Father of GST in India – Origin & Implementation

The Goods and Services Tax (GST) has transformed India's taxation landscape, unifying various indirect taxes into a single framework. Understanding the journey of GST and recognising the key figures behind its inception is essential to appreciate its significance in India's economy.

What is GST?

GST is a comprehensive tax levied on the supply of goods and services, replacing multiple indirect taxes previously imposed by the central and state governments. Implemented on July 1, 2017, GST aims to simplify the tax structure, enhance compliance, and boost revenue generation. The introduction of GST has led to a remarkable 11% growth in tax revenues since its implementation, marking it as one of India's most significant financial reforms. 

Interesting Facts About GST 

The following are some of the interesting facts about GST in India: 

• The Indian GST system is modelled after the Canadian taxation system.
• Amitabh Bachchan was appointed as the brand ambassador for GST.
• Assam was the first state to approve the GST Bill.
• France was the first country to introduce GST.
• Non-payment of GST can result in imprisonment of up to five years.

Who is Called the Father of GST in India?

The title "Father of GST in India" is often attributed to Dr. Vijay Kelkar, whose foundational work laid the groundwork for GST's implementation. However, Prime Minister Atal Bihari Vajpayee first presented the idea of GST in 2000, advocating for a unified tax system. His vision was crucial in garnering initial support for the initiative.

In addition to Vajpayee and Kelkar, Arun Jaitley, who served as Finance Minister during the critical phases of GST's legislative process, is recognised as the architect of India’s GST. His leadership was instrumental in navigating the GST through Parliament, culminating in its successful enactment.

The Journey of GST Implementation

The path to implementing GST in India was a lengthy and complex process, marked by several key milestones:

• 2000: A committee led by Dr. Vijay Kelkar was set up under Prime Minister Atal Bihari Vajpayee to explore the idea of GST. 
• 2004: The Kelkar Task Force emphasised the need for a unified tax system and recommended GST as the way forward. 
• 2006: Finance Minister P. Chidambaram introduced GST in his budget speech, bringing it into the spotlight. 
• 2009: The first official discussion paper on GST was released, outlining how it could be implemented. 
• 2011: A Constitution Amendment Bill was introduced in the Lok Sabha, laying the groundwork for GST.
• 2014: The bill was reintroduced to push GST closer to reality
• 2016: Both houses of parliament passed the bill, which received the president’s approval. 
• 2017: GST finally became a reality, launching nationwide on July 1. 

Impact of GST on India’s Economy

Implementing GST has significantly streamlined the taxation process, promoting a more efficient system that reduces the burden on businesses. The unified tax structure has increased compliance, improved revenue collection, and a more transparent tax environment. As a result, the average monthly tax collection post-GST has been approximately ₹1.66 lakh crore, a testament to its effectiveness.

Challenges Faced During GST Implementation

Despite its advantages, the GST implementation in India faced several challenges:

• Political Disagreements: The path to GST was laden with political hurdles as various parties debated its merits and implications.
• Technological Challenges: Setting up the GST Network (GSTN) posed significant technical challenges, affecting the initial rollout.
• Initial Confusion Among Businesses: Many businesses struggled to adapt to the new tax structure, leading to confusion regarding compliance requirements.

Conclusion

The story of GST in India reflects the collaborative efforts of several key figures, including Atal Bihari Vajpayee, Dr Vijay Kelkar, and Arun Jaitley. Their contributions have shaped the GST framework and paved the way for a more efficient tax system. As India evolves economically, introducing GST remains a landmark achievement, promising greater clarity and expansion in the tax landscape.

FAQs

Ans. The title is often attributed to Dr. Vijay Kelkar, but Prime Minister Atal Bihari Vajpayee is credited with initiating the concept.

Ans. GST in India dates back to 2000, and significant milestones led to its implementation on July 1, 2017.

Ans. Challenges included political disagreements, technological hurdles, and initial confusion among businesses.

Ans. GST has led to increased tax compliance, enhanced revenue collection, and a more streamlined tax structure.

Ans. GST is crucial for simplifying the tax system, improving transparency, and promoting economic growth in India.