After facing 17 years of political set-backs and missing several deadlines, India’s biggest tax reform – the Goods and Services Tax (GST) was launched on July 1, 2017. On successful completion of its one month, we provide you with a timeline of the most historic moments that culminated into the ‘one nation, one tax’ system in India.
Readers must note that though the term GST was first introduced in 2000 by the then Prime Minister Atal Bihari Vajpayee, the idea behind it – restructuring of excise taxation – was initially proposed in the union budget for 1986-87 by the then finance minister Vishwanath Pratap Singh.
History of GST: A timeline
- Discussions on GST begin and the Empowered Committee for GST is set up. Prime Minister Atal Bihari Vajpayee introduces the concept of GST, and sets up a committee to design a GST model. The then Finance Minister (FM) of West Bengal, Asim Dasgupta, is appointed as the head of the committee.
- Vijay Kelkar committee recommends tax reforms, highlights the importance of comprehensive GST. A task force chaired by Vijay Kelkar, then advisor to the finance ministry, proposes a comprehensive GST to deal with the myriad problems and complications suffered by India’s taxation system.
- Vijay Kelkar committee recommends that GST replace the existing indirect tax structure.
- GST appears in the union budget speech for the first time; the first deadline for GST implementation is set. Finance Minister P. Chidambaram sets April 1, 2010 as the deadline for implementing GST in India and announces preparation of a road map for GST.
- Empowered Committee of State Finance Ministers is constituted to prepare the road map for GST. The committee submits a report titled ‘A Model and Roadmap for Goods and Services Tax (GST) in India’ to the government.
- The GST discussion paper is published online to encourage debate on GST with various stakeholders. The next federal FM, Pranab Mukherjee, announces the basic structure of GST as designed by the Empowered Committee; retains 2010 deadline. The Bhartiya Janata Party (BJP) opposes the basic structure of the GST.
- Project on computerization of commercial taxes is launched to lay the foundation for GST rollout; the GST deadline is postponed to April 1, 2011.
- The Congress party introduces 115th Constitution Amendment Bill in the lower house of parliament to implement GST.
- A meeting is held between the federal FM and state FMs to resolve matters related to GST transition. December 31, 2012 is set as the deadline to clear all GST-related issues.
- In the annual budget, the Congress-led government introduces a corpus of US$1.4 billion (Rs 90 billion) to compensate states for losses to be incurred due to GST.
- The Parliamentary Standing Committee suggests amendments to the GST Bill, which is approved with recommendations to change the provision of the tax structure and dispute resolution mechanism. The GST Bill is ready to be introduced in the parliament.
- Narendra Modi, as then Chief Minister (CM) of Gujarat state, opposes the GST Bill in the parliament. The CM voices concerns regarding revenue losses to the states.
- The Bill lapses as the lower house of parliament dissolves. BJP-led National Democratic Alliance (NDA) government comes to power with an overwhelming mandate. Narendra Modi is elected the new Prime Minister of India.
- The GST Bill is reintroduced in the lower house as the 122nd Constitution Amendment Bill, by the newly elected NDA government; the Congress party insists that the Bill should be reviewed by the Standing Committee again.
- The lower house of parliament passes the GST Amendment Bill, and the Bill is moved to the upper house.
- The Amendment Bill fails to receive two-third majority votes in the upper house – the minimum number of votes for a bill to be passed in upper house. The Bill is forwarded for approval to a joint committee comprising of members from the upper house and lower house.
- Later, the GST Bill is passed in the upper house by a two-third majority. An arrangement is agreed whereupon GST will be levied by both federal and state governments on the consumption of goods and services in India. The GST gets approved as a single tax to subsume all indirect taxes, including service tax and excise tax.
- The GST Bill gets Presidential assent; 16 out of 32 states and union territories ratify the GST Bill. The GST Council is formed, and meets for the first time on September 22-23.
- The GST Council agrees on a four-slab GST tax structure of 5, 12, 18, and 28 percent with an additional cess on luxury and demerit goods such as tobacco and aerated drinks. GST portal goes live and a registration schedule is released for existing taxpayers.
- The FM announces July 1, 2017 as the deadline for GST roll-out.
- The GST Council finalizes the draft Compensation Bill – to make up for the revenue loss to states in the first five years of GST roll-out.
- The union cabinet approves the four key GST bills – Central GST, Integrated GST, State GST and Union Territory GST. Bills are introduced in the lower house.
- GST Council announces rates for over 1,200 categories of goods and services, fitting them in the tax slabs of 5, 12, 18, and 28 percent. A separate cess on luxury and demerit goods is announced to fund the compensation for states.
- All states except Jammu and Kashmir (J&K) pass the SGST law.
June 30 – July 1 midnight, 2017
- GST is rolled out nationwide, except in J&K.
July 7, 2017
- J&K state assembly passes state GST Bill while safeguarding state’s taxation rights enshrined in the J&K constitution.
August 3, 2017
- The lower house of parliament passes two Bills extending CGST and IGST to the state of J&K to ensure greater economic integration of the state with rest of the country.
Editor’s Note: The article was first published on August 2, 2017 and has been updated on August 3, 2017 as per the latest developments.
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