Goods and Services Tax (GST) is a tax system that eliminates certain indirect taxes. A single tax is imposed on goods and services from manufacture to consumption. It is the biggest indirect tax reform made recently in India. This article is all about the history of GST with timelines which is very crucial.
GST was introduced recently but the history of GST carries around 63 years. The foundation was founded back in 1954. It is a tax added to the price of most things you buy or use in a country. Let us look into the history of GST with timelines with the help of this comprehensive guide.
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What is Goods and Services Tax?
Goods and Services Tax replaced a complex web of state and central levies with a single, destination-based tax. This means you pay GST on the final purchase price, wherever you consume the good or service. It streamlines the system and aims for a more transparent taxation process. Know more about the history of GST with timelines further.
Origin and History of GST
The GST was first introduced in France in the year 1954. The concept of GST originated from the Value Added Tax (VAT). It was aimed to streamline taxation and avoid the cascading effect of multiple taxes. It replaced many complex taxes and integrated with them. Gradually other countries started adopting the same, inspired by the success of VAT. Origin and the history of GST with timelines has so much of development over the time.
In India, the GST was proposed by the Kelkar Task Force in 2000. The main objective was to replace the complex tax system. It unifies the fragmented tax structure, which reduces the cascading effect and promotes economic unification. A design and roadmap were prepared by the Empowered Committee of State Finance Ministers. The First Discussion Paper was released in 2009.
Though the Constitution Amendment Bill was introduced in 2011, faced challenges like compensation to states, etc. After much discussion and agreement, the 2014 Constitution (122nd Amendment) Bill was approved. And thus, allowing the introduction of GST in India.
What is the History of GST with timelines?
The history of GST with timelines involves tracing. It tracks implementation and the development of GST in different countries gradually. GST lowers tax escape and creates a combined tax system. The ultimate aim is to simplify the tax process.
The timeline for each country varies depending on legislative processes, economy, and political factors.
Brief history of GST with timelines in major countries
- GST in France was first introduced in 1954 as the tax on services.
- Germany introduced this tax system in the year 1968.
- Goods and services tax was implemented in 1991 in Canada. It’s a combination of federal sales tax with provincial sales taxes into a single tax.
- Australia introduced in 2000 by replacing the previous Federal Wholesale Sales Tax.
- In India, GST was introduced in 2017. It is a replacement of the complex indirect tax system with a unified tax regime.
- Malaysia replaced the sales and services tax with GST in April 2015.
- GST was implemented in 1994 in Singapore and 1986 in New Zealand.
GST Bill and GST Act in India
If we speak about the history of GST with timelines it is more than 20 years ago. The concept was first discussed in the year 2000. It was the government of Atal Bihari Vajpayee back then. A group of finance ministers with experience in State VAT was selected for this task.
The Fiscal Responsibility and Budget Management Committee (2004) suggested bringing in GST. 2006-07 Budget Speech was decided to introduce GST by April 1st, 2010. The announcement was by the Union Finance Minister. But, for some reason, the establishment had to be postponed.
The Constitution Bill, 2011 was introduced to incorporate certain provisions of GST. Further, it will be examined by a Standing Committee. When the Lok Sabha ended in 2014, the Bill expired, so a new Constitutional Amendment Bill was necessary.
What are the taxes before GST?
Some taxes were introduced before GST implementation.
- Value Added Tax (VAT):
- It is a state level tax imposed on goods and services. It is an indirect tax sold within the same state. Seller includes VAT and businesses can reclaim VAT paid on expenses.
- Service Tax:
- Service tax is a tax imposed on service providers for their services. But there is an exclusion of services that come under the negative list. Though the service providers are charged the tax, customers end up paying it when they use the service. Though tax was imposed on service providers, final taxpayers are customers for using services.
- Customs Duty:
- Custom Duty imposed on international transactions (import and export). This was to ensure the safeguarding of domestic products and regulate the goods movement.
- Central sales:
- It was a tax imposed by the central government. And collected when goods are sold or brought between different states.
- Excise Duty:
- Goods made within the country had to pay a tax called excise duty. It was imposed by the Central Government also known as CENVAT (Central Value Added Tax).
Milestones of GST implementation in India
The GST implementation in India was a significant tax reform. It is mainly aimed at simplifying the indirect tax structure in the country. The history of GST with timelines have created a milestone so far. Here are the key milestones of implementing GST.
- Introduction of GST Bill:
- The Constitution Act, 2016, was introduced in the Parliament of India in 2014. It is commonly known as the GST Bill. It sought to change the Constitution to enable the introduction of GST.
- Passage of GST Bill:
- After rigid debate and discussion, the GST Bill was passed by the Indian Parliament in 2016. This was a crucial step towards the implementation of GST.
- Formation of GST Council:
- The GST Council was constituted as per the provisions of the Constitution Amendment Act. It comprises the Union Finance Minister, the Union Minister of State in charge of Revenue. The finance minister or a nominee chosen by the state government will attend.
- GST Rates and Classification:
- The GST council takes the responsibility of defining the GST rates. It classifies the goods and services under the applicable tax slabs. This process involved wide consultations and conversations among the council members.
- GST Acts and Rules:
- The Central and State Governments passed respective GST Acts. Made several rules to govern the implementation and administration of GST at the central and state levels.
What is the concept of a Dual GST Structure?
A dual GST structure refers to a tax system where both the central government and state governments levy a tax on goods and services. In India, this system was implemented with the introduction of the GST regime in 2017.
Under this structure, there are two components of GST:
- Central Goods and Services Tax (CGST): Imposed by the central government.
- State Goods and Services Tax (SGST): Imposed by the state governments on supplies of intra-state goods and services.
Both CGST and SGST are charged on the same taxable value, thereby avoiding double taxation. This system allows for the distribution of tax revenue between the central and state governments, based on the place of consumption or supply. This i the concept comes under history of GST with timelines. It aims to streamline the taxation system, eliminate cascading effects, and create a unified market across India.
Conclusion
In conclusion, GST revolutionized India’s tax system upon its introduction in 2017. Its origins trace back to France in 1954, evolving from the VAT concept. India’s journey towards GST began with the Kelkar Task Force’s proposal in 2000, followed by the 2014 Constitution Amendment Bill’s approval. Before GST, India had a complex tax structure including VAT, service tax, customs duty, central sales tax, and excise duty. History of GST with timelines has made a great impact.
The key milestones of GST implementation in India include the introduction and passage of the GST Bill in 2014 and 2016 respectively, the formation of the GST Council, determination of GST rates and classification, and enactment of GST Acts and Rules by central and state governments. The dual GST structure comprises CGST and SGST.
FAQs
1. What is history of GST with timelines?
The history of GST with timelines involves tracing. It tracks implementation and the development of GST in different countries gradually.
2. When was GST introduced in India?
GST was introduced in India on July 1, 2017, after the passage of the 101st Constitutional Amendment Act.
3. What were the objectives behind implementing GST?
The main objectives were to simplify the tax structure, eliminate cascading effects, promote ease of doing business, and create a common national market.
4. What are the different types of GST?
There are three types of GST in India; that is CGST, SGST, and IGST for inter-state transactions.
5. How has history of GST with timelines impacted the Indian economy?
GST has led to streamlining of tax processes, increased compliance, reduced tax evasion, and facilitated seamless movement of goods across state borders, thus boosting overall economic growth.
