Countries that tried GST before India

The Goods and Services Tax (GST), India’s biggest tax reform since Independence, will unify a $2 Trillion economy into a single market. This big tax overhaul will be a test for India. Not only does the country’s size and diversity make the challenge daunting – 1.3 Billion people, 29 states, 22 official languages – it’s also implementing multiple rates. Here are some countries who had implemented GST are –

Canada – When Canada implemented its goods and services tax in 1991, retailers offered customers “Don’t Blame Me for the GST” stickers amid cash-register snafus and vending machine meltdowns.

Australia – Three years after pledging in 1995 to “never” introduce a GST, Australia PM John Howard reversed his policy for the 1998 election, saying he was seeking a mandate to implement a 10 percent tax on most Goods and Services. He barely won amid a voter backlash, but that narrow victory was enough to legislate a GST that’s been used to fund health care and schools funding for the states. It excludes some politically contentious items such as fresh food, pre-owned real estate, medical and education services. Current PM Malcolm Turnbull toyed with the idea of increasing the tax to 15 percent, but ruled that out in February 2016.

South Korea – Following the introduction of a value added tax in 1977, a game of hide and seek broke out between tax officials implementing the new system and market vendors seeking to avoid taxation, prompting newspaper Dong-A llbo in 1978 to describe the year as a “365-day nightmare”. The day the indirect tax regime applied some taxi drivers thought the new system applied to taxi fares and argued with customers that they need to pay 10 percent more than the price on the meter.

Malaysia – Following the implementation of GST in April 2015, there were reports cash registers weren’t calibrated to deal with the new regime, government agencies weren’t ready and GST refunds were delayed.

India GST Rates in 2017

The Goods and Services Tax has been one of the key things that have caught the attention of the market given its implications on earnings of companies. The government has kept a large number of items under 18% tax slabs. The government categorized 1211 items under various tax slabs. Here is a low-down on the tax slab these items would attract. Gold and Rough diamonds do not fall under the current rate slab ambit and will be taxed at 3% and 0.25% respectively.

No Tax Goods & Services – No tax will be imposed on items like Jute, Fresh Meat, Fish chicken, Eggs, Milk, Butter Milk, Curd, Natural Honey, Fresh Fruits and Vegetables, Flour, Besan, Bread, Prasad, Salt, Bindi, Sindoor, Stamps, Newspapers etc. Hotels and Lodges with tariff below Rs 1,000, grandfathering service have been exempted under GST.

5% Goods & Services – Items such as Fish Fillet, Apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, Coffee, Tea etc. will attract tax of 5%. Transport Services, small restaurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.

12% Goods & Services – Apparel above Rs 1000, Frozen meat products, butter, Cheese, Ghee, Dry Fruits in packaged form, Animal Fat, Sausage, Tooth Powder, Ayurvedic Medicines, Umbrella etc. will be under 12% tax slab. Non – AC hotels, business class air ticket, fertilizers, Work Contracts will fall under 12% GST tax slab.

18% Goods & Services – Most items under this tax slab which include Footwear costing more than Rs 500, Biscuits, Flavored refined sugar, Pasta, Cornflakes, Jams, Sauces, Tampons, Camera, Speaker and Monitors etc. AC Hotel that serve liquor, telecom services, IT services, branded garments and financial services will attract 18% tax under GST.

28% Goods & Services – Chewing Gum, Bidis, Pan Masala, Chocolate not containing Cocoa, Hair Shampoo, Ceramic Tiles, Water Heater, Washing Machine, ATM, Vacuum Cleaner, Shavers, Hair Clippers, Automobiles, Motorcycles, Aircraft for personal use etc. will attract 28% tax – the highest under GST system. 5-Star hotels, race club betting, cinema will attract tax 28% tax slab under GST.