ARADHANA JAIN

STUDENT AT INSTITUTE OF LAW, NIRMA UNIVERSITY

ABSTRACT

The introduction of the Goods and Services Tax (GST) in India has a profound impact on the federal system of governance of the country. The GST has significantly altered the financial relationship between the central government and the states, leading to a more cooperative and collaborative framework. This paper aims to explore the impact of GST on Indian federalism, examining its implications for the distribution of financial resources, revenue autonomy, and the balance of power between the states and the centre. The paper argues that while the GST has increased the centralization of taxation powers, it has also provided a mechanism for ensuring greater transparency, accountability, and efficiency in the collection and distribution of tax revenues.

The Goods and Services Tax (GST) in India has been introduced in 2017 marked a significant milestone in the country’s economic and political history. The GST replaced a complex and fragmented system of indirect taxation that was characterized by a multitude of taxes, rates, and exemptions. The GST sought to streamline the taxation system by introducing a single tax rate for goods and services and a unified tax administration. However, the GST has also had far-reaching implications for India’s federal system of governance.

This paper aims to examine the impact of GST on Indian federalism, analysing its implications for the distribution of financial resources, revenue autonomy, and the balance of power between the centre and the states. The paper argues that while the GST has increased the centralization of taxation powers, it has also provided a mechanism for ensuring greater transparency, accountability, and efficiency in the collection and distribution of tax revenues. The paper concludes by highlighting the need for continued dialogue and cooperation between the centre and the states to ensure that the benefits of the GST are shared equitably and that the federal structure of the Indian polity is strengthened.

Keywords: GST, federalism, tax, responsibility.