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Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of federalism?

The 101st Constitutional Amendment Act, passed in 2016, introduced the Goods and Services Tax (GST) in India, effectively overhauling the indirect tax system of the country. It represented a landmark shift in the federal tax structure, aiming to unify India into a single market.

Significance of the 101st Constitutional Amendment Act:

  1. Unified Tax Regime: Before the implementation of GST, India had a complex system of indirect taxes imposed by both the Centre and the States. The 101st Amendment replaced multiple overlapping taxes like VAT, Service Tax, Excise Duty, etc., with a single unified tax system.
  2. Elimination of Cascading Effect: The introduction of GST eliminated the cascading effect of taxes (tax on tax) thereby reducing the overall tax burden on goods.
  3. Increased Tax Compliance: With a uniform structure and transparent mechanism, tax compliance has seen improvement.
  4. Boost to Economy: By simplifying the tax structure and reducing the cost of doing business, the GST system was aimed at boosting economic growth and increasing overall tax revenue.
  5. Inter-state Tax Disputes: Earlier, tax-related disputes among states, especially in cases of inter-state transactions, were frequent. The GST regime aimed at reducing such disputes.

Accommodative Spirit of Federalism Reflected in the Amendment:

  1. GST Council: One of the most notable features is the creation of the GST Council, which is a federal body where both the Centre and the States are represented. This Council makes decisions related to the GST regime, ensuring that both the Union and the States have a say in the tax system.
  2. Revenue Sharing: The Amendment provides for a mechanism for sharing the revenue earned from GST between the Centre and the States. This ensures that no state is at a loss due to the implementation of GST.
  3. Special Provisions for States: Recognizing the unique needs and concerns of some states, the Amendment allowed them to levy certain additional taxes, ensuring their fiscal needs are met.
  4. Compensation to States: As a part of the accommodative approach, it was decided that states would be compensated for any revenue loss owing to the implementation of GST for a period of five years. This was aimed at assuaging the concerns of states that feared revenue losses.
  5. Consensus Building: The very fact that the GST, which was pending for a long time, was finally passed showed the consensus-building among different political parties and states, reflecting cooperative federalism.


The 101st Constitutional Amendment Act is significant in India’s economic and political landscape. While there have been challenges in its implementation, the spirit of federal cooperation in the conceptualization and operation of the GST regime is evident. It stands as a testament to India’s commitment to cooperative federalism, where the Centre and States work together, accommodating each other’s concerns for the larger good of the nation.

May 2024