Good exempted by the Government (Fatt. CK

Good
and Services Tax (GST) is a tax that was newly introduced in Malaysia. Before
implementing GST, Malaysian tax system was enforced through the Sales Tax Act
1972 (Act 64) and Tax Service 1975 (Act 151).These two legislations were under
the control and supervision of Malaysian Customs (Nor Hafizah & Azleen
2013). The implementation of GST is not only to raise government’s revenue but
it also allows more revenue distribution to

low-income
earner, thereby making the gap of the economies smaller between the people
(Abdul Aziz Awang,2011).GST is a broad-based consumption tax which covers all
transactions including imported goods and services except for the goods and
services that are classified as zero rated supply and exempt supply which will
be exempted by the Government (Fatt. CK & Ling Lim, 2006).It means that the
tax is charged on every supply of taxable goods and services at all levels in
the supply chain in the process of production, manufacturing, wholesale and
retail. The tax is paid by customers when they purchase goods and services
(Alapatt,M and M. Shaik J. 2014). Besides that, GST shall be levied and charged
on the taxable supply of goods and services made in the course or furtherance
of business in Malaysia by a taxable person. Moreover, GST is seen as a transformation
of tax system for restructuring the system to make it fairer, efficient and transparent.
This nature of GST would help combat the tax leakages and non-compliance. It
affects all consumers equally from every level of society regardless of where
and how their income is derived. In other word, it affects consumers across the
board including the poor and needy (The Edge, Oct 2013).

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GST
which is also known as Value Added Tax is a tax on final domestic consumption
(Malaysia Goods and Services Tax (GST) Guide by Royal Malaysian Customs). GST
is essentially a tax on consumption, and not production; hence, the tax burden
ultimately falls on the consumers (Hanum H. 2014). Following the government’s announcement
to implement the GST, it has become a hot topic among the people even though
they touted the success of the 160countriesthat have implemented this tax system(K.Saira,
M.A Zariyawati & L. Yoke).

 

Value
Added Tax (VAT) was proposed for the first time by Wilhelm Von Siemens in
Germany 1919, as an improved turnover Tax. In 1921, Sales Tax was recommended
by Prof. Thomas S. Adams of United State of America. In 1949, the Shoup mission
(A group of American Tax experts, under the leadership of Carl S. Shoup) has
suggested VAT for the reconstruction of the Japanese economy. Then, France was
the first country to implement VAT in 1954.

At
present Value Added Tax (VAT) has been implemented by more than 160 countries
in the world, even our neighbor country Pakistan is also implementing GST.
However, GST is known as “General Sales Tax” in Pakistan. In one of the
countries of Africa, it is known as “General Consumption Tax (GCT)”. In various
countries (Table-1), all over the world, it is also known by the name of Goods
and Service Tax (GST). Where in Australia, Canada, Singapore and New Zealand it
is also famous as “GST”. After Brazil (1960) and Canada (1991), India will be
the 3rd country which is going to introduce dual GST (levied by both Federal
and State Government) structure. There is no difference between GST and VAT
except a minor difference that VAT is levied on goods and GST will impose on
goods and services. Again, GST
is not an additional Tax; it is subsumed of all Indirect Taxes. This means all
Indirect Taxes will come under one umbrella.

 

India is a federal country where Tax is levied by
Federal and State Government. The Taxation power has been well defined in
Indian Constitution. At present, there are 37 Governments along with (a Central
Government, 29 State Governments and 7 Union territories who levy Tax at the
different-different Tax rate on the same product. Where Central Government
collects Direct Tax as well as Indirect Taxes and State Government collects
only Indirect Taxes.

1.1 Direct tax

Direct Tax is a kind of duty, which is charged
directly on the Taxpayer and paid directly to the Government by the Taxpayer.
It cannot be shifted from one person (Taxpayer) to another. There are several
Direct Taxes levied in India are as follows

1. Income Tax

2. Corporation Tax

3. Property Tax

4. Estate Tax

5. Gift Tax

1.2 Indirect tax

An Indirect Tax is one which is imposed on commodity
(goods) or services that is paid by the consumer. Indirect Tax is basically
collected from intermediary sources such as company, dealer and retailer while
the mediator collects Tax from the end user (consumer). It can be shifted from
one person to another and is not levied directly. There are some Indirect Taxes
are as follows

1. Custom Duty

2. Central Excise Duty

3. Service Tax

4. VAT

5. Entertainment Tax

6.
Octroi

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