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Distinguish between GST and SST
Goods and service tax (GST) levies a single tax rate for all goods (supply) and services (not in India) whereas sales and service tax (SST) is the multiple tax rate system.
GST is the indirect and unified tax rate levied on goods (supply) and services whereas sales and service tax is levied only once (tax levied on any taxable services carried out by individuals who are eligible for tax).
Goods and service tax (GST)
GST tax is levied on sales of goods, lease, exchange, supply or disposal (of goods and service). Items excluded from liquor, petroleum and natural gas, real estate. The GST system is the multi-level tax system with available input tax credit.
Advantages
The advantages of GST are as follows −
- Tax incidence is reduced.
- Process of goods and services are reduced.
- Ease of doing business has increased.
- Multiplicity of taxes is reduced.
France was the first country to introduce GST and in India, it was introduced in India (2017). Countries like India, Brazil, Canada follow a dual GST system. In the dual GST system both central and state governments collect their taxes separately.
Unified GST system is followed in some countries where both central governments collect taxes and distribute them to states. In India slab rates are fixed (5%, 12%, 18%, and 28%).
Sales and service tax (SST)
Sales tax is imposed on the manufacturing sector whereas service tax is imposed on selected sectors. Sale tax imposed at once and it is the value added tax. Services which assist in any work or work conducted by individual skill or taking up the work on others behalf etc. comes under services.
Sales tax won' t change with income level and is the same for all classes in society. Some of the types of sales taxes are excise duty, retail sales, VAT etc.
Differences
The major differences between Goods and Services Tax (GST) and Sales & Service Tax (SST) are as follows −
| Goods and Services Tax (GST) | Sales & Service Tax (SST) |
|---|---|
| Based on the indirect taxation system, single consumption. | Levied on goods/services provided to both locally produced and imported. |
| Tax based is the national market. | Tax base is the local market. |
| Tax levied at multiple stages. | Levied at sales point. |
| Eliminates cascading and compounding effects. | There is a cascading and compounding effect. |
| Eligible to claim input tax (if exports are rated zero). | No complete tax relief. |
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