Timeline of GST Explained Vis-À-Vis GST Council Meeting

Soniya Khanna

18 Dec, 2023

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 boosted the economy, made goods and services globally competitive, and even lowered the cost of goods and services. Still, 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. It 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.

Timeline of GST

The timeline of GST traces back to the 20^th century. In 1954, France was the first country in the world to implement GST law¹, the reason being to reduce tax evasion. Since then, the timeline of GST has accumulated within the change in the taxation regime of many nations.

• The timeline of the GST 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. He 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 1^st July 2000.
• Malaysia introduced GST in the year 2015.

Comparative Study of Standard GST / VAT Rates in India and Other Countries (In Percentage)

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.

Timeline of GST TILL 1^st July 2017

• Atal Bihari Vajpayee government 2000 suggested adopting Goods and Services Tax (GST), a unified tax system for all goods and services throughout the country, a stepping stone to the timeline of GST in India.
• In the same year, an empowered committee of state finance ministers was established to recommend the reforms needed for sales in the tax regime; this initiative reformed the timeline of GST and aided in establishing synergy between the centre and state relations.
• In the year 2002-04, the Fiscal Responsibility and Budget Committee (FRBM) was formed, which recommended the introduction of GST and enriched the timeline of GST.
• In 2006, the union finance minister, in his budget speech, announced the introduction of GST On 1^st 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 (115^th 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 15^th Lok Sabha, the GST Bill lapsed, directing a need for a fresh constitutional amendment Bill.
• In December 2014, Finance Minister Arun Jaitley introduced the 122^nd 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 3^rd August 2016 and by the Lok Sabha on 8^th 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 8^th September 2016 vide the constitution (101^st Amendment Act).

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 and contributing to the timeline of the GST Act on 1^st July 2017, a magnificent Act that will shine bright in the history of Indian democracy.

At the stroke of midnight hour on 1^st 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, golden words of great significance to the timeline of GST in India.

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 at the time when the world was seeing slow growth and divisiveness and contributed majorly to the Timeline Of GST In India.

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

Conclusion

The timeline of GST took 18 years of debates and discussions to make GST part of its taxation regime. In these 18 years, several meetings of the GST council 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.

FAQ’S

1. https://services.gst.gov.in/services/gstlaw/gstlawlist