GST Rate in India vs GST Rate in Other Countries

A comparison between the GST rate in India vs GST rate in other countries points out the difference in the degree of sophistication with which countries design their indirect taxes. Unlike the single-rate federal GST/VAT systems used worldwide has been India’s multi‑slab dual‑tax model. In this article, we will analyze India’s CGST/SGST/IGST system and juxtapose it with the USA, UK, Australia, Canada, Singapore, UAE, and EU, and share best practices for managing GST in other countries.

What Is GST and How Is It Applied in India?

Goods and Services Tax (GST) in India is a comprehensive tax on the supply of goods and services with a value-added tax approach. It has been in effect since July 1, 2017. It consolidated about 16 indirect taxes, such as excise, service tax, and state-level value-added tax (VAT), into one national tax. 

Key Features 

Dual Model: 

• CGST (Central GST): Levy imposed by the central government on intra-state supplies.
• SGST (State GST): Levy imposed by the state government on intra-state supplies.
• IGST (Integrated GST): Levy on inter-state supplies imposed by the center and apportioned between the center and states.  

Slab Structure: 

• 0%: Essential goods such as healthcare and fresh produce
• 5%: Stuff we need daily and food items.
• 12%: Imposed on processed food and computers.
• 18%: Consumer electronics and certain services
• 28%: Luxury and sin goods.  

Input Tax Credit (ITC): 

A business can claim the input tax on purchases made for further sales. Therefore, the CGST or SGST paid on inputs can be claimed when outputs are sold, substantially reducing bleeding to cascading taxes and lowering the burden.

Thresholds and Registration: 

• Sequentially allocated ₹20 lakhs (₹10 lakhs in NE/Special category states) for goods dealers
• Service providers nationally charge ₹20 lakh. GST registration becomes mandatory after the limit is crossed.

How Is GST Structured in Other Countries?

Approximately 160 countries have adopted VAT or GST, but their application varies by region:

• Single-rate models (NZ, Australia, Singapore, UAE) make compliance easier but broaden the base to include necessities such as food.
• Multi-Rate Models (EU, India, Indonesia) employ zero or reduced rates on basic goods and higher rates on luxuries and services.
• Federal Systems (India, Canada, and the USA) distribute taxing authority to both national and regional entities, leading to the need for harmonization agreements or councils.

How Does Indian GST Compare to Global GST Systems?

• Rates & Slabs: Among the most insoluble is India’s five-rate slab system. As compared to New Zealand and Australia’s single rate GST, which encompasses essentials and luxury in one low value.  
• Dual Taxing Authority: An individual’s federal system forces the country’s Centre and states to impose dual tax simultaneously. Canada follows a similar division shared between the federal GST and provincial HST/PST.  
• Compliance Burden: Unlike many peers, India’s e-invoicing and preliminary e-way billing require India to meet advanced digital compliance features. Such measures increase upfront adherence aimed towards conservation, reinforcing compliance obstruction policies.

What Is the GST or Sales Tax System in the USA?

The US does not have a national GST or VAT system, and rather, each state and most cities have their own sales tax system. This results in:  

• Having a range of 0–10% in varying states.  
• Businesses generally do not receive a sales tax credit; hence, no input tax credit.  
• Nexus: Sellers have to register and collect sales tax in states where they have a physical or economic presence.  
• Online sellers that exceed the threshold of $100,000 in sales or 200 transactions are mandated to collect sales tax.  

This fragmented approach requires multi-level compliance, making taxes in India vs USA, a case study of centralization versus fragmentation.

GST Rates in Various Countries (Comparison Table)

Challenges Businesses Face with Multi‑Country GST Compliance

Diverse Rate Structures: 

Multi-dimensional exemptions and wide slab surcharges alongside differing rates necessitate perpetual revisions to pricing engines.

Registration Thresholds & Nexus: 

The necessity for multiregional registrations due to varying limits of physical versus economic nexuses, turnover enables, and rules.

Invoice and Reporting Formats: 

Each from various e-invoicing paradigms, such as India’s IRN, SAF-T in the EU, and JPK in Poland, has its own unique timeline and data schemas.

Filing Frequencies: 

Monthly (UK and India), quarterly (Canada and Australia), annually (Singapore for smaller firms), and OSS for European small-business e-commerce.

Language & Local Law Nuances: 

Legal and local term gaps, as well as signature and digital signature protocol interpretation, add language barriers.

Input Credit Recovery:  

GST misalignment due to timing issues, blocked credits for exempted supplies, and reconciliation disputes.

Check out Commenda’s filing services if you need help with GST Returns in Singapore and beyond.

Best Practices for Handling GST Across Countries

Use a Centralized Tax Engine: Automate multi-jurisdictional rate look-up, invoice validation, and return preparation at the local level.

Engage Local Experts: Use local tax advisors or in-country partners to keep track of legislative updates.

Implement E-invoicing & e-Waybill Workflows: Achieve real-time compliance in heavily regulated countries such as India, Mexico, and those in the EU.

Adopt a Harmonized Chart of Accounts: Allocate local tax codes to global ledgers for smooth reporting.

Continuously Monitor Nexus Thresholds: Move registrations to be automated and instant to avoid incurring penalties.

Train Teams on Local Invoicing Rules: Ensure accuracy for mandatory fields such as e-invoice requirements in India or QR codes in Indonesia.

Maximize Cash Flow by Reconciling Input Credits Monthly: Streamline purchase-ledger credit and output-ledger debit alignment.  

Manage Global GST Compliance with Commenda

Commenda simplifies GST in various countries using a single platform.

Automated Rate Engine: Apply the correct GST/VAT rate or sales tax rate by country, state, and product category.

Cross-border E-invoicing: Effortless IRN issuance in India, SAF-T reporting in the EU, e-Faktur in Indonesia.

Filing Automation: A single user-friendly interface enables multi-jurisdictional return preparation and filing for India, Singapore, UK, Canada, etc. 

Compliance Templates: Invoice and return templates are fulfilled for each country according to specific local requirements. 

Real-Time Reporting: View liabilities and credits for all of your entities with drill-down analytics to monitor every entity’s real-time data.

Expert Support: The constant update of law changes is taken care of in-house by tax law professionals. 

For more details, explore Commenda’s website about the solutions offered for GST registration and filing.

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