Explain the salient features of the Constitution (One Hundred and First Amendment) Act, 2016. Do you think it is efficacious enough ‘to remove cascading effect of taxes and provide for a common national market for goods and services’? (250 words)
The Constitution (One Hundred and First Amendment) Act, 2016 introduced the Goods and Services Tax (GST) in India, aiming to streamline the taxation system and eliminate the cascading effect of taxes. The salient features of this amendment include:
- Unified Tax System: Subsuming various indirect taxes such as excise duty, service tax, VAT, and others into a single GST.
- Constitutional Amendment: Empowering the Parliament and state legislatures to implement GST tax regulations for inter-state trade.
- GST Council: Establishing a council consisting of the Union Finance Minister and representatives from all states to decide on GST rates, taxes to be subsumed, goods and services to be covered, and more.
- Compensation to States: Providing compensation to states for any revenue loss due to the implementation of GST for a five-year period.
The GST system has been efficacious in removing the cascading effect of taxes and providing a common national market for goods and services. It has created a unified tax regime by eliminating multiple taxes imposed at different stages of production, ultimately reducing the tax burden on the final consumer. Additionally, GST has helped create a unified common national market for India, boosting foreign investment and preventing the cascading effects of taxes.
However, some challenges remain. For instance, exemptions provided to certain goods or services may limit the benefits of a national market for goods and services. Despite these challenges, the implementation of GST has marked a significant step towards achieving a simplified and unified indirect tax system in India.
