Difference between GST and other Tax

Every commodity passes through different stages of production and distribution before finally reaching the consumer. At each stage of the production, a value addition is made in the distribution chain. And Value Added Tax (VAT) is a tax on this value addition at each stage.

A dealer under VAT collects tax on his sales, retains the tax paid on his purchase and pays the balance to the government. Value Added Tax is a consumption based tax, because it is borne ultimately by the final consumer.

Goods and Service Taxwhich was introduced as a new league in indirect taxation system replaced all most all Indirect Taxes in India. The act which came into effect on 1 ^st July 2017 is a comprehensive, multi stage, destination based tax that is levied on every value addition.
Under GST, the tax is levied at every point of sale. In case of inter-state sales, Integrated GST will be levied and in case of intra state supplies, CGST and SGST will be charged.

The main differences between VAT and GST could be understood from the following table

Point of difference	Scenario under VAT law	Scenario under GST Law
Taxable Event	Is on sale of goods	Is on every supply and supply includes goods and services.
Rates of Taxes and Laws in each state	· Different VAT rates in each state. · Different VAT laws for each state.	· Uniformed tax rates across India · For States we have State GST Act (SGST), for center we have Central GST Act (CGST) and for supplies made between the states we have Integrated GST Act (IGST) and for Union territories involved in a supply transaction we have Union Territory GST Act (UGST).
Authority over taxes	· Is a levy collected by respective state governments · Here the state government s have authority over the tax proceeds collected by such levy.	· Whereas Goods and Service Tax is collected under SGST and CGST for every sale from same state. · The corresponding center and state amount then gets bifurcated.
Input Tax Credit	· Taxpayers can claim the credit of tax by netting the VAT liability with input VAT on goods purchased and from output VAT on goods sold. · The corresponding center and state amount then gets bifurcated.	· GST is a tax levy on Goods and services as well. A taxpayer can claim the credit on supplies (Goods and Services) received by him to be used or intended to be used in furtherance of business operations. · Subsuming of taxes into one pot of GST have made available the usage of credits at one place to be used in the returns.
Compliances	Movement of goods : · Different set of compliances for movement of goods between states. · Preparation of various forms for moving the goods from one state to other. Returns : · Different returns in different states. So many annexure returns to be prepared. · Concept of auto populated return for inward supplies as in GST was absent under VAT law. Because there was no technology and ideology which is present today in GST act present back then.	Movement of goods : · Unified set of compliances for movement of goods between states · Preparation of one e way bill which is valid across India. Simplified Returns: Only three monthly returns. One for outward supply (GSTR1), other for inward supply (GSTR2) (Note: This return is an auto populated one. This provision was not there under VAT act) and the last return is a consolidated return. (GSTR3)