Explain the salient features of the Constitution (One Hundred and First Amendment) Act, 2016. Do you think it is efficacious enough “to remove cascading effect of taxes and provide for common national market for goods and services”?
Approach · directive: “explain... do you think”
What it asks · Set out what the Amendment changed (new articles, GST Council, subsumed taxes, compensation, exclusions), then judge whether it achieves a cascade-free common market or falls short.
The question has 2 parts — answer each
- Explain the salient features of the 101st Amendment: new articles, the GST Council, subsumed taxes, exclusions and compensation
- Judge whether it is efficacious enough to remove cascading and create a common national market: achievements and limits, with a view
Open with · The 101st Amendment, which came into force in September 2016 (Article 279A on 12 September, Article 246A and others on 16 September) and enabled the GST rollout of 1 July 2017, created a single framework for taxing goods and services across the Union and the States.
Cover
- Concurrent taxing power: Article 246A empowers both Parliament and State Legislatures to make laws on GST; Article 269A provides for GST on inter-State supply, collected by the Union and apportioned.
- GST Council: Article 279A creates the Council of the Union Finance Minister, the Union Minister of State in charge of Revenue or Finance and State Ministers in charge of Finance or Taxation; the Centre has one-third of weighted votes and the States two-thirds, and decisions need a three-fourths majority.
- Other changes: the Amendment adds Article 366(12A) to define GST, and provides for compensation to States for revenue loss for a period of up to five years.
- Subsuming taxes: it merges Union and State indirect taxes such as excise, service tax, VAT and entry tax into GST, which allows input tax credit across the chain and removes cascading.
- Common market: one destination-based tax removes many barriers such as check-posts and simplifies inter-State trade.
- Limits: petroleum crude, diesel, petrol, natural gas and aviation turbine fuel remain outside GST until the Council recommends a date, and alcohol for human consumption remains under States.
- Practical issues: multiple rate slabs (as of 2017; from 22 September 2025 the main rates are 5 and 18 per cent, with 40 per cent for luxury and sin goods), compliance burden for small firms, technology teething problems and State concerns about fiscal autonomy and revenue.
Close with · The Amendment gives a sound legal basis for a common market and credit chain, but full efficacy needs wider coverage, fewer rates and smoother compliance.
Add value (verified)
- Article 279A(5) defers the taxation of petroleum crude, diesel, petrol, natural gas and aviation turbine fuel under GST until the Council recommends a date, an important limit on the reform. The Constitution of India (as on 1 May 2024), Article 279A(5) - Legislative Department ↗“The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.”
Question: UPSC's CS (Main) 2017, GS Paper II — paper ↗. Approach: Minimalist IAS, checked 30 Sept 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 363 words (UPSC limit 250) · Minimalist IAS
The Constitution (101st Amendment) Act, 2016, in force from September 2016, gave the Union and the States a shared power to tax goods and services and enabled the GST rollout of 1 July 2017, replacing a maze of central and State levies with one destination-based tax.
Salient features
- Article 246A: concurrent power for Parliament and State legislatures to legislate on GST; Article 269A: GST on inter-State supply, levied and collected by the Union and apportioned between the two.
- Article 279A: a GST Council of the Union Finance Minister, the Minister of State in charge of Revenue or Finance and the State Ministers of Finance or Taxation; the Centre holds one-third of the weighted vote and the States two-thirds, and a decision needs three-fourths.
- Article 366(12A) defines GST, and the Amendment provides for compensation to States for revenue loss for up to five years.
- Subsumed taxes: central excise, service tax, State VAT, entry tax and others merge into GST, with input tax credit running across the whole chain.
- Exclusions: Article 279A(5) keeps petroleum crude, diesel, petrol, natural gas and aviation turbine fuel out until the Council recommends a date; alcohol for human consumption stays with the States.
Is it efficacious enough?
- Cascading: a seamless credit chain across goods, services and State borders removes the tax-on-tax that the old split between excise, VAT and service tax produced.
- Common market: one tax on one base ends entry taxes and check-posts, so goods move on a national rather than a State grid.
- Cooperative federalism: the Council is a standing forum in which neither side can decide alone.
- Limits: the fuel and alcohol exclusions leave a large slice of the economy outside the credit chain; multiple rate slabs in 2017 blurred the 'one tax' idea (since 22 September 2025 the main rates are 5 and 18 per cent, with 40 per cent for luxury and sin goods); compliance strained small firms and the technology platform in the first year; and States fear for their fiscal autonomy once compensation ends.
The Amendment is the right constitutional scaffold for a cascade-free common market; its efficacy is real but partial, and it grows as coverage widens, rates converge and compliance eases.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.