Chaitanya AwasthiAIR 37 · CSE 2022 · 228 wordsTheir whole copy
Opening · a constitutional or legal provision
The 101st Constitutional Amendment Act, 2016 introduced GST as a revolutionary attempt to revamp Indian taxation scenario. It subsumed myriad indirect taxes while giving both Centre and State equal powers of legislation under A. 246 (A) of Constitution.
GST - A Progressive Step:
Body · points and prose
- Subsumes various taxes removing cascading effect.
- Increases competitiveness of Indian exports.
- Better revenue collection due to easier compliance and formalization.
- Promotes uniformity - One Nation, One Tax.
Fiscal Federalism is the division of responsibilities in matters of taxation and public expenditure between Centre, State and local bodies. It is reflected in Part XII of Constitution along with A. 280 which provides for the Finance Commission.
GST v. Fiscal Federalism (1) Shrinking Fiscal Autonomy ↳ States' taxes getting subsumed leaves them little room and dependant upon Centre. (2) Trust Deficit ↳ Rising apprehensions regarding functioning of GST Council. ↳ 1/3rd voting power to Centre giving it veto. (3) Revenue Loss
Close · a way forward
↳ Majority of states have reported decline in revenues. ↳ Compensation Cess and its poor implementation Surcharges etc. not being shared by Centre.
Fiscal Federalism is embedded in the ethos of Indian Federalism. Supreme Court's recent decision declaring GST Council decisions as not binding is only going to amplify the calls for reforms by states. Centre should carry out reforms like equitable representation, fair voting power, bridge trust deficit, rationalize slabs etc.
1 more topper’s answer to this question, part by part, and how they all approached it: open the question.