.gif)
Goods and Services Tax (GST) came into force on 1stJuly 2017. The primary reason to introduce the GST policy was to reduce inflation that resulted due to the double taxation effect of the previous taxation structure.
5 Differences between GST and Previous Tax Regime
GST and the earlier tax policy, Value Added Tax (VAT) , can be differentiated across various parameters. The VAT was charged at every production or distribution point of goods. But, GST is levied only on production, sale, and consumption of goods and services. The following table will provide a comprehensive insight into GST vs previous tax regime.
|
| Point of Difference | GST | VAT |
| 1. | Point of Tax Levy | GST is levied on the supply value of goods and services. | VAT was charged on the sale value of only goods. |
| 2. | Rules and Regulations |
|
|
| 3. | Tax Rate and State Laws |
|
|
| 4. | Tax Collection | SGST and CGST collected on every sale transaction are correspondingly distributed among the centre and the state. Tax proceeds benefit both state and central governments. | The tax amount was collected by the state in which the sale transaction has taken place. Tax earnings were at complete disposal of the state government. |
| 5. | Tax Regime | All the taxes that were levied on state and central level were discontinued. Only one tax is charged on goods and services across the country. However, there are some exceptions, namely petroleum and natural gas, motor spirit as well as high-speed diesel. | At the state level, several taxes were charged like VAT, luxury tax, entertainment tax, various cesses, sales tax, etc. Meanwhile, numerous taxes at the central level made the entire system quite complex. |
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
.webp)
.svg)
