The 101st Constitutional Amendment Act, 2016, introduced the Goods and Services Tax (GST) in India, a landmark tax reform that aimed to unify the country’s fragmented tax system and enhance the ease of doing business.
Significance of the 101st Constitutional Amendment Act:
- Unified Tax System: GST replaced multiple indirect taxes levied by the central and state governments, simplifying the tax structure and reducing the cascading effect of taxes.
- Boost to Economy: By streamlining the tax regime, GST aimed to boost economic growth and increase the overall tax revenue.
- Enhanced Compliance: With a unified tax structure and online procedures, GST improved tax compliance and reduced tax evasion.
- Input Tax Credit: Businesses can now avail input tax credit across goods and services, promoting efficiency and reducing costs.
- Inter-state Trade: GST eliminated state barriers, promoting seamless inter-state trade and commerce by abolishing entry taxes.
Accommodative Spirit of Federalism:
- Dual GST Model: India adopted a dual GST model, with both the Centre and States having the power to levy and collect taxes.
- GST Council: A constitutional body, the GST Council, was established to make recommendations on tax rates and other issues. It comprises representatives from both the Centre and States, ensuring cooperative federalism. copyright©iasexpress.net
- Revenue Sharing: The Act provides a mechanism for sharing GST revenue between the Centre and States, ensuring that no state is at a loss.
- Compensation to States: For any revenue loss due to the implementation of GST, states are assured compensation for a period of five years.
In conclusion, the 101st Constitutional Amendment Act is significant as it transformed India’s indirect tax system, promoting economic growth and simplifying the tax structure. Its provisions, such as the establishment of the GST Council and the dual GST model, reflect the accommodative spirit of federalism, ensuring a balance between the powers of the Centre and States.