GST Constitution (101st Amendment) Act, 2016 and History of GST

The Constitutional provisions hitherto had delineated separate powers for the Centre and the States to impose various taxes. Whereas the Centre levied excise duty on all goods produced or manufactured in India, the States levied Value Added Tax once the goods entered the stream of trade upon completion of manufacture. Services were exclusively taxed by the Centre together with applicable cesses, if any. Besides, there were State specific levies like entry tax, luxury tax, entertainment tax, lottery and betting tax, local taxes levied by Panchayats etc. check more details for “GST Constitution (101st Amendment) Act, 2016, History of GST” from below…

With respect to goods imported from outside the country into India, Centre levied basic customs duty and additional duties of customs together with applicable cesses, if any.

Consequently, a Constitutional amendment was needed to enable integration of the central excise duty including additional duties of customs, State VAT, CST and certain State specific taxes and service tax levied by the Centre into a comprehensive goods and service tax.

GST Constitution (101st Amendment) Act, 2016

Constitution (101st Amendment) Act, 2016 was enacted on 8th September, 2016. Significant amendments made by the Constitution (101st Amendment) Act, 2016 are as follows:

  • Concurrent powers on Parliament and State Legislatures to make laws governing goods and services.
  • Levy of IGST on inter-State transactions of goods and services to be levied and collected by the Central Government and apportioned between the Union and the States in the manner provided by Parliament by Law as per the recommendation of the GST Council.
  • Principles for determining the place of supply and when a supply takes place in the course of inter-State trade or commerce shall be formulated by the Parliament, by law.
  • GST will be levied on all supply of goods and services except alcoholic liquor for human consumption.
  • On the following products, GST shall not be levied till a date to be notified on the recommendations of the GST Council:
    • Petroleum Crude
    • High Speed Diesel
    • Motor Spirit (commonly known as Petrol)
    • Natural Gas
    • Aviation Turbine Fuel
  • The Union Government shall retain the power to levy duties of excise on the aforesaid products besides tobacco and tobacco products manufactured or produced in India.
  • Article 279A of the Constitution empowers the President to constitute a joint forum of the Centre and States namely, Goods & Services Tax Council (GST Council).
    • The provisions relating to GST Council came into force on 12th September, 2016. President constituted the GST Council on 15th September, 2016.
    • The Union Finance Minister is the Chairman of this Council and Ministers in charge of Finance/Taxation or any other Minister nominated by each of the States & UTs with Legislatures are its members. Besides, the Union Minister of State in charge of Revenue or Finance is also its member.
    • The function of the Council is to make recommendations to the Union and the States on important issues like tax rates, exemptions, threshold limits, dispute resolution etc. The GST Council has decided the threshold exemption, composition threshold, GST rates, GST legislations including rules and notifications

Click Here to Download GST Constitution (101st Amendment) Act, 2016

History of GST India

It has now been more than a decade since the idea of national Goods and Services Tax (GST) was mooted by Kelkar Task Force in 2004. The Task Force strongly recommended fully Integrated GST on national basis.

Subsequently, the then Union Finance Minister, Shri P. Chidambaram, while presenting the Central Budget (2007-2008), announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and continued to be shrouded by the clouds of uncertainty.

The talks of ushering in GST, however, gained momentum in the year 2014 when the NDA Government tabled the Constitution (122nd Amendment) Bill, 2014 on GST in the Parliament on 19th December, 2014. The Lok Sabha passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016. Subsequent to ratification of the Bill by more than 50% of the States, Constitution (122nd Amendment) Bill, 2014 received the assent of the President on 8th September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of GST in India.

In the following year, on 27th March, 2017, the Central GST legislations – Central Goods and Services Tax Bill, 2017, Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills on 29th March, 2017 and with the receipt of the President’s assent on 12th April, 2017, the Bills were enacted. The enactment of the Central Acts is being followed by the enactment of the State GST laws by various State Legislatures. Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar are among the first ones to pass their respective State GST laws.

Government is endeavoring to roll out GST by 1st July, 2017, by achieving consensus on all the issues relating thereto. It is geared to attain July 1 deadline for implementation of GST across India.

GST is a path breaking indirect tax reform which will create a common national market by dismantling inter-State trade barriers. GST has subsumed multiple indirect taxes like excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc.

France was the first country to implement GST in the year 1954. Within 62 years of its advent, about 160 countries across the world have adopted GST because this tax has the capacity to raise revenue in the most transparent and neutral manner.

Click Here to Download GST Constitution (101st Amendment) Act, 2016

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