GST

History of GST Explained with Timelines

History of GST Explained with Timelines

The launch of GST benefited many stakeholders, namely industry, government, and the consumer, and it turned out to be a win-win situation for the entire nation. GST gave a boost to the economy and made the goods and services globally competitive and even lowered the cost of goods and services, but the journey from a tiresome indirect tax regime to a simplified and user-friendly regime took 10 years to ideate, deliberate, formulate, and implement.

It is a tax regime that integrates the central and local governments, forming a single interface for the taxpayers and is considered one of the biggest experiments in fiscal federalism to keep alive the truest spirit of democracy.

It is a regime where the tax is levied on the supply of goods and services in an integrated manner by way of inter-state supply, i.e. the tax is levied by the federal government but is administered and apportioned jointly by the centre and the state governments.

The introduction of GST is new to India, but historically, the foundation of this tax regime dates back to 1954, and it took India 63 years to introduce this regime.

History & Evolution of the Concept of GST

  • The history of GST traces back to the 20th century. In 1954, France was the first country in the world to implement GST law, the reason being to reduce tax evasion.
  • The concept of GST was devised by Maurice Laure, a French economist and a joint Director in the French tax authority, in 1954. He referred to it as “taxe sur la valeur”, i.e. value added tax, and defined GST/VAT as a consumption tax payable on the goods and services consumed by persons, business organizations and individuals.
  • By 1970-80, most of the European countries adopted GST.
  • Till 2023, around 160 countries have opted for this mode of taxation.
  • Certain countries have a dual system of GST, including India; Canada first introduced this system.
  • In a dual GST system, the central and state governments have the power to levy and collect taxes.
  • New Zealand introduced GST in 1986.
  • Singapore implemented GST in 1994.
  • Australia introduced GST on 1st July 2000.
  • Malaysia introduced GST in the year 2015.
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Comparative Study of Standard GST/Vat Rates in India and Other Countries (In percentage)

S.NO.NAME OF THE COUNTRYSTANDARD GST RATEREDUCED GST
 India1828,12,5
 Australia10
 BrazilIntrastate-17to19Interstate- 7 to 12 Import- 18-25
 Canada5Standard VAT- 5%
 China139 TO 6
 France2010,5.5,2.1
 Germany19
 Indonesia10
 Japan10
 South Korea10
 Malaysia106,5
 Mexico160
 Netherlands219
 New Zealand15
 Pakistan18
 Russia2818,12,5,0
 Singapore8
 Switzerland8
 Thailand7
 UK20

Relevance & History of Taxes in Indian Economy

India follows a federal structure of government, which includes both the central and state levels of government, and the basic structure of socialist, secular, and democratic republic stays uncompromised at both levels.

Both governments are responsible for managing the country’s developmental needs, and to meet these needs, the primary source of income is tax.

Tax is a contribution that a person makes towards the development of the country, and it is within the power of both state and central government to collect taxes, resulting in the fragmentation of taxes. The centre was responsible for levying tax on the goods at the production or manufacturing stage, whereas the state was empowered to tax goods at the distribution stage. Levying tax on services was the responsibility of the state.

Journey of GST Till 1st July 2017

  • Atal Bihari Vajpayee government in 2000, for the first time, suggested adopting Goods and Services Tax (GST), a unified tax system for all goods and services throughout the country.
  • In the same year, an empowered committee of state finance ministers was established to recommend the reforms needed for sales in the tax regime in the country.
  • In the year 2002-04, the Fiscal Responsibility and Budget Committee (FRBM) was formed, which recommended the introduction of GST.
  • In 2006, the union finance minister, in his budget speech, announced the introduction of GST On 1st April 2010.
  • The empowered committee was tasked with developing a roadmap and structure for GST based on their experience in designing the state VAT.
  • In November 2009, The representatives of the state and the centre were combined into joint working groups to examine the various aspects of GST and to draw a report about the taxation on services, exemptions, and thresholds. The empowered committee released its first discussion paper (FDP) on the GST based on this discussion.
  • In 2011, the Constitution (115th Amendment) Bill was introduced in the parliament, incorporating GST with its relevant provisions in front of a standing committee for detailed examination.
  • In the year 2014, with the dissolution of the 15th Lok Sabha, the GST Bill lapsed, directing a need for a fresh constitutional amendment Bill.
  • In December 2014, Finance Minister Arun Jaitley introduced the 122nd Amendment Bill in the Parliament.
  • In May 2015, the constitutional amendment bill was passed in Loksabha.
  • After it passed in Loksabha, the bill was sent to the Rajya Sabha, where it was referred to a select committee.
  • In July 2015, the select committee submitted its report suggesting certain amendments, and the Rajya Sabha passed the bill on 3rd August 2016 and by the Lok Sabha on 8th August 2016.
  • The Act was ratified by 50% of the states, after which the Hon’ble President gave his assent to the constitutional government bill, which later on became an Act which came into force with effect from 8th September 2016 vide the constitution (101st Amendment Act).
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Major Recommendations That Led To the Foundation of the GST Act in India

From the year 2016 to 17, 16 path-breaking GST Council meetings were held, resulting in the official implementation of the GST Act on 1st July 2017, a magnificent Act that will shine bright in the history of Indian democracy.

S.NO.GST COUNCIL MEETING NO.DATERECOMMENDATIONS
 1st GST Council meeting22nd -23rd September,2016Roll out GST with effect from 1st April 2017
 2nd GST Council meeting30th September,2016Rules were drafted for registration, payment of tax, returns, invoices, refunds, etc.Nominal growth rate of 14% for calculation of compensation amount payable to states.
 4th GST Council meeting3rd -4th November,2016Tax slabs with four rate structures, i.e. 5%, 12%, 18%&28%.
 9th GST Council meeting16th January,2017Issues surrounding dual control issues, i.e. between centre and state, were resolved with the passing of required guidelines.
 10th GST Council meeting18th February, 2017Need of Draft compensation bill
 11th GST Council meeting4th -5th March,2017Draft of CGST & IGST bills.
 12th GST Council meeting16th March,2017Draft of SGST & UTGST bills.
 13th GST Council meeting31st March, 2017Rules about cancelling registration, return, payment, refund, and invoices are recommended.
 14th GST Council meeting18th -19th May, 2017GST rates on goods and servicesGST compensation cess rates.
 15th GST Council meeting3rd June, 2017Rules on remaining business processes.GST rollout w.e.f. July, 2017
 16th GST Council meeting11th June, 2017Accounting rules

At the stroke of midnight hour on 1st of July 2017, the Hon’ble President and Prime Minister pressed a symbolic button to signify the launch of GST with which India entered the era of one nation: one tax: one market.

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The then finance Minister, Shri Arun Jaitley, GST as the biggest and the most ambitious tax reform and the consensus among various parties was a high point in Indian polity when the world saw slow growth and divisiveness.

Major Recommendations That Led To the Successful Implementation of the GST Act in India

S.NO.GST Council meeting No.DateRecommendations
 21st & 22nd GST Council meeting5th august & 9th September,2017Reduction in GST from 18% to 5% on certain job work and services.Relief for MSME sectorGST on works contract services supplied reduced from 18% to 5%
 23rd GST Council meeting10th November, 2017Pruning of list of 28% rated goodsGST in restaurant service was reduced from 18% to 5%
 24th GST Council meeting16th December, 2017e-way bill system introduced
 25th GST Council meeting15th January,2018Rationalization of GST rates. GST rates were reduced from 28% to 18% on theme parks, joy rides, etc.
 26th GST Council meeting10th March, 2018E-way bill introduced for intra-state movement of goods in a staggered manner
 28th GST Council meeting21st July, 2018Further pruning of list of Goods attracting 28% GST rate.
 31st GST Council meeting22nd December, 201870:30 Valuation scheme for renewable energy equipment to resolve disputes.Interest to be levied on Net Tax liabilityGST rate on cinema tickets above Rs. 100/- to be reduced from 28% to 18%, and on those up to 100/- from 18% to 12%
 32nd GST Council meeting10th January,2019Composition scheme for servicesHigher threshold limit for a supplier of goods.
 33rd GST Council meeting24th February, 2019A special scheme was formulated for the Real Estate sector.
 35th GST Council meeting21st June, 2019E-Invoicing Introduced
 37th GST Council meeting20th September, 2019Compliance relief for the MSME sectorAmendments in GST Acts given the creation of new union territories of jammu&Kashmir and LadakhDisbursal of return by a single authorityFiling of annual returns in Form GSTR-9 is optional for taxpayers with aggregate annual turnover up to Rs. 2 crore.Filing of reconciliation statement in FORM GSTR-9C waived for taxpayers having aggregate annual turnover up to Rs. 5 crore.GST rate on diamonds reduced from 5% to 1.5%Restructuring of GST rates on hotel accommodation with maximum rate to be reduced from 28% to 18%
 38th GST Council meeting18th December,2019Amnesty scheme for late fees for delayed filing of returns.Single uniform GST rate on lottery
 39th GST Council meeting14th March, 2020Rationalization of inverted duty structure on certain goods.Introduction of FORM GSTR-2BReduced GST rate on aircraft MRO services to be reduced from 18% to 5% to boost the domestic MRO industry
 40th GST Council meeting12th June, 2020Amnesty scheme for late feeInterest in filing of returns.
 42nd GST Council meeting5th & 12th October,2020Features of the return filing process enhancedQRMP scheme
 43rd GST Council meeting28th May, 2021Rationalization of duty on specified COVID-related Goods.Reconciliation statement in FORM GSTR-9C to be self-certified.
 44th GST Council meeting12th June, 2021Reduction in GST rates of covid related items
 45th GST Council meeting17th September, 2021Reduction in GST rates of covid related itemsSpecial scheme for a supplier of bricks, etc.Clarifications related to GST rates on goods.
 46th GST Council meeting31st December, 2021Deferment of revised rate structure in the textile sector
 47th GST Council meeting28th and 29th June,2022Rate rationalization to remove inverted duty structure on certain goods and servicesRefunds of accumulated ITC are not to be allowed in certain cases.Rate changes on certain goods & services.Clarifications on GST rates on certain Goods and services.Certain trade facilitation measures by way of amendment in CGST Rules like change in the formula for calculation of refund in inverted duty cases, further waiver of late fees for delaying filing of GSTR-4, and additional modes for payment of tax.Clarifications on certain procedural issues.Certain measures for streamlining compliances in GST.
 48th GST Council meeting17th December, 2022Decriminalization of certain offences under section 132Increase in the threshold of the amount of tax for prosecution and reduction in the amount of compounding in GST.
 49th GST Council meeting18th February 2023Government of India to clear the entire pending balance of GST compensation.Adopted report on GST Appellate Tribunal with certain modifications.Approved Report on capacity-based taxation and special composition schemes in certain sectors on GST.Changes in GST rates of ‘rab’, i.e. liquid jaggery and pencil sharpener.
 50th GST Council meeting11th July 2023Measures to be adopted for facilitation of trade and to streamline compliance.Certain amendments were proposed in rules 10A, 21A (2A), 21A (4), 59(6), 9, and 25 of the GST Act.
 51st  GST Council meeting2nd August, 2023The taxation landscape on online gaming horse racing and casinos changed to 28% full value.

Conclusion

It took India 18 years of debates and discussions to make GST part of its taxation regime, and in these 18 years, several meetings of the GST council1 were held which discussed the loopholes in the then-existing indirect tax regime, four bills were introduced, a committee was set up to design a Goods and Services Tax model, Kelkar task force was given the responsibility of fiscal and budget management ultimately resulting in a nationwide implementation of a fully integrated GST regime.

FAQs

  1. When was GST first started?

    France was the first country to introduce GST in the year 1954.

  2. When did GST first start?

    In the year 1954, France became the first nation to introduce the regime of GST.

  3. Who started GST first in India?

    In the year 2000, the BJP government, headed by Shri Atal Bihari Vajpayee, introduced the concept of GST in India.

  4. When and who introduced GST?

    Atal Bihari Vajpayee, who headed the government in the year 2000, introduced GST.

  5. Who is called the father of GST?

    Shri Atal Bihari Vajpayee is called the father of GST in India.

  6. Who first started GST?

    BJP Government in the year 2000, under the guidance of Shri Atal Bihari Vajpayee, took the initiative of starting GST.

  7. Who introduced GST first?

    Atal Bihari Vajpayee government made India aware of the concept of GST.

  8. Who is the father of GST?

    Shri Atal Bihari Vajpayee, former president of India, is the father of GST.

  9. Who declared GST in India?

    Prime Minister Shri Narendra Modi and President Shri Pranab Mukherjee launched GST by a historic midnight session of both houses of parliament convened at the central hall of Parliament on (30 June- 1 July).

  10. Who is called the father of Indian GST?

    Shri Atal Bihari Vajpayee, Former Indian Prime minister.

  11. Who is the father of GST first in the world?

    Maurice Laure, a French economist and joint director In the French tax authority, made the world aware of the concept of GST.

  12. Who invented GST first in India?

    Atal Bihari Vajpayee government introduced India to the concept of GST.

  13. Who is the first GST chairman?

    The former Finance Minister was the first chairman of the GST Council.

  14. Who introduced GST in India?

    BJP ruling government headed by Shri Atal Bihari Vajpayee introduced GST in India.

  15. Who is the GST father of India?

    Former Prime – Minister Late Shri Atal Bihari Vajpayee.

  16. Who announced GST?

    The former finance minister Arun Jaitley announced the GST Act, and at midnight of 30th June, a special session of parliament was called to commemorate the occasion of the implementation of GST in India.

References

  1. https://gstcouncil.gov.in/

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