Goods and Services Tax Constitutional Provisions and Amendments

Constitutional background

Goods and Services Tax Constitutional Provisions and Amendments: The Goods and Services Tax (GST) marked a historic shift in India’s taxation structure. It replaced multiple indirect taxes like excise duty, VAT, and service tax with a single tax. To enable GST, major constitutional amendments were required, resulting in the 101st Constitutional Amendment Act, 2016.

Static GK fact: GST was implemented nationwide on 1st July 2017, known as GST Day.

122nd Constitutional Amendment Bill

The journey started with the 122nd Amendment Bill, 2014. It was passed by the Lok Sabha in May 2015 and later approved by the Rajya Sabha on 3rd August 2016. With over 15 states ratifying it, the Bill received the President’s assent on 8th September 2016, leading to the enforcement of the 101st Constitutional Amendment Act.

Static GK fact: Constitutional amendments require passage by both Houses of Parliament and ratification by at least half of the states.

Creation of GST Council

Article 279A mandated the creation of a GST Council within 60 days of the amendment. The notification was issued on 10th September 2016, and the Council came into force on 12th September 2016. The Union Cabinet approved its headquarters in New Delhi.

Composition of the Council

The GST Council under Article 279A(2) includes:

• Union Finance Minister as Chairperson
• Union Minister of State for Finance/Revenue
• Finance Ministers of all States
• In case of Article 356, a nominee of the Governor

Static GK fact: The GST Council is often termed as a “federal decision-making body” in taxation.

Functions of the Council

Article 279A(4) empowers the Council to recommend:

• GST rates and exemptions
• Model GST laws and principles
• Place of supply rules
• Thresholds for registration
• Special provisions for natural calamities and special category states

Decision-making process

Most decisions are taken by consensus. If voting is required:

• The Centre has one-third weightage
• States collectively hold two-thirds weightage
• A proposal passes with 75% weighted votes

Key decisions of GST Council

Since its first meeting in September 2016, the Council has made several crucial decisions:

• Introduction of e-Way Bill System
• Reduced GST on electric vehicles from 12% to 5%
• Launch of e-Invoicing for firms with ₹5 crore+ turnover
• COVID-19 relief measures with lower GST rates on medical items
• Establishment of GST Appellate Tribunal (GSTAT)
• Rate rationalization reducing items under 28% slab from 227 to 35
• Approval of QRMP scheme for small businesses
• Exemption of GST on gene therapy and voucher transactions in the 55th meeting

Impact of GST

GST created a unified national market by removing cascading taxes. It simplified compliance through online returns and digital invoicing. The GST Council ensured cooperative federalism by involving both Centre and States in decision-making.

Static GK Tip: France was the first country to implement GST in 1954, followed by more than 160 countries worldwide.

Static Usthadian Current Affairs Table

Goods and Services Tax Constitutional Provisions and Amendments: