101 Constitutional Amendment Act

By : Neha Dhyani

Updated : Mar 23, 2022, 4:43

The 101 Constitutional Amendment Act was instrumental in ushering in the Goods and Services Tax (GST) in India. The Goods and Services Tax replaced all the erstwhile indirect taxes that were levied on the manufacture, sale, and consumption of goods and services across the country. For example, excise duty, Octroi tax, customs duty, service tax, entry tax, entertainment tax, etc., were all superseded by the GST, making it a single indirect tax.

101 Constitutional Amendment Act - Overview

Since GST involved a complete tax regime change and restructuring of central as well as state taxes, the responsibility to prepare a road map for the implementation of the GST 101 amendment was handed down to the Empowered Committee of State Finance Ministers (EC).

The EC proposed to have two GST components, the central GST to be levied and collected by the centre and the state GST to be levied and collected by the states. The Constitutional 101 Amendment Act 2016 was passed by the Parliament, and after some ratifications put together by the states, the President of India gave assent to the bill.

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101 Constitutional Amendment Act - India’s Tax System

The Constitution 101 Amendment Act 2016 ensued the amendment and insertion of certain articles of the Constitution to bring about comprehensive enactment of GST:

  • Creation of GST Council

Article 279A empowered the President of India to create GST Council with members from the Centre and the States. It is an apex forum authorized to create, modify, or remove any law based on GST 101 amendment.

  • Special Provision for GST

Article 246A was inserted in the Constitution to validate the Parliament and the State legislatures to make laws on GST. However, for inter-state supplies, the Parliament of India was awarded exclusive power to make laws. Additionally, crude petrol, natural gas, motor spirit, high-speed diesel, and aviation fuel were excluded from the scope of GST.

  • GST on Inter-State Supply

Article 269A covers how the revenue from inter-state supplies is shared between the centre and the state and authorizes the GST Council to make laws regarding this. Import of goods or services is also considered inter-state supplies, and the central government imposes IGST on it.

  • Restrictions on Levying Tax on Services

Article 286 was already in place and restricted state governments from passing any law to levy tax on the sale or purchase of goods. After Constitution 101 Amendment Act 2016, the restriction extended to prevent the state governments from passing any laws on services.

  • Important Definitions

Article 366, an existing article, was amended to include the definitions of GST, Services, and State.

  • Revenue Compensation

The GST 101 Amendment also provides for relief to states due to the revenue loss emanating from the implementation of GST.

  • Changes in the 7th Schedule of the Constitution

It contains 3 lists that mention the subjects on which the union and the state governments can make laws. Appropriate changes were made to the list to facilitate smooth GST implementation.

The 101 Constitutional Amendment Act heralded a new chapter in India’s tax regime. GST 101 Amendment minimized tax burden on small companies and reduced corruption, instilling order and accountability in the unorganized sector.

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FAQs on 101 Constitutional Amendment Act

Q.1. When was the 101 Constitutional Amendment Act officially launched in India?

After the Constitution 101 Amendment Act 2016 was cleared, GST came into force from 1st July 2017 in India.

Q.2. What does the 101 Constitutional Amendment Act mean?

GST refers to Goods and Services Tax which is levied on the supply of goods, services, or both. It replaced other indirect taxes in India after the implementation of the 101 Constitutional Amendment Act.

Q.3. Name the minister who introduced the GST 101 Amendment Bill in Parliament?

Arun Jaitley, the Finance Minister at the time, introduced the bill in the Lok Sabha.

Q.4. How many types of GST 101 Amendment exist?

There are four types: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST), and Union Territory Goods and Services Tax (UTGST).