What is GST:
GST stands for the goods and service tax. As its name suggests, GST is an indirect tax applied on goods, services or both.
Where Did GST Originate:
GST is not a new concept in the world and goes decades back. Its need was strongly felt in the 1940s-50s. Even as France was the first country ever to implement GST in 1954, France’s GST system is different from the systems adopted by some other countries like India, Canada, etc.
Why GST was Introduced:
Before GST, the tax system was complex and very hard to understand for a common man. The tax rate on the same goods varied from state to state. The entrepreneurs from different countries felt uncomfortable to fit in the previous tax systems.
Advantages:
It is accepted worldwide. Till this day, 160 out of 193 countries have adopted GST.
After GST, the tax system has become easier to understand and attracts the interest of foreign cooperation.
Disadvantages:
GST is controlled by the central government, makes the state government feel like they are losing their freedom and are dependent on the central government. This creates disputes between the governments.
Right after GST is introduced in any country, it shakes up the economy and decreases the gross domestic product (GFP) for a few years. For example, in India when GST was introduced in 2017, it had a huge downside effect on GDP.
When was GST introduced in different countries and what is it called?
France – 1954, it is called VAT
UK – 1973, it is called VAT
Canada – 1991, it is called GST.
Russia – 1991, it is called General Taxation System.
Singapore – 1994, it is called GST.
Australia – 2000, it is called GST.
China – 2016, it is called VAT.
India – 2017, it is called GST.
UAE – 2018, it is called VAT.
GST is also known as Value-added tax (VAT).
Tax Rates in Major Countries:
Fun fact - USA is the only major economy that doesn't have GST.
Written by Rishita Arora