introduction
The 101st Amendment to the Indian Constitution, enacted in 2016, marked a transformative step in India’s economic and constitutional landscape by introducing the Goods and Services Tax (GST). This amendment streamlined the country’s complex indirect tax system by replacing multiple central and state taxes with a unified tax structure. The amendment added Articles 246A, 269A, and 279A, granting both the Centre and states the power to legislate on GST and establishing the GST Council as a federal body for its implementation. By promoting a “one nation, one tax” framework, the 101st Amendment aimed to enhance ease of doing business, curb tax evasion, and foster economic integration across the states, thereby reshaping India’s fiscal policy.
important points
Here are the key points on the 101st Constitutional Amendment Act, 2016:
1. Introduction of Goods and Services Tax (GST):
- The amendment introduced Goods and Services Tax (GST), a unified indirect tax system aimed at replacing multiple central and state taxes like VAT, excise duty, and service tax.
2. Creation of GST Council:
- A GST Council was established under Article 279A to make recommendations on tax rates, exemptions, and the implementation of GST. It includes representatives from the central and state governments.
3.Concurrent Taxation Powers:
- Both the Centre and the States were empowered to levy GST on the supply of goods and services (CGST for the Centre and SGST for the States). Integrated GST (IGST) is levied on inter-state supplies.
4.Compensation to States:
- The amendment provided for the Compensation to States Act, 2017, ensuring compensation to states for revenue loss due to the GST implementation for five years.
5.Abolition of Various Taxes:
- Central taxes like central excise duty, service tax, and state taxes like VAT, entry tax, and octroi were subsumed under GST.
6.Amendment of the Seventh Schedule:
- The amendment modified the Union List and the State List to incorporate GST-related provisions while retaining specific items like petroleum products and alcohol under the previous tax regime.
7.Article 246A:
- Introduced a new Article 246A, granting both Parliament and State Legislatures concurrent powers to make laws on GST.
8.Article 269A:
- Empowered the Centre to levy and collect IGST on inter-state trade, with the revenue shared between the Centre and the states.
9.Article 279A:
- Established the GST Council to foster cooperative federalism and resolve disputes regarding GST implementation.
10.Removal of Cascading Effect:
- GST replaced the cascading effect of taxes, ensuring a single tax at each stage of the supply chain with input tax credit mechanisms.
11.Implementation Date:
- GST was implemented on 1st July 2017, hailed as a significant tax reform in India’s financial history.
The 101st Amendment aimed to create a simplified, transparent, and unified tax system, fostering ease of doing business and enhancing economic growth by integrating the country into a single market.