Question.
Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of federalism?
(UPSC 2023 General Studies Paper 2 (Main) Exam, Answer in 150 words)
Answer.
New Article 279a ( GST Council) in the constitution was inserted through the 101st Constitutional Amendment Act ( 2016).
GST Council is a constitutional body, which is responsible for making recommendations and implementing "Goods and Service Tax ( GST)" in India.
Significance of the 101st Constitutional Amendment Act (2016):
Simplified or Unified Tax Structure:
GST has replaced indirect taxes like VAT, excise duty, and service tax. It integrated many Central and state indirect taxes. It created a unified national market " One Nation one tax".
Reduced Cascading effect of taxation:
GST helped in reducing the Cascading effect of taxation.
Improved tax compliance:
The GST portal has improved tax compliance and also helped in increasing tax collection to the government.
Formalization of Economy/ Boost to the Economy:
GST has improved the business environment in India and promoted the ease of doing business.
GST reflects the accommodative spirit of federalism:
GST Council:
In the GST Council, both centers and states participate in decision-making. It provides the equal representation of all the states. It reflects the accommodative spirit of federalism.
Dual Structure:
GST is comprised of Central GST ( CGST) and State GST ( SGST). It reflects federalism.
Compensation:
Central government addresses concerns about losses of state revenue due to GST. It reflects the accommodative spirit of federalism.
However, there are some concerns about the GST Council:
Central Government enjoys more power than all States.
States have suffered financial losses due to the implementation of GST, and the Central government has yet to compensate it.
In Summary, despite many challenges, the introduction of GST has made India a business-friendly country. It is a good example of cooperative federalism as it accommodates the spirit of federalism.
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