The Goods and Services Tax (GST) has revolutionized India’s indirect tax system since its introduction in 2017. But how does it stack up against GST systems worldwide? Many countries have adopted GST (or its equivalent, like VAT), each with unique rates, structures, and exemptions. If you’re looking to master GST compliance, a GST Course in Chennai can provide in-depth insights into India’s tax framework while comparing it with global models.
In this blog, we’ll explore how India’s GST compares to other nations, which country has the highest GST rate in the world, and where GST doesn’t even exist. Whether you’re a business owner, accountant, or student, understanding these differences can help you navigate taxation more efficiently.
GST Around the World: A Quick Overview
Presently, how many countries have implemented GST? Over 160 countries use a form of GST or Value Added Tax (VAT). However, the structure varies—some have a single national rate, while others, like India, follow a multi-tier system. One of the key Benefits of GST is its ability to streamline tax systems across different regions, promoting consistency and simplifying compliance for businesses.
- Canada: Uses a Harmonized Sales Tax (HST) ranging from 5% to 15%, depending on the province.
- Australia: Introduced GST in 2000 at a flat 10% with exemptions on essentials.
- Singapore: Charges 9% GST (increasing to 9% in 2024) with low exemptions.
- European Union: VAT rates vary between 17% and 27%, with some luxury items taxed higher.
India’s GST system is unique because it combines Central GST (CGST), State GST (SGST), and Integrated GST (IGST). Unlike many countries with a single rate, India has four primary tax slabs (5%, 12%, 18%, and 28%), plus exemptions for essential goods.
If you’re keen on mastering GST calculations and compliance, enrolling in a Tally Course in Chennai can be a game-changer, as Tally is widely used for GST filing in India.
Which Country Has the Highest GST Rate?
When it comes to the highest GST rate in the world, Hungary takes the lead with a staggering 27% VAT. Other high-tax nations include:
- Sweden, Denmark, Norway: 25% VAT
- Croatia, Finland: 24% – 25% VAT
- Argentina, Uruguay: 21% – 22% VAT
In contrast, India’s highest GST rate is 28%, but it applies only to luxury and sin goods like cars, tobacco, and aerated drinks. Most daily-use items fall under lower slabs (5%, 12%, or 18%).
Interestingly, some countries have no GST or VAT at all. These include:
- United States: No federal VAT; sales tax varies by state (0% – 11.5%).
- United Arab Emirates (UAE): Introduced 5% VAT in 2018, but no GST before that.
- Oman & Bahrain: Recently introduced VAT but at low rates.
For professionals looking to specialize in international taxation, a Training Institute in Chennai can offer advanced courses comparing India’s GST with global models.
Key Differences Between India’s GST and Other Countries
1. Single vs. Multiple Tax Slabs
- India: Multi-tier system (5%, 12%, 18%, 28%)
- Most Countries: Single or dual-rate system (e.g., Australia 10%, Singapore 9%)
2. Exemptions & Zero-Rated Goods
- India: Essential items like milk, grains, and healthcare are tax-free.
- UK & EU: Basic food items are zero-rated, but VAT applies to processed foods.
3. Compliance & Technology
- India: Mandatory GST e-filing, e-invoicing, and e-way bills.
- New Zealand: One of the simplest GST systems with easy online filing.
4. Input Tax Credit (ITC) Mechanism
- India allows ITC but with strict matching rules.
- Countries like Canada have smoother ITC claims.
Conclusion: Is India’s GST System Better or More Complex?
India’s GST is more complex than many global systems due to its multiple tax slabs and compliance requirements. However, it’s also more progressive, ensuring essential goods remain affordable while taxing luxury items higher.
Also Read: Top Reasons to Secure Tally Data
