1. GST Definition
Goods and services tax or GST is an indirect tax, which is imposed on goods and services at each stage of production, starting from raw materials to final product. GST is levied on the value additions at different stages of production. GST is widely applied in the European countries. However, now a number of countries across the globe have adopted this tax system.
GST is known as the Value Added Tax (VAT) was first introduced in France as taxe sur la valeur ajoutee or TVA. In 1954, the French economist, Maurice Laure, the joint director of the French tax authority, the Direction generale des impost, initiated the concept of VAT, which came into effect on April 10, 1954. Initially introduced for large businesses of France, with the passage of time, VAT was employed for all business sectors of the country. In France, value added tax is considered to be one of the major sources state finance.
2. GST Rates
GST, an indirect tax, is levied on value addition of products at every stage of production. From raw materials to the final product, at every stage, value is added to the goods and services. Initiated in France, today GST is widely used as a method of taxation in most of the European countries.
There are also some products, which are exempt from GST, for which 0% GST rate is imposed. However, the actual GST rates levied on products vary from one country to other. The GST authorities of the countries decide on the rates to be imposed on different goods and services. In addition, there are also certain rules for specific products and services.
GST is known by various local names in different countries. GST rates of the some of the member countries of the European Union and the local names used for this taxation system in those countries are mentioned below:
|Country |GST Rate |Name | |Standard |Reduced | | | |Denmark |25% |None |Merværdiafgift | |Finland |22% |17% or 8% |Arvonlisavero | | | | |Mervardesskatt | |Germany |19% |7% |Mehrwertsteuer/Umsatzsteuer | |France |19.6% |5.5% or 2.1% |Taxe sur la valeur ajoutee | |Ireland |21% |13.5%, 4.8% or 0% |Value Added Tax (English) | | | | |Cain Bhreisluacha (Irish Gaelic) | |Italy |20% |10%, 6%, or 4% |Imposta sul Valore Aggiunto | |Netherlands |19% |6% or 0% |Belasting toegevoegde waarde | |Portugal |20% |12% or 5% |Imposto sobre o Valor Acrescentado | |Spain |16% |7% or 4% |Impuesto sobre el valor añadido | |Sweden |25% |12% or 6% |Mervardesskatt | |United Kingdom |17.5% |5% or 0% |Value Added Tax | |Poland |22% |7%, 3% or 0% |Podatek od towarow i uslug |
Apart from the European Union member states, there are also a number of countries across the world, where GST has been introduced to solve various problems related to the sales tax system. In most of these countries, variations of GST are imposed on value addition on goods and services. However, in India, GST has been introduced with the aim of replacing the system of sales tax. The following table...
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