10 Countries where GST seems to be irrelevant & seems like the Government is sucking the blood of the common man.

What is GST, and how will it affect the tax system?

GST (Good Service Tax) is a multi-tiered, destination-based tax levied on all purchases. It is an indirect tax that applies across India, replacing multiple cascading taxes imposed by the central and state governments.GST is governed by the GST Council, whose chairman is India’s Finance Minister. Under GST, different rates of tax will apply to both goods and services at 0%, 5%, 12%, 18%, and 28%. The tax on brought, precious, and semi-precious stones is 0.25 percent, and gold is taxed at 3%. On July 1, 2017, India’s GST structure changed. GST will revolutionize how Indians pay taxes, but it is a tax reform that most Indians do not fully comprehend.

To ensure that revenues earned by the central and state governments remain constant, nearly 60% of all goods subject to GST fall into the 18% or 28% tax bracket. While unpackaged grains and milk are tax-free, hair oil, shampoos, deodorants, and even chocolates are taxed at 28%.

The impact of GST on the economy:

GST is referred to as a single taxation system, but in reality, it is a dual tax system because both the state and central will collect separate taxes on a single transaction of sales and services. Many product taxes have been raised, increasing their costs. The industries which are hit hardest are dairy, textile, IT, telecommunications, etc., and also the cost of jewelry and cell phones have increased.

It has already been implemented in about 140 nations, including Australia, Germany, Japan, and Pakistan. India has one of the most stable economies in the world, and our ability to adapt to significant economic changes has shown to be quite good.

According to some economists, GST in India would have a negative effect on the real estate market. It would decrease demand by about 12% while increasing costs for new homes by up to 8%.

Real estate could have a negative effect; according to some economists, it will increase the price of new homes by up to 8% and decrease demand by close to 12%.

Dealers who have been paying only VAT to avoid paying other taxes but now have to pay may become uneasy.

Some experts claim that the terms “CGST” (Central GST), “SGST” (State GST), and “CST” (Value Added Tax) are simply new names for the same taxes. As a result, there is no significant decrease in the number of tax layers.

Only 4% tax is currently applied to some retail goods. After the tax, clothing and accessories might cost more.

Speaking of costs, the tax has also significantly raised hiring costs for both small businesses and accounting firms. Since many individuals are still not familiar with the tax and accounting firms need to hire new staff who have received tax training, some small businesses file their own taxes, which has become problematic.

In addition, the implementation of the new compliant software results in increased costs for the training of the current employees.

The tax will directly impact all sectors of the economy, including large, medium, and small-scale units, intermediaries, importers, exporters, traders, professionals, and consumers. The Goods and Service Tax (GST), one of India’s most significant tax reforms, is slated to boost overall growth by integrating State economies.

GST will unify the Indian market and strengthen the economy, but just as a coin has two sides, so will GST’s implementation have both positive and negative effects on a country. It is a way to lessen the amount of “black money” if we ignore the drawbacks and focus on the benefits. GST is currently experiencing a few minor issues, but as time passes, we will be able to see the bigger picture, and it will undoubtedly lead to greater economic integration.

How does GST function?

Three different Goods and Services Taxes are applicable. As follows:

CGST: where the central government will collect the money

The following would be the GST tax structure-

Within-state sales: GST plus SGST.

IGST: Sale to another state.

GST around the world

The central and state governments each have the authority to levy taxes under the dual-GST structure.

India has the highest tax rate of all the nations that have adopted GST.

Ten highest GST paying Countries:

1. France

In France, there are four different VAT rates: Since its initial implementation in 1954, the following percentages have been achieved: 2.1%, 5.5%, 10%, and 20%

2. The United Kingdom

The UK’s VAT has been set at 20% since 2011.

3. Ukraine

Ukraine has two VAT rates: 20% for most goods and services and 7% primarily for medicines.

4. New Zealand

GST was first implemented in New Zealand in 1986 at a 10% rate, and in 2010 it was raised to 15%.

5. Australia 

The rate was first introduced in 2000 and is currently 10%.

6. Vietnam 

Except where otherwise noted, most goods and services in Vietnam are subject to three VAT rates of 0%, 5%, and 10%.

7. Singapore 

GST was introduced in 1994 at a rate of 3% and increased to 7% in 2007.

8. Malaysia

The GST rate in Malaysia was introduced in 2015 and is set at 6%.

9. Canada 

GST, which applies to supplies of goods or services and covers the majority of products, is set at 5%. A 15% harmonized sales tax is also levied in some Canadian provinces.

10. Ivory Coast

The people give 60% of their income to the government.

Why does it seem like the government is sucking the blood of ordinary people?

On Friday, Congress leader Navjot Singh Sidhu compared Prime Minister Narendra Modi’s NDA administration to a “leech” drawing blood from the general populace.

Speaking to reporters at Rajiv Bhawan, the state headquarters of the Congress, Sidhu added that the incorrect policies of the Centre had caused significant losses for public sector companies and banks over the previous five years.

The Modi administration has evolved into a leech that feeds off the average person’s blood. Ordinary people struggle to even stand, “said the ex-cricketer turned politician.  While public sector businesses and banks are failing under the Modi government, the profits of a select few capitalists have increased, He claimed.

He added that despite high international crude prices, fuel prices were low under the Manmohan Singh-led UPA government and that the Centre had increased excise duty on gasoline and diesel 16 times over the previous five years.

He claimed that despite low international rates, domestic fuel prices are reaching the sky under PM Modi’s administration.

The price of essential medications has gone up by 10%. Commodities like cement, steel, cooking oil, and others are now significantly more expensive. Massive inflation consequently has a negative effect on the typical person’s daily life. This, they claimed, is Modi’s contribution.

The main tactic used by the BJP to deflect attention is to bring up sensitive social issues and incite hateful feelings in people, according to Siddaramaiah. He exclaimed that the BJP government is misleading people to divert their attention from issues like rising in the price of petrol, unemployment of the people, hike in different products etc. Before introducing the new currency, MSMEs offered about 11 crore jobs. They remarked that there are only 2.5 crore jobs now and questioned what had become of the promise that under Modi’s rule, two crore jobs would be created annually.

Law and order are essential for investments, job creation, and growth. According to Siddaramaiah, the state’s ongoing decline in law and order has cost billions of dollars in assets. The topic of bond purchases by oil companies is entirely unimportant, and the data is fabricated to mislead the public. According to him, the UPA had issued bonds for about Rs 2.2 lakh crore, but the further duty revenue was about Rs 26 lakh crore.

There is no justification for raising taxes due to the covid pandemic. Chief Minister Basavaraj Bommai, Covid has received investments totaling Rs 15,000 crore over the last two years. Rs 15,000 crore is unimportant in comparison to the size of our budget. Kerala has invested approx Rs 40,000 crore in Covid during the earlier 2 years. Kerala has a much smaller budget than we do. Additionally, the BJP has failed to increase capital investments. There have been no homes constructed, and the infrastructure is still subpar.

Edited by Prakriti Arora