Question

Consider the following statements regarding the 101st Constitutional Amendment:

I. It came into force on July 1, 2017, during the tenure of Prime Minister Narendra Modi.

II. This amendment omitted certain entries in the Union List and State List of the Seventh Schedule.

III. States were compensated for five years for revenue loss due to GST.

Which of the above statements are correct?

• A. I, III only
• B. I, II, III
• C. I only
• D. II, III only

Answer 1

Answer:

B. I, II, III

101st Constitutional Amendment Act, 2016

• Effective Date: This significant amendment came into effect on July 1, 2017. This was during the period when Narendra Modi was the Prime Minister of India.

• Objective: The primary aim of this amendment was to introduce the Goods and Services Tax (GST) across India.

• Seventh Schedule Impact: The amendment led to the modification of the Seventh Schedule of the Constitution. Specifically, it:

  • Omitted certain entries from the Union List (related to excise duty on tobacco, etc.).

  • Omitted certain entries from the State List (related to sales tax, entertainment tax, luxury tax, etc.).

  • Introduced GST as a concurrent power, enabling both the Union and the States to legislate on it.

• Compensation to States: To address potential revenue losses for states due to the transition to GST, the Act provided for compensation. States were assured of compensation for a period of five years from the date of commencement of GST, should their revenue collection fall short.

• Council Formation: The amendment also paved the way for the establishment of the GST Council, a constitutional body responsible for making recommendations on GST rates, administration, and other related issues.

• Significance: The 101st Amendment is considered one of the most important constitutional changes in India's economic history, transforming the indirect taxation system.