Difference between VAT and GST in India with Example



VAT and GST are both indirect tax whose burden shifts to final consumer. Both VAT and GST will on the value of sale or supply of goods. But still, there are lots of differences between VAT and GST in India which we are explaining on the basis of following points with examples.

1. Definition 

VAT : VAT means Value added tax. It was converted from sales tax. Difference between VAT output and VAT input was deposited in State Govt. Account.

GST : GST means goods and service tax which is applicable both on goods and service supply as per GST Law. If there is not exempted goods, you have to pay 5% or 12% or 18% or 28% to Govt. account on the supply of goods or sale value of goods which you will be collected from your customer.


2. Valuation of Goods 

VAT : For calculating VAT, we take the value on the basis of its sale price. Both Excise duty and VAT will add in market price and on same gross value goods was sold to customer. Excise duty and VAT was gone in the pocket of Govt. and rest in the pocket of business person.

For Example : Market value of goods is Rs. 10,000 and excise duty is Rs. 2000 and VAT is Rs. 3000. Then value which will be taken from customer is

RS. 10,000
+ Rs. 2000
+ Rs. 3000
----------------
RS. 15000
===========

GST : Only GST will charge and add in the value of goods. For example market value of goods is Rs. 10,000 and GST is 12%

Then

RS. 10,000
+ Rs. 1200
----------------
Rs. 11200
===========

3. Partition of Tax between State and Center

VAT : Only State govt. has right to get its whole share for welfare of state's public.

GST : Whole GST will be collected into two parts for every sale from same state

CGST : It will be half of given GST rate and will be automatically deposit in central govt. account
SGST : It will be half of given GST rate and will be automatically deposit in State Govt. account.

If sale will be out of same state, whole GST will be deposit into IGST account which is central govt. account and then central govt. will cut its share and send rest to beneficiary state govt. account.


4. Taxation on Provided Service

VAT : VAT was not on provided or sold services. Service tax was 14.5%

GST : GST is also on provided service. It may be 12% and 18% and 28% which are mentioned on the nature of services. Most services are coming under 15% GST.

5. Input Credit 

VAT : In VAT, dealer has right to deposit on his net VAT liability by deducting Input VAT on Goods purchased from Output VAT on Goods Sold. So, input credit was in advance

GST : Now, in GST, first Deposit GST on Service Provided. He already paid GST on Goods purchase. System of GST portal will calculate the Input Credit which is used for payment of next GST liability.

6. Benefit of Input Credit of Services for Goods

VAT : This facility was not available.

GST : In GST, if you have paid GST on Services which will add in total input GST and which will compare total output GST which may be on goods sold. Now, you will get the input credit on tax of your services from the tax of your goods.

7. Taxable Event 

VAT : Taxable event is sale.

GST : Taxable event is supply of goods or service.

8. Must VAT No. and GST No.

VAT : If turnover is RS. 10 Lakh

GST : If turnover is more  than Rs.20 Lakh

9. Monthly Online  Return Filling

VAT : Must file return by 20th of succeeding month.

GST : Must file return for sales by 10th, purchase by 15th and payment by 20th of succeeding month.

10. Online Payment 

VAT : Online Payment was not compulsory

GST : Online payment is compulsory if tax is more than rs. 10,000

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Accounting Education: Difference between VAT and GST in India with Example
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