India introduced a dual GST structure in the year 2017 to change the whole tax regime of the country in which the main aim of incorporating GST was to eliminate double taxation. But in a democratic country, it’s not easy to change the whole GST system in India in the blink of an eye and so even after introducing the idea of GST it took around 17 years for its implementation. And so to clear your doubt, we at Vyapaar Pundit are here to give you some information about GST, in brief, and the 17-year-long journey of GST via a timeline.
1. Before 2000: While in the world a whole new taxation reform was going on and the immediate reason for the reforms was the need to enhance revenues to meet impending fiscal crises, India still was one of the countries having the same taxation system which was highly fragmented. There were a number of taxes which were charged with different names and due to the absence of any other option citizens were forced to pay those taxes. And with globalization, there was also an increase in the international competition which demanded a new tax regime.
2. Drafting of the GST Law: In the year 2000, the idea of incorporating GST in our Indian taxation system was suggested by the Atal Bihari Vajpayee government. Ensuing this a committee was then formed to design the Goods and Services Tax Model for the country. This committee was headed by Asim Dasgupta, the then finance minister of West Bengal and he headed this committee till the year 2011. Apart from this the representatives of the center and states were requested to make suggestions based on their experience with this GST proposal including exemptions, threshold, taxation on inter-state and intra-state supplies etc.
3. Importance of GST: A task force on Fiscal Responsibility and Budget Management which was headed by Vijay L. Kelkar who was the then advisor to the finance ministry indicated that there were major drawbacks and loopholes in the current taxation system and brought to a close that only a system like GST can mitigate those flaws and proposed a nation wise implementation of fully integrated GST.
4. GST introduction date: During the budget session of 2006-07, the finance minister P. Chidambaram in his speech said that their medium to long-term goal was to implement a uniform GST structure across the country and for this they announced 1st April 2010 as the date for the introduction of this new tax regime.
5. CST to be phased out: In the year 2007, a new bill was passed in Lok Sabha which aimed to phase out CST (Central Sales Tax) in four stages and it would be completely abolished in three years. The annihilation of CST would have paved the path for GST in the upcoming years.
6. Dual GST structure: In India due to its federal structure both the center and state have the power to levy tax on a single transaction. So while making a blueprint of GST it was kept in mind to have a dual structure or levy tax with two different components i.e. if a person makes a transaction then he has to pay two kinds of taxes which are CGST(Central Goods and Services Tax) and SGST(State Goods and Services Tax).
7. GST implementation Postponed: In the year 2010, a decision was taken to computerize the whole Commercial Tax Department (CTD) at the central as well as state level which will eventually help the citizens in availing the online services and will also ease the work of the CTD staff. But because of this, the implementation of GST got postponed by one year.
8. Constitutional Amendment Bill: In March 2011 the Congress government put forth the Constitutional (115th) Amendment Bill, for incorporating the relevant provisions of GST, in the parliament. It is the year for which GST was postponed but due to constant protest by the opposition party, the Bill was sent for examination to the standing committee which held it in abeyance.
9. The Standing committee: After the GST Bill was sent for examination to the standing committee, they began the discussion but it was stalled over clause 279B of the Constitution. This clause empowers the central government with some additional or discretionary powers in event of any dispute or complaints arising out of the recommendation made by the GST council.
10. Standing Committee Report: In August 2013, the standing committee submitted its report to the Parliament. The panel of the committee approved the legislation but also suggested the scope for some amendments. The committee said “What should be included in the laws and rules should not form part of the constitution of India. The present bill relating to GST, in the committee’s view, has not been well drafted from this perspective and, therefore, requires amendments as suggested.”
11. GST bill reintroduced: In May 2014, the Constitutional amendment Bill lapsed with the dissolution of the 15th Lok Sabha and the same year the BJP government came into power at the center. The Constitutional (122nd) Amendment Bill, 2014 on GST was reintroduced in the parliament by the new finance minister Arun Jaitley and this time the opposition demanded that the Bill should be sent to the standing committee for the discourse.
12. GST Bill passes in Lok Sabha: This 122nd Constitutional amendment Bill was eventually passed in Lok Sabha but not in Rajya Sabha. As the Bill was not passed in Rajya Sabha, it was referred to the Joint committee of both houses of the parliament. In addition to this, the finance minister also mentioned that there was no specific cause for not passing the bill.
13. GSTN goes live: A new portal for GST went live, it’ll help easy countrywide enrollment of the taxpayers. The GST Network was preparing the IT backbone to support the new tax regime in the country. The GSTN has collated the basic information through the existing database of the income tax department and the essential information is required to be filled in by the assessee.
14. The Bill was passed in both the houses: Arun Jaitley agrees with Congress's demands but also said that the tax rates are not fixed and if any such unforeseen situation arises in the future, the tax rates can be changed after taking the permission of the parliament. After incorporating the recommendations of the committee and agreeing with congress's demands, the Bill was finally passed in both the houses.
15. Supplementary GST Bills: After a long debate and cross-questioning four supplementary GST bills were passed in Lok Sabha namely:
The Goods and Services Tax (Compensation to States) Bill, 2017
The Union Territory Goods and Services Tax Bill, 2017
The Integrated Goods and Services Tax Bill, 2017
The Central Goods and Services Tax Bill, 2017
After it was passed in Lok Sabha the bill also got approved by the cabinet.
16. Implementation of GST: All four bills got approved in Rajya Sabha and after that, it was sent to the Honorable President of India for his assent. After assent this Constitutional amendment Bill becomes an Act. The Bill got the assent of the President and later on it was declared that it’ll become applicable from 1st July 2017 to the whole country.
CONCLUSION
From this blog, we can get a brief idea about the implementation of GST, and how its journey started since the inception of the idea in the year 2000 and was finally implemented in 2017. It veritably represents the democratic fabric of the country which entails a change of hands in the government regime and factors into account multi-party consensus-building exercises for formulating and implementing a revolutionary reform of the magnitude of GST.
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