101st Constitutional Amendment: Is GST the 101st or 122nd Amendment?

GST rests on the Constitution (One Hundred and First Amendment) Act, 2016. When it was moving through Parliament it was called the Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014. That is the whole answer to "is GST the 101st or the 122nd amendment": 122 was the bill's number, 101 is the number of the Act it became. This post covers what the amendment actually changed in the Constitution, which committees shaped GST before it, and how the bill got through Parliament and the state assemblies.

Is GST the 101st or the 122nd amendment?

The two numbers come from two separate counting systems:

• Bills to amend the Constitution are numbered in the order they are introduced in Parliament. Many amendment bills are introduced and never passed, so the bill count runs ahead of the Act count. The GST bill introduced in the Lok Sabha in December 2014 was the 122nd.
• Acts are numbered in the order they are actually enacted. When the GST bill received Presidential assent in September 2016, it was the 101st amendment to become law.

So in an exam or an interview, the precise answer is: GST was introduced by the 101st Constitutional Amendment Act, 2016, which was passed as the 122nd Constitutional Amendment Bill. Quoting only "122nd amendment" is a common slip, since there is no 122nd Amendment Act relating to GST.

Why GST needed a constitutional amendment

Before 2016, the Seventh Schedule split indirect taxes neatly between the two levels of government. The Centre could levy excise duty on manufacture and tax on services. The states could tax the sale of goods through VAT, and had a range of smaller levies such as entry tax, luxury tax and entertainment tax. Neither side had the power to tax the whole supply chain, goods and services together.

A dual GST, where the Centre and the states both tax the same supply at the same time, simply did not fit that structure. The states could not tax services, and the Centre could not tax sales beyond the manufacturing stage. The only way to create a tax that both could levy on every supply was to change the Constitution itself.

What the 101st Amendment added and changed

The amendment is short, but it touched a surprising number of provisions. The new articles are the ones everyone remembers; the consequential changes are what removed the old taxes.

Two further details are worth knowing. First, petroleum crude, petrol, diesel, natural gas and aviation turbine fuel were brought inside the definition of GST, but GST on them only applies from a date the GST Council recommends, which has not happened. Second, alcohol for human consumption was kept out of GST entirely by the definition itself. For what the Council does in practice, see the GST Council explained, and for the compensation side, see GST compensation cess.

Which committee recommended GST?

No single committee "created" GST, but two bodies are the usual answer, and a third is worth knowing.

1. The Kelkar Task Force (2003)

The Task Force on the implementation of the Fiscal Responsibility and Budget Management Act, 2003, chaired by economist Dr Vijay Kelkar, is the committee that first recommended a comprehensive goods and services tax for India. Its argument was that the existing mix of excise, service tax and state sales taxes caused cascading and distortion, and that a single value-added tax on goods and services, shared between the Centre and states, would be simpler and more productive. If an exam asks which committee recommended GST, this is the expected answer.

2. The Empowered Committee of State Finance Ministers

The Empowered Committee was set up originally to steer the states' move from sales tax to VAT. After the Union Budget for 2006-07 announced the goal of GST, the same committee was asked to design it. For most of this period it was chaired by Dr Asim Dasgupta, then Finance Minister of West Bengal. Under him the committee produced the first discussion paper on GST in 2009, which set out the dual GST model of a central and a state component on the same supply. That model is what India eventually adopted.

3. Later committees on the details

Once the bill was in Parliament, other committees did detailed work. A Select Committee of the Rajya Sabha examined the 122nd Bill in 2015, and a committee led by the then Chief Economic Adviser, Dr Arvind Subramanian, studied the revenue-neutral rate that GST would need. These shaped the final design, but they came after the recommendation to adopt GST.

How the bill passed: Parliament and the states

The route from bill to Act had four stages:

1. Lok Sabha. The 122nd Amendment Bill was introduced in December 2014 and passed by the Lok Sabha in 2015.
2. Rajya Sabha. It was referred to a Select Committee, debated at length and finally passed by the Rajya Sabha in August 2016 with amendments. One significant change was dropping an extra 1% tax on inter-state supplies of goods that the original bill had proposed.
3. Lok Sabha again. Because the Rajya Sabha changed the text, the bill went back to the Lok Sabha, which agreed to the amendments in August 2016.
4. Ratification by states. An amendment that changes the distribution of powers between the Centre and states must be ratified by at least half of the state legislatures. Assam was the first to ratify, and the required number followed within weeks.

The bill received Presidential assent on 8 September 2016 and became the Constitution (One Hundred and First Amendment) Act, 2016.

What happened after the amendment

The amendment created the power to levy GST; it did not levy it. The GST Council was constituted soon after assent and spent the following months agreeing rates, thresholds and model laws. Parliament then passed the CGST, IGST, UTGST and GST (Compensation to States) Acts in 2017, each state passed its own SGST Act, and GST came into force on 1 July 2017. The full launch story and the taxes GST replaced are covered in when was GST implemented in India.

The practical result for every business is the 15-character GSTIN, issued under the laws that flow from Article 246A. The split between central, state and integrated tax that you see on an invoice comes straight from Articles 246A and 269A; see CGST, SGST and IGST for how that works. If you need to confirm that a supplier's GSTIN is genuine and active, you can check it with a GSTIN verification lookup.

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