What is the difference between a VAT and a GST?

With the advent of GST, the rules of the old vat are not depended upon anymore as most businesses are required to apply for GST registration. The difference between the Vat and GST lies in the way the extra taxes are filtered and how all the taxes will no longer be separated.

To know more about the difference between the current taxation and the new GST tax in India you will have to know more about the GST tax. 

GST is actually a tax policy that means one market all around the country. This system actually reduces the complicated structure of taxation as it creates a common market. This also reduces the burden of a tax payer as it brings down the indirect tax and also the import and exports taxes.

The business that has an income lower than 20 lakhs is not required for registration in GST.

GST removes the cascading effect of several taxes that the tax payers pay.

In India, the GST tax will finally replace almost all the indirect taxes and encourage a common market with an easy tax structure and simple tax payment. 

The cost levied on all the commodities will drop, thanks to the GST implementation as it does away with the tax on tax syndrome.

Differences Between the Vat and GST

The VAT and service tax are taken separately as VAT is considered separately for goods and separately for service while the GST is common for both of it, making it simpler to follow.

The several indirect taxes together increases the tax and with every state having their own tax rate, increases the amount of tax rate as the goods are transported from one state to another. This results in a cascading of taxes and with the implementation of GST, such problems can be avoided.

GST will also do away with the differences in the structure of taxation between the states and this will lead to single indirect tax.

Central and state governments

GST will make the tax compilation better and seamless with the transfer of input tax credit from one stage to another.

GST will also be reducing the tax collection of the government and hence lead to higher revenues.

Consumer

Due to a high tax rate on every item and the increasing value when it reaches the consumer flummoxes them as they do not understand the exact process of the implementation of taxes as it is a real complicated process.

Thankfully the overall tax burden will reduce considerably and the consumer’s burden will also reduce significantly.

The GST is implemented and it will leave an impact in the every sector. Some of these impacts can be temporary in some of the others it is permanent. 

The impact is actually expected at a high rate as the transformation in the game of tax will either see a slight or a huge leap in the world of business and of course it all depends on the different category of business. Every sector will feel a different kind of repercussions.