA

 Introduced by Vajpayee Government in 2000.

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  Union Budget 2005-07 announced application of GST from 1st April, 2010.
 Bill passed in Lok Sabha on 6th May, 2015.
 Bill passed in Rajya Sabha on 3rd August, 2016.
 GST to be implemented by July 2017.

INDIA’S ADOPTION OF THE GOODS AND SERVICE TAX (GST)

India established a dual GST structure in 2017, which was the biggest reform in the country’s
tax structure in decades. The main objective of incorporating the GST was to eliminate tax on
tax, or double taxation, which cascades from the manufacturing level to the consumption
level.

India has, since launching the GST on July 1, 2017, implemented the following tax rates;

 A 0% tax rate applied to certain foods, books newspapers, homespun cotton cloth, and
hotel services.
 A rate of 0.25% applied to cut and semi-polished stones.
 A 5% tax on household necessities such as sugar, spices, tea, and coffee.
 A 12% tax on computers and processed food.
 An 18% tax on hair oil, toothpaste, soap, and industrial intermediaries.
 The final bracket, taxing goods at 28%, applies to luxury products, including,
refrigerators, ceramic tiles, cigarettes, cars and motorcycles.

The previous system with no GST implies that tax is paid on the value of goods and margin at
every stage of the production process. This would translate to a higher amount of total taxes
paid, which is carried down to the end consumer in the form of higher costs for goods and
services. The implementation of GST system in India is, therefore, a measure that is used to
reduce inflation in the long run, as price for goods will be lower.

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

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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.

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

Standard Rate 0% (for food staples), 5%, GST 5% and HST varies 20%
12%, 18% and 28%(+cess from 0% to 15% Reduced rates- 5 %,
for luxury items) exempt, zero rated

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

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

Liability arises Accrual basis: Issue of Accrual basis: The date of Accrual Basis:
on invoice OR issue of invoice OR the Invoice OR Payment

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Particulars India (proposed) Canada UK

Receipt of payment date of receipt OR Supply

-earlier of payment- earlier. -earliest
Cash basis (T/O upto
1.35mn): Payment

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

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

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

Exempt services Manufacture of Medical, Education,

exempted goods or Provision Finance, Insurance, Postal
of exempted services (to be services
notified)

OBJECTIVE

 To develop further understanding of the theories and concepts cover in the course,
 To develop a practice of learning new aspects of the subjects and develops a habit of
research related to the subject.

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 CONCLUSION

After making this assignment all the concepts related to this topic is now cleared and
provides entro-knowledge regarding this topic.

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 BIBLIOGRAPHY

Web site :
www.cleartax.com

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www.scribd.com

www.investopedia.com

Search Engine:

www.google.com

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