Discuss the rationale for introducing Goods and Services Tax (GST) in India. Bring out critically the reasons for the delay in roll out for its regime.

Rationale for GST

The Goods and Services Tax was conceived to replace a fragmented indirect-tax system with a single, destination-based tax. Its rationale rested on several gains:

• Removing the cascading 'tax on tax' effect through a seamless input tax credit chain.
• Subsuming multiple central and state levies — excise, service tax, VAT, octroi, entry tax — into 'One Nation, One Tax' and creating a common national market.
• Widening the tax base, improving compliance through the GSTN's technology backbone, cutting logistics costs and improving ease of doing business.
• Embodying cooperative federalism through the GST Council under Article 279A.

Reasons for the delay

• A trust deficit between the Centre and states over compensation for revenue loss and the assured compensation formula.
• The need for a constitutional amendment (the 101st Amendment, 2016) requiring wide political consensus.
• Disputes over the revenue-neutral rate, dual administrative control and thresholds, and over keeping petroleum and alcohol outside GST.
• Building the GSTN IT infrastructure and reconciling divergent state interests.

Conclusion

These issues were finally resolved with the 101st Amendment, and GST was rolled out on 1 July 2017 — a landmark, if still-evolving, reform of Indian fiscal federalism.