MAINS Current Affairs includes Nine Years of GST (2017–2026) &  VB-G RAM G Act, 2025

ECONOMY

1. Nine Years of GST (2017–2026)

Context: 1 July 2026 marks 9 years of GST, introduced through the 101st Constitutional Amendment Act, 2016.

• GST replaced multiple indirect taxes with a unified indirect tax system across India.

About GST

• Introduced on 1 July 2017.
• Destination-based indirect tax on supply of goods and services.
• Replaced 17 Central and State indirect taxes and multiple cesses.
• Based on the principle of “One Nation, One Tax, One Market.”
• Governed by the GST Council under Article 279A.

Major Achievements of GST

1. Formalisation of the Economy

• Expanded India’s formal tax base.
• GST registrations increased from 5 lakh (2017) to nearly 1.65 crore (May 2026).
• Improved tax compliance through digital registration and return filing.

2. Strong Revenue Growth

• Gross GST collections increased from ₹7.4 lakh crore (2017–18) to ₹22.27 lakh crore (2025–26).
• Improved tax buoyancy and government revenue.

3. Creation of a Unified National Market

• Eliminated multiple indirect taxes across states.
• Reduced cascading (tax-on-tax) effect through Input Tax Credit (ITC).
• Facilitated seamless interstate trade.

4. Digital Tax Administration

• Online registration, return filing, e-way bills and e-invoicing.
• Increased transparency and reduced tax evasion.

5. Improved Ease of Doing Business

• Simplified indirect taxation.
• Reduced logistics costs and compliance duplication.
• Enhanced supply chain efficiency.

GST 2.0 Reforms

Rationalisation of Tax Rates

• Earlier four slabs (5%, 12%, 18%, 28%) largely rationalised into:
• 5%
• 18%
• 40% GST introduced for luxury and demerit goods.

Household Relief

• Nil GST (0%) on:
• UHT milk (tetra pack)
• Paneer
• Roti
• Erasers
• Essential household products like soap, toothpaste and kitchenware shifted to 5%.

Healthcare Reforms

• GST exemption on life and health insurance.
• Reduced GST on essential medicines and medical devices.

Sector-Specific Support

• Addressed Inverted Duty Structure in key industries.

Institutional Strengthening

• GST Appellate Tribunal (GSTAT) operationalised for faster dispute resolution.

Benefits of Next-Generation GST

• Simpler tax structure.
• Lower compliance burden.
• Greater consumer relief.
• Improved ease of doing business.
• Faster dispute resolution.
• Better tax administration through digital systems.
• Strengthened national market integration.

Challenges

Revenue Loss

• GST rate reductions may result in an estimated ₹48,000 crore revenue loss.
• Requires broadening of the tax base.

Input Tax Credit (ITC) Issues

• Removal of ITC on healthcare and insurance may increase operational costs for service providers.

Petroleum Outside GST

• Petrol, diesel and other petroleum products remain outside GST.
• Continues cascading taxation and increases logistics costs.

Transitional Compliance Burden

• Businesses need:
• Pricing revisions.
• Software updates.
• Billing system modifications.

State Revenue Concerns

• States remain concerned after the end of the GST compensation mechanism.
• Fear revenue shortfalls due to rate rationalisation.

Slower Revenue Growth

• GST collections continue to rise in absolute terms.
• However, year-on-year growth has moderated, raising concerns about long-term revenue buoyancy.

Way Forward

AI-Based Tax Administration

• Use AI for:
• Invoice matching.
• Real-time ITC verification.
• Detection of fake invoices and tax fraud.

Strengthen Cooperative Federalism

• Build consensus through the GST Council.
• Address states’ revenue concerns.

Broaden GST Base

• Bring more goods and services under GST.
• Consider inclusion of petroleum products to achieve a truly comprehensive GST.

Faster Dispute Resolution

• Operationalise GSTAT across all proposed locations.
• Reduce litigation and improve taxpayer confidence.

Conclusion

Over nine years, GST has transformed India’s indirect tax system by creating a unified national market, improving tax compliance, and strengthening formalisation. Future reforms should focus on tax base expansion, technology-driven compliance, inclusion of petroleum products, cooperative federalism, and efficient dispute resolution to make GST simpler, more efficient, and revenue sustainable.

GOVERNANCE

2. VB-G RAM G Act, 2025

Context: The Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) [VB-G RAM G] Act, 2025 came into force on 1 July 2026.

• It replaces the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005.

Background

• India introduced several rural employment programmes before MGNREGA:
• Rural Manpower Programme (1960s)
• Crash Scheme for Rural Employment (1971)
• National Rural Employment Programme (NREP)
• Rural Landless Employment Guarantee Programme (RLEGP)
• Jawahar Rozgar Yojana (JRY)
• Sampoorna Grameen Rozgar Yojana (SGRY)
• Maharashtra Employment Guarantee Act (1977) introduced the concept of a legal right to work.
• MGNREGA (2005) provided a statutory guarantee of rural employment.
• VB-G RAM G (2025) modernises rural employment by linking livelihood security with infrastructure creation and sustainable development under Viksit Bharat @2047.

Key Features of VB-G RAM G

Increased Employment Guarantee

• Annual guaranteed employment increased from 100 days to 125 days per rural household.

Pause During Peak Agricultural Season

• States can notify up to 60 days during sowing and harvesting seasons when works will remain suspended.
• Objective:
• Ensure availability of agricultural labour.
• Avoid labour shortages during peak farming periods.

Revised Funding Pattern

• General States: Centre : State = 60 : 40
• North-Eastern & Himalayan States/UTs with Legislature: 90 : 10
• UTs without Legislature: 100% Central funding
• Marks a shift from MGNREGA, where the Centre largely bore wage costs.

Normative Allocation of Funds

• Annual allocations decided by the Central Government using objective criteria based on the 16th Finance Commission’s horizontal devolution formula.
• Replaces demand-driven labour budget allocations under MGNREGA.

New Governance Framework

• Eight draft rules cover:
• Governance
• Grievance redressal
• Administrative expenditure
• Fund allocation
• Wage payments
• Unemployment allowance
• Monitoring councils
• State expenditure procedures

Gramin Rozgar Guarantee Card

• Replaces MGNREGA Job Cards.
• Existing e-KYC verified job cards remain valid until new cards are issued.
• Issued through Gram Panchayats.
• Valid for 3 years and renewable.
• Special coloured cards for:
• Women
• Elderly
• Persons with Disabilities
• Bonded labourers
• PVTGs
• Transgender persons

Timely Wage Payments

• Wages to be paid:
• Weekly, or
• Within 15 days of muster roll closure.
• Delay compensation:
• 05% of unpaid wages per day.

Wage Rates

• Centre empowered to notify regional wage rates.
• Wage cannot be below MGNREGA wage.
• Minimum floor wage: ₹300/day.
• State-wise wages range:
• ₹300–₹409/day
• Up to ₹450/day in parts of Sikkim.

Unemployment Allowance

• If work is not provided within 15 days:
• First 30 days: 25% of notified wage
• Thereafter: 50% of notified wage

Significance

Stronger Livelihood Security

• Higher employment guarantee reduces seasonal unemployment and income insecurity.

Better Wage Protection

• Floor wage reduces interstate wage disparities.

Climate-Resilient Rural Development

• Focus on water conservation, natural resource management and disaster-resilient infrastructure.

Inclusive Rural Employment

• Greater focus on women, vulnerable groups, PVTGs and persons with disabilities.

Durable Rural Assets

• Greater emphasis on creating productive infrastructure rather than temporary works.

Supports Viksit Bharat @2047

• Links employment generation with sustainable rural development and long-term economic growth.

Challenges

Greater Centralisation

• Normative allocation reduces the demand-driven nature of MGNREGA.
• May weaken local planning by Gram Panchayats.

Financial Burden on States

• States now bear 40% of total expenditure, increasing fiscal pressure.

Digital Exclusion

• Dependence on biometric authentication and digital systems may exclude:
• Elderly
• Tribal communities
• Remote rural populations

Weakening Rights-Based Approach

• Shift from a legally enforceable employment guarantee towards a more centrally managed development programme.

Reduced Local Autonomy

• Centralised fund allocation and planning may reduce flexibility for local development priorities.

Way Forward

• Ensure adequate fiscal support to States.
• Strengthen Gram Panchayat autonomy and participatory planning.
• Improve digital inclusion while providing offline alternatives.
• Strengthen social audits and transparency.
• Integrate climate-resilient and natural resource-based works.
• Build administrative capacity for effective implementation.
• Ensure timely wage payments and efficient grievance redressal.

Conclusion

The VB-G RAM G Act, 2025 represents a major shift in India’s rural employment policy by combining livelihood security with infrastructure creation and sustainable development. Its success will depend on adequate funding, cooperative federalism, inclusive implementation, stronger local governance, and transparent execution while preserving the core objective of providing employment security to rural households.

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