What Are the Most Essential Features of the Constitution (122nd Amendment) Bill, 2014?

The Union Government had introduced the Constitution (122nd Amendment) Bill in December 2014. This bill was passed in the parliament with the motive that it will create a way for the proposed introduction of the Goods and Services Tax (GST) in the country.

The Goods and Services Tax (GST) had been introduced with the aim of making India a national and unified common market. Its objective was to remove the pre-existing trade barriers in the form of tax-on-tax effect. Therefore, to eliminate such drawbacks, the Union Government presented the Constitution (122nd Amendment) Bill, 2014 to the lower house of the Parliament.

Some Salient Features of the Constitution (122nd Amendment) Bill, 2014

According to the bill,

  • Both the states as well as the centre are entitled to impose the Goods and Services Tax (GST) on the supply of any goods and/or services within any state.

  •  The GST Council recommends tax rates. It also recommends the period over which additional taxes will be levied, special provisions and the major principles of supplies and so on.

  • The members of the GST Council are the State Finance Ministers nominated by each State Government, Union Finance Minister as Chairman and Union Minister for State of Finance or Revenue.

  • A new Article (Article 246A) had been inserted in the Constitution which gave power to both the central and the state governments to make laws on levying tax on goods and/or services.

  • The GST Council is in charge of inspecting issues related to goods and services tax. The Council is also in charge of making recommendations to the States and the Union regarding rates, threshold limits, exemption list, etc.

  • All the seventeen indirect taxes that existed previously, some of which are the Value Added Tax (VAT), Sales Tax, Octroi Tax, Entry Tax, Entertainment Tax, Luxury Tax, etc. are subsumed under GST.

  • GST tax rates are uniform throughout the country. However, there is a provisional narrow tax band over the rates of SGST and CGST in order to allow a fiscal autonomy to the Centre and the States.

  • GST has promised compensation for any kind of revenue loss due to the implementation of GST, for up to five years. The compensation rates will be 100% for the first 3 years, 75% on the 4th year and 50% on the last and 5th year.

  • The Centre will levy and collect an additional tax of not more than 1%, on supply of goods for trade and commerce within states. This additional tax will be assigned for two years or as the GST Council will recommend.

  • There will be restriction by the Constitution on states on the imposition of taxes on supply of goods and services but not on sale. Previously, there were restrictions, over the imposition of taxes on both supply as well as sale of goods.

  • Services can be defined as “anything other than goods”. This definition is modelled after the regulations that were prevalent in the VAT structure of the European Union. This also widens the scope of the Goods and Services Tax to be eligible to tax items such as lottery tickets, etc.

  • GST is levied on sale of advertisements and newspapers. This industry has so far been tax free but under GST, there will be substantial increment in revenues through this taxation.

  • Both the centre and the states levy GST. The centre levies and collected the Central Goods and Services Tax (CGST) and the states levy the State Goods and Services Tax (SGST) on all transactions within states.

  • The power of the GST Council to discuss certain situations has been widened. Some of those issues are- disputes arising out of the recommendation of the bill itself, imposition of taxes during disasters and introducing special provisions with regard to the Himalayan states.

  • Goods and Services Tax (GST) is a multi-staged and destination-based tax. It is a tax that would reduce complexity of the levy of Value Added Tax and Service Tax on work contracts, hire purchase transactions, restaurants, etc.

  • Almost all goods and services fall under GST except alcohol for human consumption, petroleum products, electricity and a few others. The reason behind this is unknown but the GST Council will discuss this on a future date.


GST has achieved both GST advantages and disadvantages through this bill. The Constitution (122nd Amendment) Bill, 2014 aims at constitutional empowerment of the Goods and Services Tax (GST). It contains various transitional contingencies. However, the state and central governments need to be vigilant of the difficulties and lack of clarity that might arise out of this bill.

While the bill holds an enormous amount of potential to bring about changes in the Indian tax framework, it is in its nascent stage. There are several questions that this bill keeps unanswered which has led to much confusion and criticism. This bill definitely needs to be discussed and debated.






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