Goods and Services Tax Council (GST Council)

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Goods and Services Tax Council (GST Council)
Goods and Services Tax Council (GST Council)

The Goods and Services Tax Council (GST Council), a constitutional body in India, embodies the nation’s commitment to the development of a harmonized national market for goods and services. It stands as a guardian of the smooth functioning of the indirect tax regime in India. This article of Next IAS aims to study in detail the Goods and Services Tax Council (GST Council), including its evolution, composition, functions, powers, and other related aspects.

  • The Goods and Services Tax (GST) Council is a constitutional body in India.
  • It has been established to make decisions and recommendations to the Union and State Governments on all issues related to the Goods and Services Tax (GST).
  • It is an apex decision-making body responsible for formulating policies, rules, and regulations governing the GST system in the country.
  • The Secretariat of the GST Council is located in New Delhi.
– Goods and Services Tax is an indirect tax levied in India on the supply of goods and services.
– It is a value-added tax levied on most goods and services sold for domestic consumption.
– It was launched in India in 2017 as a comprehensive indirect tax for the entire country.
– It is a comprehensive, multistage, destination-based tax because it has subsumed almost all the indirect taxes except a few state taxes.
– It is paid by the consumers and is remitted to the government by the businesses selling the goods and services.
– It is of three types:
a. CGST is to be levied by the Centre,
b. SGST is to be levied by the States and
c. IGST is a tax levied on all Inter-State supplies of goods and/or services.
– All these taxes are levied at rates mutually agreed upon by the Centre and the States.
– The GST Council is the governing and key decision-making body for GST.
  • The 101st Amendment Act of 2016 paved the way for the introduction of a new tax regime, that is, Goods and Services Tax (GST) in the country.
  • This Amendment Act inserted a new Article 279-A in the Constitution, which empowers the President to constitute a Goods and Services Tax Council or the GST Council by an order.
    • Accordingly, the President issued the order in 2016 and constituted the GST Council.

As the first constitutional federal body vested with powers to take all major decisions related to GST, the GST Council aims to establish the highest standards of the cooperative federation in the functioning of the Council.

The Mission of the GST Council is to use a process of wider consultation to evolve a GST Structure, which is Information Technology-driven and user-friendly.

As a joint forum of the Center and the States, the GST Council consists of the following members:

Chairperson– The Union Finance Minister
Vice -Chairperson– The Members of the GST Council from the States have to choose one amongst themselves as the Vice-Chairperson of the Council.
– The members can also decide their term.
Members– The Union Minister of State in charge of Revenue or Finance.
– The Ministers in charge of Finance or Taxation or any other Minister nominated by the State Government.
– The Chairperson of the Central Board of Indirect Taxes and Customs (CBlC) is a permanent invitee (non-voting) to all proceedings of the GST Council.
– The Union Revenue Secretary (Department of Revenue, Ministry of Finance) acts as the ex-officio Secretary to the GST Council.
  • The GST Council takes every decision at its meetings by a majority of not less than three-fourths of the weighted votes of the members present and voting.
    • The least quorum required for conducting a meeting is 50% of the total number of members of the Council.
  • The weights of the votes are calculated as follows:
    • Weightage of Center’s Vote: The vote of the Central Government is assigned a weightage of one-third of the total votes cast in a particular meeting.
    • Weightage of States’ Votes: The votes of all the state governments combined is assigned a weightage of two-thirds of the total votes cast in a particular meeting.
    • Any proceedings or acts of the GST Council will not become invalid on the following grounds:
    • Any defect or vacancy in the constitution of the GST Council,
    • Any defect in the appointment of any member of the GST Council,
    • Any procedural irregularity of the GST Council does not affect the merits of the case.

The GST Council is required to make recommendations to the Centre and the States on the following matters:

  • The taxes, cesses, and surcharges levied by the Center, the States, and the local bodies would get subsumed into GST.
  • The goods and services that may be subjected to or exempted from GST.
  • The model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-state trade or commerce, and the principles that govern the place of supply.
  • The threshold limit of turnover below which goods and services may be exempted from GST.
  • The rates include the floor rates with bands of GST.
  • Any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.
  • Recommending the date on which the GST may be levied on petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel.
  • Establishing a mechanism to adjudicate upon the dispute:
    • between the Center and one or more States,
    • between the Center and any State or States on one side and one or more other States on the other side,
    • between two or more States.
  • Recommending compensation to the States for the loss of revenue arising on account of the introduction of GST for five years.
    • The Parliament determines the compensation based on these recommendations.

The Goods and Services Tax (GST) Council stands as a testament to India’s commitment to fostering cooperative federalism and streamlining its indirect tax regime. Since its inception, the GST Council has played a pivotal role in formulating policies, resolving disputes, and ensuring the smooth implementation of the GST system across the country. By bringing together representatives from the Union and State governments, the Council has facilitated constructive dialogue, consensus-building, and decision-making on crucial aspects of GST. As India continues its journey towards economic growth and fiscal consolidation, the GST Council remains at the forefront, guiding the nation towards a more transparent, efficient, and unified tax regime.

Is the GST Council a Statutory Body?

No, the GST Council is a Constitutional body.

Who are the members of the GST Council?

In the GST (Goods and Services Tax) Council, the Union Finance Minister serves as the Chairperson. The members of the Council include the Union Minister of State for Revenue or Finance, along with the Minister in charge of taxation or finance from each State government, or any other minister nominated by the respective State governments.

Who heads the GST Council of India?

The Union Finance Minister heads the GST Council in India.

What are some of the taxes subsumed by GST?

The State taxes that have been subsumed under the GST are State VAT, Central Sales Tax, Luxury Tax, Entry Tax (all forms), Entertainment and Amusement Tax (except when levied by the local bodies), etc.

What are the different tax slabs under GST?

The primary GST slabs for any regular taxpayers are presently at 0% (nil-rated), 5%, 12%, 18% & 28%.

GST was introduced under which amendment of the constitution?

The GST was introduced under the 101st Constitutional Amendment Act of 2016.

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