101st AMENDMENT ACT, 2016

INTRODUCTION:

The 101 Constitutional Amendment Act was instrumental in conducting in India’s Goods

and Services Tax (GST). The Goods and Services Tax replaced all the erstwhile indirect
taxes that were levied on the manufacture, sale, and consumption of goods and services
across the country.

The 101 Constitutional Amendment Act is the first amendment made to the Constitution of
India. Constitutional Amendment Act 101 allows both the centre and states to assess excise
duty, Octroi tax, customs duty, service tax, entry tax, entertainment tax, etc., all substituted
by the GST, making it a single indirect tax.

101ST AMENDMENT ACT:

The constitution of India prescribed the power to levy tax on both the union and state
government by its union list and state list.

The 101st constitution amendment act introduced the system of ‘one nation, one tax’.
It extends to the union territory of Jammu and Kashmir and is governed by the central goods
and services tax (Extension to Jammu and Kashmir) Act, 2017. 

This pan-India uniform indirect tax system ensured the smooth flow of goods throughout the
country.
The 101st constitution amendment act 2016 introduction led to some amendments and the
insertion of some new articles in the constitution of India.

Since GST involved a complete tax regime change and restructuring of central and state
taxes; the responsibility to prepare a road map for implementing the GST under the 101
Constitutional Amendment Act was handed down to the Empowered Committee of State
Finance Ministers (EC).

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  The EC proposed to have two GST components, the central GST to be levied and
collected by the center and the state GST to be levied and collected by the states.
 The Parliament passed the 101 Constitutional Amendment Act in 2016, and after
some ratifications put together by the states, the President of India gave assent to the
bill.

CHANGES IN THE 101ST AMENDMENT ACT, 2016:

In order to suitably implement the GST legislation, this Act resulted in the insertion, deletion,
and amendment of certain Articles of the Constitution. The following matters were dealt with
as a result of these changes:
 The delineation of powers to levy and make laws with respect to GST.
 The applicability and scope of the GST law
 The manner of apportionment of revenue from GST among Centres and States
 The constitution, powers, and duties of the GST council
 The discontinuation of existing taxes to give way for GST
 The manner of providing compensation to States for loss of revenue on account of the
introduction of GST

THE CENTRAL TAXES WERE REPLACED BY GST

The introduction of the GST has replaced the following taxes, which were levied earlier.

 Central excise duty

 Central sales tax
 Service tax
 Additional duties of customs
 Additional duties of excise
 Excise duty levied under the textiles and textile products

THE STATE-LEVEL TAXES REPLACED BY GST

 Purchase tax
 Central sales tax
 VAT

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  Surcharge and CESS
 Entry tax
 Taxes on lottery, gambling, and betting
 Taxes on advertisements

The Constitution 101 Amendment Act 2016 ensued the amendment and insertion of
certain articles of the Constitution to bring about comprehensive enactment of GST:

 Article 279A empowered the President of India to create GST Council with members
from the Centre and the States. It is an apex forum authorized to create, modify, or
remove any law based on GST in the 101 Constitutional Amendment Act.
 Article 246A was inserted in the Constitution to validate the Parliament and the State
legislatures to make laws on GST. However, the Parliament of India was awarded
exclusive power to make laws for inter-state supplies. Additionally, crude petrol,
natural gas, motor spirit, high-speed diesel, and aviation fuel were excluded from the
scope of GST.
 Article 269A covers how the revenue from inter-state supplies is shared between the
center and the state and authorizes the GST Council to make laws regarding this.
Importing goods or services is also considered inter-state supplies, and the central
government imposes IGST on it.
 Article 286 was already in place and restricted state governments from passing any
law to levy tax on the sale or purchase of goods. After 101 Constitutional Amendment
Act 2016, the restriction was extended to prevent the state governments from passing
any laws on services.
 Article 366, an existing article, was amended to include GST, Services, and State
definitions. The GST 101 Constitutional Amendment Act also provides for relief to
states due to the revenue loss emanating from the implementation of GST.
 Article 268A has been omitted.
 Article 270 was amended to provide for the distribution of GST collected by the union
which is between the union & state.

CHANGES IN THE 7TH SCHEDULE:

This amendment has made the following changes in 7th schedule of the constitution:

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Union List:
 entry 84 of the Union List earlier comprised the duties on tobacco, alcoholic liquors,
opium, Indian hemp, narcotic drugs and narcotics, and medical and toilet
preparations. After this amendment, it will comprise Petroleum crude, high-speed
diesel, motor spirit (petrol), natural gas, aviation turbine fuel, tobacco, and tobacco
products. Thus, these are now out of the ambit of GST and subject to Union
jurisdiction.

 Entry 92 (newspapers and advertisements published therein) has been deleted thus,
they are now under GST.

 Entry 92-C (Service Tax) has been now deleted from the union list.
State List
 Under the State list, entry 52 (entry tax for sale in the state) has been deleted.

 In Entry 54, Taxes on the sale or purchase of goods other than newspapers, subject to
the provisions of Entry 92-A of List I.; have been now replaced by Taxes on the sale
of petroleum crude, high-speed diesel, motor spirit (commonly known as petrol),
natural gas, aviation turbine fuel, and alcoholic liquor for human consumption, but not
including sale in the course of inter-State trade or commerce or sale in the course of
international trade or commerce of such goods.”

 Entry 55 (advertisement taxes) has been deleted.

 Entry 62 (Taxes on luxuries, including taxes on entertainment, amusements, betting,

and gambling) has been replaced by these taxes only to be levied by local
governments (panchayats, municipality, regional council, or district council.

TYPES OF GST:
The one hundred and constitution amendment act led to the introduction of four types of GST
for governing the taxation system in India:-

 SGST (State goods and services tax)

 CGST (Central goods and services tax)

 IGST (Integrated Goods and services tax)

 UGST (Union territory goods and services tax)

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STATE GOODS AND SERVICES TAX
The state government levies state goods and services tax on intra-state goods and services
transactions. The state’s revenue collected from SGST on transactions made within the state
on goods and services gets earned. The SGST eliminated earlier taxes such as VAT, luxury
tax, entertainment tax, octroi tax, a tax levied on the lottery, and purchase tax.

CENTRAL GOODS AND SERVICES TAX

The central goods and services tax gets levied on the central government’s intra-state goods
and services transactions. It is governed by the Central goods and services tax act 2017. The
central government earns the revenue collected from CGST. The central goods and services
tax gets shared between the centre and state governments. Both governments will agree on
combining their appropriate portion of the tax to be levied on the concerned intra-state goods
and services transactions. The CGST to get levied should not exceed the limit of 14%. It
eliminated the entry tax, service tax, additional customs duty, special additional duty of
customs, additional excise duty, central excise duty, etc.

INTEGRATED GOODS AND SERVICES TAX

The Integrated Goods and services tax gets levied on inter-state goods and services
transactions. This Integrated GST applies to both imports and exports. It is governed by
the Integrated goods and services tax act, of 2017. The IGST revenue gets shared between
both the central and state government. The share of revenue agreed on by both governments
will be divided between them accordingly.

UNION TERRITORY GOODS AND SERVICES TAX

A particular union territory government levies the Union territory goods and services
tax(UTGST) on the goods and services transaction taken up within the union territory.
It is governed by the Union territory goods and services act, 2017, and levied along with the
CGST. It applies to union territories similarly to the SGST, applicable to the intra-state
supply of goods and services. UTGST has its application in the Union Territories of
Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli & Daman and Diu,
Lakshadweep, Jammu and Kashmir, Ladakh. The state goods and services tax (SGST) is
applicable in the Union Territories of the National capital territory of Delhi and Puducherry
as this UT’s had their legislature.

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CONCLUSION:
The 101st constitution amendment act 2016 aims to make India one unified common market
and introduce a new uniform indirect taxation system.

It provides a transparent tax structure for the consumers on the value of goods and services he
is availing for use.

The GST is divided into three tax slabs to ease the process of its implementation and
distribution of funds between the central government and state governments.

The GST collected under the 101st constitution amendment act 2016 is divided into four tax
slabs of 5%, 12%, 18% & 28%.

The maximum rate of IGST applicable is 40% and cannot exceed more than that and,

The upper cap fixed for the application of CGST is 20%.

The GST is not applicable on some goods and services or some transactions like a gift given
by an employer to an employee, agricultural services like harvesting, renting or leasing of
machinery, services provided by courts and tribunals, sale of land/building subject to para
5(b) of schedule II, etc.

Under the GST regime, the credit of input taxes will be available in the subsequent stage of
value addition making it taxable at the last stage of value addition.