WHAT IS GST ( GOODS AND SERVICE TAX )

The government will introduce a new indirect tax namely Goods and Service Tax or GST in short, to replace the existing laws or Act namely Sales Tax 1972 and Service Tax 1975, which these two existing laws have two diffrent rate where sales tax charge at 5 -10% rate of duty while service tax charge at the rate of 5%.Under the new tax regime (GST) is charge at a rate of 4%  By adopting the new laws, the latter will be revoked by parliament.

Some confusion arise amongst the public about the new tax regime that the government will introduce. Consumer association is not excluded in this problem. Among others the public  is thinking that GST will be a new tax that will be bear by the 'rakyat'. No, it's wrong totally. In fact, GST will replace the two existing laws and GST will charge at a much lower rate than the existing laws.

Majority of the public did not realize that, under the existing laws tax are paid indirectly  by the manufacturer, when a manufacturer  is selling his or her product to a buyer mainly the trading arm. So when the consumer good is sold to the buyer or the end consumer, the seller is charging all the tax paid to the manufacturer by adding certain amount in his or her selling price. So thats why, the elements of tax is latent when a consumer is buying consumer products.

Under GST, tax is not collected at multi  level, and instead  every input tax  is claimed by each level of  good sold, and tax is only collected when consumer is buying any taxable goods, and the amount of tax will be shown in every transaction by consumer.

Will there be rise in price of goods or otherwise under GST? Logically, when rate of tax is reduced from 5-10% to 4%, the price of goods will certainly be lower instead of rise. For instance under current tax regime if a consumer is purchasing a set of sofa valued at RM1000. which attract of 10% sales tax, a buyer or consumer will have to pay RM 100. of  sales tax.  But under GST if the same products with the same is purchased, a consumer will have only to pay 4% tax which is equivalent to RM 40. Logically, which is better paying under sales tax or under GST. 

Among ASEAN countries, only Malaysia, Brunei and Myanmar is not adopting GST and  in the world most countries including third world countries have adopted GST.