GST Blog

Goods and Services Tax - Genesis

By J.Prem Bashani, Founder @psquarewisdoms

The passing of The Constitution (One Hundred and First Amendment) Act, 2016 (Levy of GST) by the Parliament on the 8th of September, 2016 is a historic event in the tax administration of India. The collective political will of the legislators in arriving at a consensus to bringing in the constitutional amendment bill is to be lauded. The Nation owes gratitude to the states for their collective wisdom of surrendering this vital authority to the centre for the sake of National good.

The political leadership of all the parties, both regional and national, had shown exemplary wisdom, sagacity and grace to take forward the spirit of our nationhood raising the bar on the assailed virtue of cooperative federalism. This can be worn as a badge of honour for the policy makers of the times in the cause of Nation building. The achievement is politically significant given the subject of taxation finding a place in both union and state lists of the Constitution.

Ever since the dawn of liberalisation of the economies worldwide, and countries having to open up borders to become economically dependent, one nation one market became a necessity. Inevitably, GST got to be the answer. The shift to GST can usher in a new era of transparency, fairness and certainties in taxation, that are an impetus to trade and industry and consequently to the economy and GDP. The cost of compliance of the stake holders will come down significantly making the Indian businesses more competitive. On the revenue side, broader tax base and tax buoyancy is in the offing. That means, a greater leeway for the State to fund social and growth infrastructure. On the governance side, digitalization, efficient rational tax administration and creating conducive environment for doing business is plausible. That can attract investment. The consequential benefits of investment viz. growth and employment are expected to flow.

Historically, the tax administration in modern India before the roll out of GST will be dubbed as pre-GST era. Innumerable tax jurisdictions, many manifestations, cascading taxes, multiple legislations, administrators, tax events, registrations, appellations, never ending litigations and the ignominy of uncertainties marred the pre-GST era. Nevertheless, if documented well, the tax administration was stable and can boast of constant sophistications and continuous evolution any civilization can be proud of. Post-GST, the teething issues of Administrative structure, Control of power, Infrastructure and HR issues will settle down with time. Experiences and demands will further shape and fine tune them. Post GST, we move to a modern tax administration with digital infrastructure, realistic data, superior intelligence, hassle free client interface and more informed policy decisions.


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