Constitutional Status
- The GST Council is a constitutional body established by the 101st Constitutional Amendment Act, 2016.
- Article 279A empowers the President to constitute the GST Council by an executive order.
Purpose and Role
- Apex body for deciding GST policies, rates, and exemptions across India.
- Promotes cooperative federalism by involving both Union and State governments.
- Acts as the key decision-making authority for India’s unified indirect tax regime.
Secretariat
- Located in New Delhi, it provides administrative support to the Council.
Composition of the GST Council
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- Chairperson: Union Finance Minister.
- Vice-Chairperson: Elected from among State Ministers.
- Members:
- Union Minister of State for Finance/Revenue.
- Finance/Taxation Ministers of all States.
- Non-voting invitees:
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- Chairperson of the Central Board of Indirect Taxes and Customs (CBIC).
- Ex-officio Secretary: Union Revenue Secretary.
Working of the GST Council
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- Quorum: 50% of total members.
- Voting system:
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- Central Govt: 1/3rd weight.
- State Govts (combined): 2/3rd weight.
- Decisions require ¾th majority of weighted votes.
- Proceedings not invalid due to vacancy or procedural issues.
Types of GST
- CGST: Collected by the Centre on intra-state supplies.
- SGST/UTGST: Collected by State/UT on intra-state supplies.
- IGST: Collected by the Centre on inter-state supplies and imports.
Major Functions of the GST Council
- Recommend:
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- Taxes, cesses, and surcharges to be subsumed under GST.
- Exempted goods and services.
- Model GST laws and principles of levy and place of supply.
- Threshold limits for exemption.
- GST rates, floor rates, and bands.
- Special rates during natural calamities/disasters.
- Date for inclusion of petroleum and other fuels under GST.
Dispute Resolution Function
- Can establish a mechanism to resolve:
- Centre vs. one/multiple States.
- Inter-State disputes.
- Centre + State(s) vs. other State(s).
Compensation Mechanism
- Recommends compensation to States for GST revenue losses for 5 years (2017–2022).
- Parliament enacts legislation based on its recommendations.
Vision & Mission
- Vision: Build highest standards of cooperative federation in tax governance.
- Mission: Design a user-friendly, IT-driven GST framework through wide consultations.
Significance
- Ensures uniformity in tax structure across India.
- Balances interests of Centre and States – example of cooperative federalism.
- Plays a key role in India’s economic integration and fiscal consolidation.
Challenges
- Disagreements between Centre and States (e.g., compensation delays).
- Complexity in rate rationalisation.
- Inclusion of key fuels still pending.
Conclusion
The GST Council is a landmark in India’s fiscal history. It facilitates collaborative decision-making and helps maintain the delicate Centre-State fiscal balance. It will remain pivotal in evolving the GST regime for economic efficiency and federal harmony.