Meaning and Objectives of GST

One Nation, One Tax

Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. The primary objective of GST is to unify the indirect tax system in India, creating a common national market.

Subsuming of Indirect Taxes

GST has subsumed various Central and State level taxes such as:

• Central Excise Duty
• Service Tax
• Value Added Tax (VAT)
• Central Sales Tax (CST)
• Octroi and Entry Tax
• Purchase Tax, and others

This consolidation simplifies the tax structure and eliminates the cascading effect of taxes.

Constitutional Amendments for GST

Constitution (101st Amendment) Act, 2016

The GST was introduced through the 101st Constitutional Amendment Act, which came into effect on 1st July 2017. This amendment enabled both the Centre and States to levy and collect GST.

Insertion of Articles 246A, 269A, 279A

• Article 246A: Empowers both Parliament and State Legislatures to make laws on GST.
• Article 269A: Deals with the levy and collection of GST on inter-State trade and commerce.
• Article 279A: Provides for the constitution of the GST Council to recommend rates and policy matters related to GST.

Article 246A

Concurrent Power to Legislate on GST

Article 246A grants simultaneous powers to both the Parliament and the State Legislatures to make laws with respect to GST. This marks a significant departure from the traditional distribution of legislative powers under the Constitution of India.

CGST, SGST, IGST

• CGST (Central GST): Levied by the Central Government on intra-state supplies.
• SGST (State GST): Levied by the State Governments on intra-state supplies.
• IGST (Integrated GST): Levied by the Central Government on inter-state supplies, imports, and exports.

Article 269A

Levy and Collection of IGST on Inter-State Supply

Article 269A authorizes the Central Government to levy and collect IGST on inter-state trade or commerce, including imports into India.

Apportionment of IGST

The IGST collected is to be shared between the Centre and the State(s) as per the recommendations of the GST Council. The apportionment is based on the destination-based consumption principle.

Article 279A

Constitution of Goods and Services Tax Council (GST Council)

Article 279A provides for the establishment of the GST Council by the President within 60 days from the commencement of the 101st Amendment Act.

Functions of GST Council

• Recommend the tax rates, exemption list, and threshold limits.
• Suggest model GST laws, principles of levy, and apportionment of IGST.
• Promote harmony among the Centre and States regarding GST implementation.