As per the new system India will have four tax slabs: 5%, 12%, 18% and 28% which now, makes it the country with highest GST rate going past Argentina that levies 27% tax on goods and services.
The Goods and Services Tax or GST rollout took place at a grand midnight event in the Central Hall of the Indian Parliament on June 30. The event was attended by Prime Minister Narendra Modi, President Pranab Mukherjee, Lok Sabha Speaker Sumitra Mahajan, BJP chief Amit Shah and Finance Minister Arun Jaitley. All the political leaders hailed GST as a positive move for the Indian economy but only a few people would know that GST rates in India are highest in the world among the 140 countries that have implemented it so far, according to a report by Business Today.
As per the new system India will have four tax slabs: 5%, 12%, 18% and 28% which now, makes it the country with highest GST rate going past Argentina that levies 27% tax on goods and services. The reason why some European countries have one rate of GST is that they don’t have worry about a large population poor like India. Also, a majority of Indian population still stays in rural areas and is not economically stable.
France was the first country to introduce this type of tax regime and since then 140 countries have implemented it, with some of them following the dual-GST model, for example, Brazil and Canada. India to followed the footsteps of Canada and introduced a structure where both Centre and states have the powers to levy and collect taxes. Also, goods have been divided into four tax slabs in the country.
However, some countries are still struggling to rationalise an adopted rate structure. Some countries had to increase the rates while others had no other option but decrease it. For example, Canada reduced the GST rates multiple times.
Here are the GST rates levied by other countries as per the report:
Canada – 13 to 15%
France – 20%
UK – 20%
New Zealand – 15%
Malaysia – 6%
Singapore – 7%
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, for example, Brazil and Canada. India has chosen the Canadian model of dual GST as it has a federal structure where the Centre and states have the powers to levy and collect taxes.