Download Legislative history-The Constitution (One Hundred and Twenty

GST
What is GST?
GST is uniform single indirect tax regime throughout the country that has subsumed central and state indirect taxes into
single indirect tax. It aims to remove indirect tax barriers across states and integrate the country into a single common
market, boosting government revenue and reducing business costs. The Constitution (One Hundred and First
Amendment) Act, 2016 gives the constitutional status to GST. It was 122nd amendment bill. GST was first
recommended by the Kelkar committee task force.
What is GST Council? The council is a constitutional body. As per Article 279A of the Constitution, GST Council
will be a joint forum of the Centre and the States. It shall consist (i) Union Finance Minister (Chairperson). (ii) The
Union Minister of State (MoS) in-charge of Revenue of finance (Member) and (ii) The Minister In-charge of taxation or
finance or any other Minister nominated by each State Government (Members).
What are the functions of GST Council? The functions of GST Council are mention in Article 279A (4) of the
Constitution. The Council will make recommendations to Union and States on important issues related to GST, like (i)
Goods and services that may be subjected or exempted from GST. (ii) Model GST Laws. (iii) Principles that govern
Place of Supply, threshold limits, GST rates. (iv) GST rates will including the floor rates with bands and (v) Special
rates for raising additional resources during natural disasters/ calamities, special provisions for certain States, etc.
Outcomes of Meeting based on consensus
Compensation of states due to loss of revenue after implementation of GST from 1 April 2017. Secular growth rate of
14% will be taken into consideration for calculating the revenue of each state in the first five years of implementation of
the GST. Base year for calculating the revenue of states will be 2015-16. States getting lower revenue will be
compensated by the Centre. These states will be compensated fund to be created from the Cess on top of the GST on
ultra-luxury items and demerit goods. The rate structure will be revenue-neutral so that there is no need to burden
consumers with additional tax. It will not lead to further inflation.
Good items along with other 50% items of common usage to be exempted from the tax to keep the inflation under
check.
Background-An empowered committee was set up by the Atal Bihari Vajpayee administration in 2000. In his budget
speech in 2006, P. Chidambaram, the then Finance Minister, announced the target date for implementation of GST to be
1 April 2010 and formed another empowered committee of State Finance Ministers to design the roadmap. The
committee submitted its report to the government in April 2008 and released its First Discussion Paper on GST in India
in 2009.
Legislative history-The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 was introduced in
the Lok Sabha by Finance Minister Arun Jaitley on 19 December 2014, and passed by the House on 6 May 2015. In the
Rajya Sabha, the bill was referred to a Select Committee on 14 May 2015. The Select Committee of the Rajya Sabha
submitted its report on the bill on 22 July 2015. The bill was passed by the Rajya Sabha on 3 August 2016, and the
amended bill was passed by the Lok Sabha on 8 August 2016.The bill, after ratification by the States, received assent
from President Pranab Mukherjee on 8 September 2016, and was notified in The Gazette of India on the same date.
Ratification-The Act was passed in accordance with the provisions of Article 368 of the Constitution, and has
been ratified by more than half of the State Legislatures, as required under Clause (2) of the said article. On 12
August 2016, Assam became the first state to ratify the bill, when the Assam Legislative Assembly unanimously
approved it.