Imagine going shopping across different states in India, and each time, you’re hit with different taxes, confusing rules, and separate bills for central and state charges.Now imagine if all of this was replaced by one simple tax, no matter where you are in India. Sounds easier, right? That’s exactly what the 101st Constitutional Amendment tried to achieve.
Let’s walk through this game-changing reform : “ One Nation, One Tax “
What is the 101st Constitutional Amendment ?
The 101st Constitutional Amendment Act, 2016, is the legislation that introduced the Goods and Services Tax (GST) in India. GST is a comprehensive indirect tax that replaced a long list of central and state taxes like VAT, service tax, excise duty, and more.
This Amendment was notified on 8th September 2016, and GST officially rolled out on 1st July 2017.
But before we go deeper,
Quick Poll:
How many types of taxes did you pay the last time you bought something online or at a restaurant?
- A) One
- B) Two or more
- C) No idea
(Don’t worry—most people would say C. And that’s why GST was needed)
Why Did India Need GST?
Before GST, India’s tax structure was messy and complicated. Let’s break it down:
- There were multiple layers of taxation: Central taxes (like excise, service tax) and State taxes (like VAT, entertainment tax).
- A product often went through “tax on tax”, called cascading of taxes.
- Doing business across states meant dealing with different tax laws—a nightmare for businesses.
Let’s Simplify with an Example:
Suppose you buy a chocolate bar for ₹100.
Before GST:
- Excise duty = ₹10
- VAT = ₹15 (on ₹110, including excise)
- Final Price = ₹125
After GST:
- Single GST = 18%
- Final Price = ₹118
One nation, one tax, one market—that’s what GST brought in.
What Did the 101st Amendment Actually Do?
This Amendment empowered both the Centre and States to levy GST. Let’s list the key features:
1 Article 246A – Special power to make laws on GST
- A new Article was added to give simultaneous powers to the Centre and States to make laws on GST.
- Normally, the Centre makes laws for the Union list and the States for the State list. But GST falls into both.
2. Article 269A – Levy and Collection of GST on Inter-State Trade
- When goods or services move between states, it’s called inter-state trade.
- The tax here is called IGST (Integrated GST), collected by the Centre and later shared with States.
3. Article 279A – The GST Council
- A brand-new body called the GST Council was set up.
- It includes:
- Union Finance Minister (Chairperson)
- State Finance Ministers
- This council decides tax rates, exemptions, thresholds, and rules for GST.
4. Compensation to States – A Temporary Promise
- Some states feared they would lose revenue.
- So the Amendment promised compensation for 5 years (2017–2022) for any loss in revenue due to GST.
How Was GST Implemented?
After the 101st Amendment was passed:
- The GST Council started meetings to discuss rates, items, and processes.
- Parliament passed four important GST laws in 2017.
- States also passed their own GST laws.
- Finally, on the midnight of June 30, 2017, GST was launched in a grand session in Parliament.
Did You Know?
GST was called a “Good and Simple Tax” by PM Narendra Modi during its launch.
What Changed After GST?
Here’s how GST made a difference:
| Before GST | After GST |
| Different taxes in different states | One tax across India |
| Multiple returns, registrations | Unified online portal (GSTN) |
| Cascading taxes | Input tax credit to avoid double taxation |
| Complex logistics | Seamless interstate trade |
But Was It All Smooth? Not Really.
No reform is perfect. GST faced challenges:
1. Technical Glitches:
The online GST portal (GSTN) had bugs in the beginning, making it hard for businesses to file returns.
2. Compliance Burden:
Small businesses had to file multiple returns every month—initially three! Now it’s simplified.
3. Frequent Rate Changes:
The GST Council kept tweaking tax rates, causing confusion for businesses and consumers.
4. Revenue Loss in Some States:
States like Punjab and Kerala feared a dip in tax collection and sought more compensation.
Was GST Worth It?
Despite hiccups, GST has had some major wins:
Pros:
- Increased tax compliance
- Boosted formal economy
- Improved ease of doing business
- Helped create a common national market
Cons:
- Complex for small traders
- Slower revenue growth in initial years
- Still not a true “one rate” GST—multiple slabs exist (5%, 12%, 18%, 28%)
What Can We Expect in the Future?
The GST system continues to evolve. Some upcoming reforms may include:
- Merging the multiple tax slabs into fewer categories
- Bringing petroleum products and alcohol under GST
- Simplifying compliance further for small businesses
- Strengthening AI-driven tax tracking for better enforcement
Let Me Sum Up things for you
The 101st Constitutional Amendment wasn’t just about taxes. It was a historic step toward a unified economic structure in India. By replacing a complex, layered tax system with a single indirect tax, India showed its readiness to modernize its economy.
GST may not be perfect yet, but it’s undoubtedly a major leap forward—and the 101st Amendment laid its foundation.
