GST: Fiscal Centralism in a Federal Polity

by C.P. Chandrasekhar (Editor), Girish Kumar R. (Editor), Babu Sebastian (Foreword)

The 101st Constitution Amendment Act 2016 on GST is a big leap for the fiscal reforms relating to the Indirect Tax regime in India as it seeks to introduce a single, comprehensive tax that will subsume other indirect taxes on consumption like sales and service taxes, strengthen the nation’s tax institutions, dismantle barriers that exist across States and create a common market. The main objective of the GST Act is to replace the existing multi layered indirect tax regimes instituted by the Union and State Governments and to unify them across the country. It is a comprehensive value added tax on the manufacture, sale and consumption of goods and services, levied and collected on value addition at each stage of sale or purchase of goods or supply of services based on the input tax credit method but without State boundaries. The administrative power generally vests with a single authority to levy tax on goods and services. By amalgamating a large number of Central and State taxes into a single tax, GST would pave the way for a common national market.

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About the author

C.P. Chandrasekhar is Dean, School of Social Sciences, and Professor at the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi, India.