India’s GST Model Gets Vindicated As Malaysia Scraps Failed Single Rate Tax

Protesters hold anti-GST placards in Kuala Lumpur (Mohd Rafsan/AFP via Getty Images)

Three years after it rolled out the Goods and Services Tax (GST), Malaysia yesterday (16 May) decided to scrap the tax, reports Business Standard. India had studied Malaysia’s implementation and had borrowed the concept of an anti-profiteering clause to ensure that tax benefits are passed on to the end-user.

While the decision in Malaysia won’t have an impact on India, experts have asked the government to tread with caution over the next few years and study the three-year implementation to expand the GST reforms here.

Scrapping GST was a poll promise of Prime Minister Mahathir Bin Mohamad who won the elections a week ago. The 6 per cent GST rate will be scrapped from 1 June.

GST was introduced in India last July, replacing a combined total of 17 Central and state taxes. It’s rollout was followed by several hitches, mostly due to technical difficulties in the system’s digital side.

Malaysia was the most recent country to introduce GST prior to India. However, experts feel that India’s implementation would ensure that it wouldn’t meet the same fate.

Malaysia had an absurd situation of a single GST rate of 6 per cent for all goods and services. That is not sustainable. A cycle and a BMW cannot be taxed at the same rate. That is why for India the different rates will work.
Sumit Dutt Mazumder, former chairman of the Central Board of Excise and Customs

GST in India is collected at five different rates – 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent.