Jonah Patel
The Constitutional (122nd Amendment) Bill, 2014, also known as the GST Constitutional Amendment Bill, was introduced in the Indian Parliament to enable the introduction of the Goods and Services Tax (GST). The Bill proposed amendments to the Constitution to give simultaneous power to the Parliament and State Legislatures to make laws governing GST and create a GST Council. The GST Council is a constitutional body responsible for making recommendations and deciding issues related to the implementation of GST in India. The Bill was passed by the Rajya Sabha and Lok Sabha in August 2016 and received the President's assent on September 8, 2016, becoming the 101st Constitution Amendment Act. The GST was eventually launched nationwide on July 1, 2017, subsuming 17 central and state taxes and creating a unified market for India's $2.4 trillion economy.
| Characteristics | Values |
|---|---|
| Name of the bill | Constitutional (122nd Amendment) Bill, 2014 |
| Abbreviation | CAB |
| Purpose | To enable the introduction of GST |
| Passed by Rajya Sabha on | 3rd August 2016 |
| Passed by Lok Sabha on | 8th August 2016 |
| Assented by President | 8th September 2016 |
| Enacted as | 101st Constitution Amendment Act, 2016 |
| Creation of | GST Council, GST Council Secretariat, and posts of Additional Secretary and Commissioners in the GST Council Secretariat |
| Continuation of | Levy of excise duty on five petroleum products and tobacco products |
| Abolition of | Entertainment tax |
| Amendment of | Article 246A, Article 269A, Article 366 |
| Insertion of | Definitions of Goods and Services Tax in Article 366 |
| Exclusion from GST | Supply of alcoholic liquor for human consumption |
| First meeting of GST Council | 22nd and 23rd September 2016 |
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What You'll Learn
The GST Council
The creation of the GST Council was a result of the Constitutional (122nd Amendment) Bill, 2014, which was introduced in the Parliament to enable the introduction of GST. The Bill was passed by the Lok Sabha in May 2015 and by the Rajya Sabha on 3 August 2016, with certain amendments. It was then passed again by the Lok Sabha on 8 August 2016, and received assent from the President on 8 September 2016. This Act conferred simultaneous power upon Parliament and the State Legislatures to make laws governing GST and create the GST Council. As per Article 279A(1) of the amended Constitution, the GST Council had to be constituted by the President within 60 days of the commencement of the Amendment Act.
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Amendments to Articles 246A and 269A
The GST (Goods and Services Tax) Council is a constitutional body responsible for making recommendations on issues related to the implementation of the GST in India. The GST Council is a joint forum of the Centre and the States, with the Minister In-charge of finance or taxation of each State Government as its members.
The insertion of Article 246A of the Constitution of India gave powers to the State and Union Legislatures, along with Parliament, to make and amend GST laws. Parliament has been given special powers over the states to make laws regarding inter-state supplies. The IGST Act deals with interstate supplies, and certain petroleum products are excluded from the article until the time recommended by the GST Council.
The 122nd Constitutional Amendment Bill, 2014, was introduced in Parliament to amend the Constitution and enable the introduction of GST. The Bill was passed by the Lok Sabha in May 2015 and by the Rajya Sabha on 3 August 2016, with certain amendments. The Bill received the assent of the President on 8 September 2016 and was enacted as the 101st Constitutional Amendment Act, 2016. This Act conferred simultaneous power on Parliament and the State Legislatures to make laws governing GST and create the GST Council.
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Tax on supply of goods and services
The Goods and Services Tax (GST) is a tax on the supply of goods, services, or both. It was introduced in India via the Constitutional (122nd Amendment) Bill, 2014, which was passed by the Lok Sabha in May 2015 and by the Rajya Sabha on 3rd August 2016. The Bill was then passed by more than 15 states and received presidential assent on 8th September 2016.
The GST replaced the existing tax system, which allowed the Centre and States to levy separate taxes. The GST, on the other hand, is levied in such a way that both the Centre and the States have the power to levy and collect it. This required an amendment to the Constitution, which resulted in the insertion, deletion, and modification of certain Articles.
One of the key changes was the amendment to Article 366, which now defines the Goods and Services Tax as a tax on the supply of goods, services, or both. The term 'supply' replaces 'sale or purchase', and the GST applies to both intrastate and interstate transactions.
The GST also led to changes in the taxation of certain goods. For instance, excise duty continues to be levied on five petroleum products, tobacco, and tobacco products, in addition to GST. Entertainment tax was also abolished, except where levied by local bodies.
The GST Council, a joint forum of the Centre and the States, is responsible for making recommendations on issues related to the implementation of the GST, including tax rates, exemptions, thresholds, and administrative procedures. The Council has been instrumental in shaping India's tax landscape and driving economic growth.
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Tax exemptions
The GST Council is a constitutional body that makes recommendations on issues related to the implementation of the Goods and Services Tax (GST) in India. The Council meets periodically to deliberate and decide on various issues related to GST, including tax rates, exemptions, thresholds, and administrative procedures.
The GST Council has approved several tax exemptions since its inception. Here are some key examples:
- Electric Vehicles and Buses: In its 36th meeting, the GST Council approved a reduction in GST rates on all electric vehicles from 12% to 5%. Additionally, electric buses with an occupancy capacity of more than 12 people were exempted from GST.
- Gene Therapy: The GST Council recommended a full exemption from GST on gene therapy in its 53rd and 55th meetings.
- COVID-19 Relief: During the COVID-19 pandemic, the GST Council approved the rationalization of duty on specified COVID-related goods in its 43rd and 44th meetings.
- Vouchers: The GST Council decided that no GST would be levied on transactions of vouchers as they are neither considered a supply of goods nor services.
- Petroleum Products: Excise duty continues to be levied on five petroleum products: petroleum crude, high-speed diesel, motor spirit, natural gas, and aviation turbine fuel. However, states also have the power to levy taxes on these products.
- Entertainment Tax: Entertainment tax was abolished except where it is levied by local bodies.
- Alcoholic Liquor: The supply of alcoholic liquor for human consumption is excluded from the purview of GST.
These tax exemptions approved by the GST Council aim to promote specific sectors, provide relief during the pandemic, simplify taxation, and address various economic and social considerations.
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Administrative procedures
The GST Council is responsible for making recommendations on issues related to the implementation of the Goods and Services Tax (GST) in India. The Council meets periodically to deliberate and decide on various issues related to GST, taking decisions through a consensus-based approach.
The GST Council is a joint forum of the Centre and the States, with the Minister In-charge of finance or taxation of each State Government as members. The Council also includes the Secretary (Revenue) as the Ex-officio Secretary to the GST Council, and the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting).
The GST Council has approved various measures to facilitate trade and simplify compliance. For example, it has recommended changes in the formula for calculating refunds, waived late fees for filing returns, and suggested additional modes for paying taxes. The Council has also recommended the creation of the Goods and Services Tax Appellate Tribunal (GSTAT) and an amnesty scheme for filing appeals against demand orders.
To ensure smooth implementation, a Joint Working Group consisting of officers from the Central and State Governments was formed. This group was further divided into three Sub-Working Groups to work on draft legislation, processes/forms, and IT infrastructure development. Additionally, an Empowered Group for IT Systems development was established under the leadership of Dr. Shruti Negi.
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Frequently asked questions
The GST Constitutional Amendment Bill, or CAB for short, is a bill that was introduced in the Parliament to amend the Constitution to enable the introduction and implementation of the Goods and Services Tax (GST) in India.
The GST Constitutional Amendment Bill was passed by the Rajya Sabha on 3rd August 2016 and by the Lok Sabha on 8th August 2016. It received assent from President Pranab Mukherjee on 8th September 2016.
The purpose of the bill was to make amendments to the Constitution to enable the introduction and implementation of GST in India. This included addressing the delineation of powers to levy and make laws with respect to GST, as well as the manner of providing compensation to states for loss of revenue due to GST.
