GST in India: a comparative study with Chinese VAT system

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Portor, Allen
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MSc International Accounting and Finance
Dublin Business School
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Taxation system forms the backbone of any nation’s economy and has been present since the centuries. Over the years the system has evolved in many ways, from the tax levied to Caesar to the union government, the system has been one of the integral part of the financial systems of various economies around the globe (Kelkar, Vijay et al (2004). The concept has been the frontrunner in generating revenues for the government which is then utilized for the betterment and upliftment of the country. As the economies particularly western like France, Canada progressed the urge for the unified taxation system augmented and the result has been the genesis of GST or sometimes referred to as VAT (Bird and Richard, 2012). The concept soon swept the developed economies and started to be the cynosure of every advance economies around the globe. In South East Asian continent, the concept first started in China in the year 1994 which partially adopted the system and over the years maneuvered the concept to seep in the main financial system of the county (Kumar, 2015). The study chiefly focused on the effect of harmonized tax system on the developing nation like India against the backdrop of the China which is developing economy. The study focused on three aspects viz how the concept of GST or VAT as it is referred to in India and China differ with each other in terms of implementation, secondly how what effects it has created on the five important sectors viz petroleum, plastics, machinery, precious metals and pharmaceuticals with the help of the primary data that was collected with the help of semi structured interviews, email interviews and survey questionnaire and then analyzed. The rationale behind the study has been that not much comparative and contrasting analysis of the developed and developing economy has been done in the past so this area would explore new avenues and prove to be a research of one of its own kind. Further, the research found that categorically, on the implementation part the Chinese and Indian economy differ with each other and the changes which these system brought are also specific which has to be taken in to account for the respective governments and lastly the threats which these concepts are having in their economies should also be taken in to consideration as it can improve the effectiveness of the phenomena and the economy can be strengthened.