It has been more than 5 years
since GST has been introduced in India and with the passage of time, the process
of GST has stabilized in the country and the government feels proud of
the success of GST implementation in the country. Being tax head of an MNC, I am being exposed
to the GST or VAT process of other countries, especially European countries, and in this article tries to compare
the indirect tax process of both countries from my own experience.
01. Rate
of Tax
Most European countries follow a single rate of tax and for very few countries, the
rate of tax may be 3-4 kinds. In the case of India, there are more than 10 kinds of
rates of tax, and applying the correct rate of the tax itself is a challenging task for
the taxpayer.
02. Input
credit.
In Europe, there
is no conditions to claim Input credit whereas, in the case of India, the Input
credit should appear in the GST portal coupled with a number of other conditions. Further, there is no concept of blocked
credit in Europe and for India, input credit is blocked under the law for a number of
items.
03. Number
of returns
In Europe, there
is only either a monthly or quarterly VAT
return which captures both output and
input. In India, there first come monthly
output return, then after 10 days monthly input return, and at the year-end, two
annual return makes the total number of returns per year for a single GST
registration to 26.
04. Refund
There are no
conditions when it comes to VAT refunds for European countries. The refund comes automatically to the
taxpayer's bank account when the VAT return input exceeds the output. In the case of
India, the GST refund is only possible when there is an export of goods or
services and the taxpayer received the foreign exchange within the stipulated
timeline and is able to provide all documents related to the realization of foreign
exchange of export of goods and service and require to make a separate application
for refund within the stipulated period.
The documents are going to be verified by the tax office and he has all
the right to ask any questions to the taxpayer and accept or reject his refund application.
The above-mentioned facts show
that the GST of India still has to go long to make the process simple for
taxpayers and hopefully the government will work on this to bring ease of doing
business in India.
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