GST in India: the road to one tax

The Vajpayee government sets up an empowered committee of state finance ministers, chaired by West Bengal’s Asim Dasgupta, to design a goods and services tax.

Finance Minister P. Chidambaram’s Budget speech proposes introducing GST from April 2010.

The Constitution (115th Amendment) Bill is introduced in the Lok Sabha. It lapses when the Lok Sabha is dissolved in 2014.

The Constitution (122nd Amendment) Bill is introduced by the new government.

The Rajya Sabha passes the amended bill on 3 August and the Lok Sabha agrees on 8 August, after which states ratify it.

The President gives assent. The amendment creates the GST Council (Article 279A), where the Union and the states decide rates together.

GST replaces central excise, service tax, VAT and many other levies, launched at a midnight session of Parliament.

An electronic permit becomes compulsory for moving goods between states.

Electronic invoices become compulsory for large businesses, later extended to smaller ones.

The five years in which the Union compensated states for lost revenue come to an end.

The GST Council replaces the four main slabs with two — 5% and 18% — and a 40% rate for a short list of luxury and “sin” goods.

Prices of many everyday goods fall as the two-rate structure comes into force.