How Indian GST model compares with GST in other countries

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.

ParticularsIndia (proposed)CanadaUK
Name of GST in the countryGoods and Service taxFederal Goods and Service Tax & Harmonized Sales TaxValue Added Tax
Standard Rate0% (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 Limit20 lakhs (10 lakhs for NE states)Canadian $ 30,000 (Approx Rs. 15.6 lakhs in INR)GBP 73,000(Approx Rs. 61.32 lakhs)
Liability arises onAccrual basis: Issue of invoice OR Receipt of payment-earlierAccrual 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 paymentsMonthly and 1 annual returnMonthly, quarterly or annually based on turnover.Usually quarterly. Small business option- annual
Reverse charge MechanismApply on goods (new) as well as services (currently under Service tax)Reverse charge applies to importation of services and intangible propertiesApplicable
Exempt servicesManufacture of exempted goods or Provision of exempted services (to be notified)Real estate, Financial Services, Rent (Residence), Charities, Health, EducationMedical, Education, Finance, Insurance, Postal services
Name of GST in the countryGoods and Service taxGoods and Service TaxGoods And Services Tax
Standard Rate0% (for food staples), 5%, 12%, 18% and 28%(+cess for luxury items)7% Reduced rates- Zero rated, exempt6%
Threshold exemption Limit20 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 -earlierAccrual Basis: Issue of invoice OR Receipt of payment OR Supply - earliest Cash basis:(T/O upto SGD$1mn): PaymentAccrual Basis: Delivery of goods OR Issue of invoice OR Receipt of payment
Returns and paymentsMonthly and 1 annual returnUsually quarterly Business option- Monthly returns.Large organsations- Monthly
Reverse charge MechanismApply 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

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.

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