Good and Services Tax(GST) which is based on the idea of “One nation, one tax” was introduced in India on 1 July 2017. It replaced the multiple taxes levied by the central and state governments. It is not a new concept and before India, nearly 160 countries have adopted it.
France was the first country to implement GST. But the Indian version of GST is different from others as it is not a uniform tax but the government has categorised items in five major slabs – 0%, 5%, 12%,18% and 28%. India has the highest GST rate at 28% as compared to other emerging markets.
In China and Brazil, most of the commodities fall under the tax slab 17% and 10% respectively whereas developed countries like France, Germany and United Kingdom have GST rates between 19% to 20%.
GST was introduced in New Zealand in 1986 at a rate of 10%. One becomes liable to pay GST when the annual turnover exceeds NZ$60,000 in any 12 month period.
GST is applicable at the rate of 15% in all good, services and other items sold or consumed in the country. At present, New Zealand is the highest tax-producing country among OECD nations.
In Australia, GST was introduced on 1 July 2000 and replaced a wholesale sales tax. The GST is set at a uniform rate of 10% of the price of the good being sold or services being supplied.
The United States of America doesn’t have GST, and the states enjoy a greater autonomy in taxation.
GST was introduced in Canada in the form of multi-level VAT in 1991 on supplies of goods and services purchased in the country. It was imposed on all products except for certain essentials like grocery, residential rent and medical services. However, the system of imposing own sales tax besides GST has led to price distortions in the country.
The country introduced GST in the year 1994 at a tax rate of 3% to make it acceptable to the public and minimise inflation. Singapore also introduced compensation scheme under GST to provide support to the needy and destitute.
After a prolonged debate for over 26 years, GST was finally introduced in the country. It was introduced at a standard rate of 6% which is relatively low in comparison to other ASEAN countries.