GST Council of India: Roles, Powers & Structure Imagine this scenario: before 2017, if a person wanted to send goods from Mumbai to Delhi, they could face the services of tax checks, with each state charging a tax service. Even a simple commercial transaction could have meant a series of tax norms. In comes the GST and with it, a highly empowered body called the GST council, which completely revolutionised the tax structure of India. But what is this body, and how does it work to ensure a unified tax structure of India? GST Council Overview The GST Council is a pivotal constitutional body tasked with overseeing the implementation and administration of the GST in India. Formed under the 101st constitutional amendment through Article 279A, the GST council plays a critical role in creating a harmonised tax structure and fostering a unified national market for goods and services. In line with this, the president of India issued the order in 2016 and constituted the council, with its secretariat located in New Delhi.
Vision: The vision of the GST Council is to set the highest standard of cooperative federalism, making it the first constitutional body empowered to make significant decisions regarding GST.
Mission: Its mission focuses on evolving a GST structure through wide consultations, aiming to create a user-friendly, information technology-driven system.
Objective of the GST Council The GST Council has been instrumental in shaping policies, settling disputes and ensuring the seamless execution of the GST system throughout the nation since its establishment. It’s key objectives include the following:
To ensure a smooth implementation of GST:
To simplify the tax structure, eliminate cascading taxes, and reduce compliance costs.
To monitor all the taxation processes to avoid fraudulent processes.
GST Council Constitutional Provisions The GST Council, established under the 101st constitutional amendment act, is a constitutional body tasked with making key recommendations on Goods and Services Tax. Significant constitutional body tasked with making key recommendations on Goods and Services Tax, significant constitutional provisions related to the council include:
Formation of the GST Council: Article 279A (1) mandates the President to form the GST Council within 60 days of the commencement of the 101st Amendment Act
GST Levy Date Recommendation: Article 279A (5) empowers the GST Council to recommend the date for levying GST on specific goods like petroleum, diesel, petrol, natural gas, and aviation fuel.
Guiding Principles for Functioning: Article 279A (6) ensures that the GST Council's actions promote a unified national market and harmonise GST structures.
Procedural Framework: Article 279A (8) assigns the GST Council the responsibility to establish procedures for carrying out its functions.
Validity of GST Council Proceedings: Article 279A (10) ensures the validity of GST Council proceedings despite vacancies or flaws, as long as they do not affect the merits or procedural integrity.
GST on Specific Goods: Article 279A (11) tasks the GST Council with resolving disputes between the Government of India and States regarding GST implementation.
GST Council Composition According to Article 279 A of the amended constitution, the GST council, a collaborative body between the centre and states, consists of the following members:
Chairperson
The Union Finance Minister
Vice Chairperson
The GST council members, a vice-chairperson from among themselves for a period they decide.
Members
Union Minister of state for revenue or finance.
State minister for finance, taxation or a nominated minister
Permanent Invitee
Chairperson of the Central Board of indirect taxes costumes
Ex-offocio Secretary
Union Revenue Secretary from the Ministry of Finance.
Functions of the GST Council The functions of the GST council are outlined in Article 279A. It mandates the council to provide recommendations to both the Union and State governments on various aspects of GST, such as tax rates, exemptions, threshold limits, and other matters related to its implementation and administration.
Taxes to be Subsumed: The taxes, cesses, and surcharges levied by the Union, the States, and the local bodies which may be subsumed in the goods and services tax.
Goods and Services Subject to GST: The goods and services that may be subject to, or exempted from, the GST.
Model GST Laws and Principles: Model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-state trade or commerce under Article 269A, and the principles that govern the place of supply.
Threshold Turnover Limit: The threshold limit of turnover below which goods and services may be exempted from GST.
GST Rates: The Rates Include Floor Rates With Brands of GST Special provisions for Emergencies: Any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.
Special Provisions for Specific States: Special provisions concerning the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand;
Other Matters Related to GST: Any other matter relating to the GST, as the Council may decide.
Working of the GST Council The GST Council serves as a collaborative platform where the Union and state governments discuss, deliberate, and make decisions on GST-related matters. Its functioning ensures that both levels of government are represented, promoting cooperation and inclusivity. Key aspects of its working include the following:
Quorum Requirement: Article 279A (7) states that at least one-half of the total members of the GST Council must be present to constitute the quorum for its meetings.
Decision-Making Process: Article 279A (9) specifies that every decision of the GST Council must be made at a meeting with a majority of not less than three-fourths of the weighted votes of the members present and voting.
Vote Weightage: The vote of the Central Government carries a weightage of one-third of the total votes cast at the meeting.
The collective votes of all State Governments carry a weightage of two-thirds of the total votes cast.
Suggested Read: Appointment & Powers of Officers under GST
GST Council Meetings Outcomes The GST council’s decisions have a direct impact on the tax burden of businesses and consumers, as well as on the overall economic environment of the country. Some of the major outcomes of the GST Council include:
Dual GST Model: The GST council has recommended implementing a dual model in India, under which both the central and state governments levy GST on the supply of goods and services.
Five Tax Slabs: The GST Council has classified goods and services into five tax slabs, including 0%, 5%, 12%, 18%, and 28%. Some goods and services have also been exempted from GST, while others have been subjected to additional cesses on top of the applicable GST rate.
GST Compliance System: The GST Council has implemented a comprehensive GST compliance system, including an online portal for filing GST returns and making tax payments.
Reduction of Tax Burden: The GST Council has reduced the compliance burden on businesses by allowing businesses to avail of input tax credits for GST paid on their purchases and allowing for the composition scheme for small businesses.
Conclusion The GST Council of India is one of the most important reasons behind the smooth functioning and uniform implementation of Goods and Services Tax throughout the country. The Council, via a common platform for the Union and State governments, ascertains that federalism is kept alive through consensus-based decision-making. Its well-defined structure, clearly defined powers, and advisory authority strike a perfect balance between national economic objectives and state-specific interests.
Suggested Read: GST Rates in India
FAQS What is the GST Council of India? The GST council is a constitutional entity formed under Article 279A to advise on policies, rates, exemptions, and procedures for GST.
Who are the members of the GST council? It is made up of the Union Finance Minister (Chairperson), Union Minister of State for Finance, and Finance Ministers of all States and Union Territories.
What are the main roles played by the GST council? The council recommends the GST rates, the exemption levels, the the exemptions, the model laws, and the procedures for implementing the GST in India.
Is the GST Council's decisions binding on states? These are not binding recommendations, but they are taken more or less as gospel.
How are decisions made in the GST Council? Decisions are by voting, with one weightage in favour ofCentre and two-thirds in favour of the States.
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