GST: A look at the changes proposed to the Constitution (122nd Amendment) Bill, 2014

The Bill to amend the Constitution, paving the way for the biggest, long-pending and much awaited indirect tax reform, is all set to be approved by the Rajya Sabha on Wednesday. Union Finance Minister Arun Jaitley will move amendments to the Constitution (122nd Amendment) Bill, 2014, meant for the roll-out of the Goods & Services Tax (GST) in the House, when it is taken up for consideration and passage.

The government circulated to the MPs the amendments it has proposed in the Constitution amendment Bill to enable implementation of the tax.

Here's a look at the key changes proposed to the Constitution (122nd Amendment) Bill, 2014:

Clause	2014 Bill	2016 proposed amendments
Additional tax up to 1% on inter-State trade	An additional tax of up to 1% on the supply of goods will be levied by centre in the course of inter-State trade or commerce. The tax will be directly assigned to the States from where the supply originates. This will be for two years or more, as recommended by GST Council.	Deletes the provision.
Compensation to States	Parliament may, by law, provide for compensation to states for any loss of revenues for a period which may extend to five years. This would be based on the recommendations of the GST Council. This implies that Parliament may decide (i) whether it wants to provide compensation; (ii) the time period for which it can provide such compensation, up to five years.	Parliament shall, by law, provide for compensation to states for any loss of revenues, for a period which may extend to five years. This would be based on the recommendations of the GST Council. This implies that (i) Parliament must provide compensation; and (ii) compensation cannot be provided for more than five years, but allows Parliament to decide a shorter time period.
Dispute resolution	The GST Council may decide upon the modalities to resolve disputes arising out of its recommendations.	The GST Council shall establish a mechanism to adjudicate any dispute arising out of its recommendations. Disputes can be between: (a) the centre vs. one or more states; (b) the centre and states vs. one or more states; (c) state vs. state. This implies there will be a standing mechanism to resolve disputes.
Replacement of the term IGST	Under the 2014 Bill, the GST Council would make recommendations on the apportionment of the Integrated Goods and Services Tax (IGST). However, the term IGST was not defined. The 2016 amendments replace this term with ‘goods and services tax levied on supplies in the course of inter-State trade or commerce’.	This is a technical change in relation to the apportionment of the IGST. It clarifies that the states’ share of the IGST shall not form a part of the Consolidated fund of India.
Inclusion of CGST and IGST in tax devolution to states	The GST collected and levied by the centre, other than states’ share of IGST,(CGST and Centre’s share of IGST) shall also be distributed between the Centre and States.	The amendments state that the CGST and the Centre’s share of IGST will be distributed between the Centre and States. This is just a restatement of the provisions in the 2014 Bill in clearer terms.

Source: PRS India