“Our aim is Economical and educational empowerment of the poor. GST can help us achieve this aim.”
-By Narendra Modi
The path towards Goods and Services Tax (GST), the biggest indirect reform, has picked up tremendous speed with the passage of Constitutional (122nd Amendment) Bill, 2014 in both the houses of Parliament in August, 2016, thereby increasing the possibility of long-awaited GST being implemented soon. Lok Sabha passed the bill on 6th May, 2015 and the same was passed in Rajya Sabha on 3rd August, 2016. On 08.09.2016, the Indian Constitution was amended by 101st Constitutional Amendment Act, 2016 for implementing GST and by this amendment Article 246A of the Constitution empowered the Central and States to levy and collect the GST. The idea of GST was first conceptualized by a German Businessman Mr. Wilhelm Von Siemens. Almost 150 countries in the world have GST system. On 15.09.2016 notification for constituting GST was passed and journey of GST started. On 01.07.2017 it will finally be rolled out expectedly.
This IT-enabled system will unify the tax market, reduce the cascading effect of tax on cost of goods and services, allowing all stakeholders to get benefited. Presently in terms of Article 246 and Schedule VII of the Constitution of India, we have three lists, the Union List, the State List, and the Concurrent List. Under the Union List, only the Central Govt can levy taxes, taxes on State List can be levied by State Govt and under the Concurrent List, Center and State Govt can levy taxes. The credits of taxes paid to Central Govt. are not available to States and vice-versa creating cascading effect of taxes, i.e. tax on tax. Multiple taxes inflates the cost of goods which restricts the growth of economic development. India is looking at some simplification, clarification and uniformity in indirect taxes which is exactly what is called GST.
This big game changer will bring all major taxes levied under indirect taxes, i.e. Central Excise, Service Tax, VAT/CST under its ambit.
