India has a three-tier federal structure, comprising the:

  1. Union Government (Central Government)
  2. State Government
  3. Local Government

The power to levy taxes and duties is distributed among the three tiers of Governments, as per the constitution of India.

The constitution of India is the supreme law of India. It consists of:

  • a preamble
  • 25 parts containing 448 Articles
  • 12 Schedules

Article 246:

It gives respective authority to Union and State governments for levying the tax.

The Seventh Schedule to Article 246 contains three lists that enumerate the matters under which the Union and State Governments have the authority to make laws.

Power to levy Goods and Service Tax (GST) has been conferred by Article 246A of the Constitution which was introduced by the Constitution (101st Amendment ) Act, 2016.

Beginning of GST in India:

The first time in the year 2000, the then Prime Minister mooted the idea of GST and set up a committee. Central Government formed a task force under Vijay Kelkar ( Know as Kelkar Committee ), in the year 2003.

Consequently, while presenting the Union Budget (2006-2007) the then Union Finance Minister, Shri P. Chidambaram announced that the GST would be introduced from 1st April 2010.

Since then GST booted many deadlines and continued to be shrouded by the clouds of uncertainty.

Finally, on 1st July 2017 GST was introduced. GST law was extended to Jammu and Kashmir on 8th July 2017.

Indirect Tax Deficiencies before GST

  • Double taxation of a transaction as both goods and services.
  • Non-integration of Value Added Tax (VAT) and Service Tax.
  • There were several taxes in the States, Such as Luxury Tax, Entertainment Tax, etc. which were not included in VAT.
  • No CENVAT (Central Value Added Tax) after the manufacturing stage.
  • Cascading of taxes.

Following Taxes Subsumed under GST

Central Taxes
  • Central Sales Tax
  • Service Tax
  • Central Excise Duty & Additional Excise Duty
  • Excise Duty under the Medicinal & Toilet preparation Act
  • Central surcharges & cesses ( as they relate to supply of goods and services)
  • Countervailing Duty (CVD) and Special Countervailing Duty ( Special CVD)

State Taxes
  • Value Added Tax (VAT)/ Sales Tax
  • Luxury Tax
  • Entertainment Tax ( except charged by local bodies)
  • Entry Tax
  • Taxes on Advertisements
  • State surcharges & cesses ( as they relate to supply of goods and services)
  • Tax on lottery, betting & gambling

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