GST and sales tax compared across the United States, Canada and India comes down to one design difference: the United States has no national consumption tax, while Canada and India both run value-added taxes with input credits. In the U.S. each state decides what to tax and what rate to charge, and the seller collects from the final customer. In Canada the federal GST and the provincial taxes sit alongside each other. In India the Goods and Services Tax is shared between the Centre and the states. This page compares design, rates, registration thresholds and credits for the 2025 and 2026 filing seasons and explains what that means for people who sell in more than one country.
GST and sales tax compared: how does each tax work?
| Feature | United States | Canada | India |
|---|---|---|---|
| Level of tax | State and local sales and use tax; no federal sales tax | Federal GST, with HST in some provinces and separate PST or QST elsewhere | Central GST (CGST) and state GST (SGST) within a state; integrated GST (IGST) between states |
| Type | Single-stage tax on retail sales | Value-added tax with input tax credits | Value-added tax with input tax credit |
| Who collects | The seller | The registrant | The registered supplier |
| Credit for tax on purchases | Generally none; purchases for resale are exempt with a certificate | Yes, input tax credits | Yes, input tax credit |
| Authority | State revenue department, such as the Illinois Department of Revenue | Canada Revenue Agency; Revenu Quebec for QST | GST Council policy; central and state tax authorities |
| Exports | Out-of-state delivery rules vary | Zero-rated, 0% | Zero-rated, with documentation |
Canada's CRA states that a zero-rated supply has a 0% rate throughout Canada. In Illinois, the destination rate applies to remote sales shipped to the buyer, so a seller needs a rate by delivery address. For Illinois-source sales where the location cannot be determined, the Illinois Department of Revenue can assess 15% of gross receipts to an undetermined location.
What are the rates in 2025 and 2026?
| Region | Rate structure |
|---|---|
| Illinois | 6.25% state rate plus local rates; the Illinois Department of Revenue also quotes 6.25% as the voluntary use tax rate for sellers who do not meet the threshold |
| Canada, GST-only provinces and territories | 5% GST |
| Ontario | 13% HST |
| Nova Scotia | 14% HST since April 1, 2025, when its provincial portion fell to 9% |
| Other HST provinces | HST rates of 13%, 14% or 15%, as shown in the CRA's registrant guide |
| Manitoba | 5% GST plus a separate 7% PST |
| India | Standard 18% and merit 5% rates, a 40% rate for a short list, and nil for many essentials, effective from September 22, 2025 |
Rates change, and local add-ons in Illinois differ by city and county, so use the official lookup tools for the exact combined rate. India's GST Council described the change as a "2 rate structure with a Standard Rate of 18% and a Merit Rate of 5%", with a special 40% rate for a few goods and services.
Registration thresholds and filing
| Item | Illinois | Canada | India |
|---|---|---|---|
| Remote or small-seller test | $100,000 of cumulative Illinois gross receipts for remote retailers from January 1, 2026; earlier the 200-transaction test also applied | Small supplier: $30,000 or less of worldwide taxable revenue in any single quarter and over the last four consecutive quarters | Goods: Rs 40 lakh, or Rs 20 lakh in states that chose it; services: Rs 20 lakh, or Rs 10 lakh in special category states |
| Presence rules | Inventory in Illinois creates physical presence, so the seller is not a remote retailer | Non-residents carrying on business in Canada may need to register; your Canadian CPA decides | Place of supply rules decide where tax is due |
| Registration | MyTax Illinois, Form REG-1, before making sales | CRA business number and GST/HST account | GST portal registration, with limited exceptions |
| Return frequency | Set by IDOR based on liability | Annual up to $1,500,000 of taxable supplies, quarterly up to $6,000,000, monthly above | Monthly returns for most registrants, with quarterly options for small ones |
| Small-business option | Not applicable | Voluntary registration for small suppliers | Composition scheme up to Rs 1.5 crore for goods suppliers |
The Indian thresholds come from the 2019 GST Council decisions, and your CA confirms whether any later change applies to your state. Public service bodies in Canada have a $50,000 threshold. If you previously met only the Illinois 200-transaction test, IDOR says it automatically moved your registration to voluntary use tax status from January 1, 2026.
What it means for cross-border sellers
- U.S. sellers to Canada. A seller with no Canadian establishment may still need to register if it carries on business in Canada. Your Canadian CPA decides; see GST/HST registration and filing and the guide for a U.S. company entering Canada.
- Canadian sellers to Illinois. Cross the $100,000 receipts test and you must register, collect destination-based tax and file.
- Indian suppliers to the U.S. The U.S. generally has no VAT on imported services, but sales tax rules for goods and digital products vary by state. See sales tax registration for foreign sellers and the guide for an Indian company entering the U.S..
- Marketplace sales. Illinois treats marketplace facilitators as responsible for tax in many cases; Canada and India have their own platform rules.
- Credits matter in Canada and India. A business that sells and buys in those countries should compare tax on sales and credit on purchases each period; the Indian side is explained in GST registration and returns in India.
A worked example
A shop sells a $1,000 item. In Illinois it adds tax at the combined local rate, which includes the 6.25% state portion ($62.50) and local add-ons. In Ontario it adds 13% HST ($130). In Alberta it adds 5% GST ($50). In India, for a taxable supply of Rs 10,000 at 18%, it adds Rs 1,800, split Rs 900 CGST and Rs 900 SGST within a state or Rs 1,800 IGST between states. The credit mechanism differs: a Mississauga business that paid $78 of HST on inventory and collected $130 on its sale remits $52. An Indian business with Rs 1,080 of input tax credit that collected Rs 1,800 pays Rs 720. A U.S. retailer buying inventory for resale pays no sales tax on it with a valid certificate, collects tax on the sale and remits all of it.
Mistakes to avoid
- Assuming no physical presence means no sales tax in Illinois.
- Treating HST as one national rate or forgetting PST and QST on top of GST.
- Using the old 12% or 28% Indian rate on a supply now taxed at 5% or 18%.
- Forgetting to collect exemption or resale certificates in the U.S.
- Not checking whether a marketplace already collects the tax for you.
How we can help
Our Aurora, Illinois firm handles Illinois registration, returns and nexus reviews, and coordinates with your Canadian CPA and Indian CA on GST/HST and GST. See our service page on sales tax and GST compliance, the Illinois guide and the indirect tax filing comparison. More three-country tables are on the comparisons hub.
Frequently asked questions
Is GST the same as VAT?
Both are value-added taxes: businesses charge tax on sales and recover tax paid on purchases. GST is the name used in Canada and India, and the United States does not have one.
Do I need to register for Illinois sales tax if I only sell online?
If you are a remote retailer with Illinois sales above $100,000 in the lookback period you must register; if you hold inventory in Illinois you have physical presence.
What is the Canadian small-supplier threshold?
$30,000 of taxable revenue in a single quarter or over four consecutive quarters, including associates, with a $50,000 threshold for public service bodies.
Did India change GST rates in 2025?
Yes. The 56th GST Council meeting moved to two main rates, 5% and 18%, with a 40% rate for selected goods and services, effective September 22, 2025.
Who files the Canadian and Indian returns?
Your Canadian CPA and Indian CA do. We handle the U.S. side and coordinate.
Official sources
- Illinois Department of Revenue: Marketplace facilitators, sellers and remote retailers FAQ
- Illinois Department of Revenue: FY 2026-12 bulletin
- CRA: General information for GST/HST registrants (RC4022)
- CRA: Charge and collect GST/HST, which rate
- PIB: Recommendations of the 56th GST Council
- PIB: GST Council decisions on thresholds
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.