Which Constitutional amendment led to the introduction of the Goods and Services Tax (GST) in India?

The correct answer is 101st Amendment.

Key Points

• The 101st Constitutional Amendment Act was passed by the Parliament of India in August 2016.
• This amendment led to the introduction of the Goods and Services Tax (GST), which came into effect from 1st July 2017.
• GST replaced multiple indirect taxes like VAT, service tax, excise duty, etc., with a single tax regime.
• The amendment aimed to streamline the tax structure and enhance the efficiency of the tax system in India.
• The GST Council was established under this amendment to make recommendations on various GST-related issues.

Additional Information

• Goods and Services Tax (GST)
  • GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
  • It is divided into Central GST (CGST), State GST (SGST), Integrated GST (IGST), and Union Territory GST (UTGST).
  • GST has subsumed numerous indirect taxes such as excise duty, VAT, service tax, and more.
  • It simplifies the taxation system and reduces the cascading effect of taxes by allowing seamless input tax credit.
  • The GST regime aims to create a unified market and promote economic growth by reducing tax evasion and enhancing transparency.
• GST Council
  • The GST Council is a constitutional body established under Article 279A.
  • It comprises the Union Finance Minister, the Union Minister of State for Finance, and the Finance Ministers of all states.
  • The council is responsible for making recommendations on aspects like tax rates, exemptions, thresholds, and other matters related to GST.
  • Decisions in the GST Council are made by a majority of not less than three-fourths of the weighted votes of the members present.
• Input Tax Credit (ITC)
  • ITC allows businesses to claim the tax paid on purchase of goods and services used for business purposes.
  • It helps in reducing the overall tax liability and ensures that tax is paid only on the value addition.
  • ITC is available for both goods and services under the GST regime.
• GST Rates
  • GST has multiple rates ranging from 0%, 5%, 12%, 18%, to 28%, based on the type of goods and services.
  • Luxury items and sin goods attract higher tax rates, whereas essential goods and services are taxed at lower rates.