Question

With reference to the 101st Constitutional Amendment, consider the following statements:

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

II. The amendment omitted certain entries from the Union List and State List in the Seventh Schedule.

III. Compensation to States for revenue loss due to GST was provided for a period of five years.

Which of the statements given above is/are correct?

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

Answer 1

Answer:

D. I, II, and III

101st Constitutional Amendment Act, 2016

• This amendment is a landmark legislation in Indian fiscal federalism, primarily introducing the Goods and Services Tax (GST) in India.

• Statement I: The 101st Constitutional Amendment Act came into effect on July 1, 2017. This date marked the official rollout of GST across the country. Prime Minister Narendra Modi's government was in power at the time of this amendment.

• Statement II: The amendment significantly altered the legislative powers of the Union and States concerning taxation. It led to the omission of certain entries from the Union List and State List within the Seventh Schedule of the Constitution. This reallocation was necessary to implement a unified tax structure, subsuming various indirect taxes levied by both the Centre and the States. For instance, the power to levy taxes on services was largely shifted from the State List to the Union List.

• Statement III: To facilitate the transition to GST and address potential revenue shortfalls for states, the Constitution (101st Amendment) Act, 2016, provided for the compensation to states. Section 18 of the Act states that the Parliament may, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of GST for a period of five years from the date on which the goods and services tax is to be levied by the Government of India.

• Key Context: The introduction of GST aimed to create a single, unified market across India, reduce tax cascading, improve ease of doing business, and enhance tax compliance. The Constitutional Amendment was crucial to empower both the Parliament and State Legislatures to enact GST laws and establish the GST Council, a joint body of the Centre and States to decide on all major issues relating to GST.