Which Constitutional amendment led to the introduction of the Goods and Services Tax (GST) in India?

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  1. 61st Amendment
  2. 101st Amendment
  3. 86th Amendment
  4. 100th Amendment

Answer (Detailed Solution Below)

Option 2 : 101st Amendment
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The correct answer is 101st Amendment.

Key Points

  • The 101st Constitutional Amendment Act was passed by the Parliament of India in August 2016.
  • This amendment led to the introduction of the Goods and Services Tax (GST), which came into effect from 1st July 2017.
  • GST replaced multiple indirect taxes like VAT, service tax, excise duty, etc., with a single tax regime.
  • The amendment aimed to streamline the tax structure and enhance the efficiency of the tax system in India.
  • The GST Council was established under this amendment to make recommendations on various GST-related issues.

Additional Information

  • Goods and Services Tax (GST)
    • GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
    • It is divided into Central GST (CGST), State GST (SGST), Integrated GST (IGST), and Union Territory GST (UTGST).
    • GST has subsumed numerous indirect taxes such as excise duty, VAT, service tax, and more.
    • It simplifies the taxation system and reduces the cascading effect of taxes by allowing seamless input tax credit.
    • The GST regime aims to create a unified market and promote economic growth by reducing tax evasion and enhancing transparency.
  • GST Council
    • The GST Council is a constitutional body established under Article 279A.
    • It comprises the Union Finance Minister, the Union Minister of State for Finance, and the Finance Ministers of all states.
    • The council is responsible for making recommendations on aspects like tax rates, exemptions, thresholds, and other matters related to GST.
    • Decisions in the GST Council are made by a majority of not less than three-fourths of the weighted votes of the members present.
  • Input Tax Credit (ITC)
    • ITC allows businesses to claim the tax paid on purchase of goods and services used for business purposes.
    • It helps in reducing the overall tax liability and ensures that tax is paid only on the value addition.
    • ITC is available for both goods and services under the GST regime.
  • GST Rates
    • GST has multiple rates ranging from 0%, 5%, 12%, 18%, to 28%, based on the type of goods and services.
    • Luxury items and sin goods attract higher tax rates, whereas essential goods and services are taxed at lower rates.
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