GST Council: Constitutional Provisions and Functions

The 101st Constitutional Amendment Act of 2016 formed the GST Council as a constitutional body in India. It is responsible for overseeing the implementation and administration of the Goods and Services Tax (GST). The Council plays a key role in addressing GST-related issues and making recommendations to the Union and State governments on taxation matters. Additionally, it is vital in shaping the GST framework and ensuring effective execution throughout the country.

Overview of GST Council

The GST Council, established under Article 279A of the Constitution, is an essential body for managing GST implementation. Its goal is to create a unified tax system and promote a common national market for goods and services. The President of India established the Council in 2016, with its Secretariat based in New Delhi.

• Vision: The GST Council aims to set a high standard of cooperative federalism and is the first constitutional body with the power to make key decisions regarding GST.
  
• Mission: Its mission is to evolve a GST system through consultations, focusing on creating a user-friendly, technology-driven framework.
  

Objectives of the GST Council

The Council plays a crucial role in shaping policies, resolving disputes, and ensuring smooth GST implementation. Its main objectives include:

• Ensuring effective implementation of GST across the country.
  
• Simplifying the tax structure, eliminating cascading taxes, and lowering compliance costs.
  
• Monitoring taxation processes to prevent fraud.
  

Constitutional Provisions Related to GST Council

Specific constitutional provisions outlined in the 101st Constitutional Amendment Act, 2016, govern the GST Council. Key provisions include:

1. Formation of the GST Council: Article 279A (1) mandates the President to establish the GST Council within 60 days of the Amendment’s enactment.
   
2. GST Levy Date: Article 279A (5) empowers the GST Council to recommend when GST should be applied to certain goods (like petroleum and natural gas).
   
3. Guiding Principles: Article 279A (6) ensures the Council’s work promotes a unified national market and harmonized GST structures.
   
4. Procedural Framework: Article 279A (8) tasks the GST Council with defining the procedures for carrying out its duties.
   
5. GST Dispute Resolution: Article 279A (11) requires the Council to address any disputes between the central and state governments regarding GST.
   

GST Council Composition

The GST Council is made up of the following members:

• Chairperson: Union Finance Minister.
  
• Vice Chairperson: Elected by Council members.
  
• 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 and Customs (CBIC) (non-voting).
  
• Ex-officio Secretary: Union Revenue Secretary from the Ministry of Finance.
  

Functions of the GST Council

The GST Council’s primary role is to provide recommendations on various aspects of GST, including:

• Taxes to be Subsumed: Identifying taxes, cesses, and surcharges to be included in the GST.
  
• Goods and Services Subject to GST: Deciding which goods and services will be taxed or exempted under GST.
  
• Model GST Laws: Establishing principles related to GST laws, including inter-state trade.
  
• Threshold Turnover Limit: Determining the turnover limit for GST exemptions.
  
• GST Rates: Recommending GST rates, including special rates in emergencies or for specific states.
  
• Other GST Matters: Addressing any other GST-related issues as decided by the Council.
  

Working of the GST Council

The GST Council operates as a platform where both the Union and State governments collaborate on GST-related issues. Key features of its functioning include:

• Quorum Requirement: At least half of the members must be present for a valid meeting.
  
• Decision-Making Process: Decisions require a three-fourths majority of the weighted votes from members present.
  
  • Central Government votes carry one-third of the weight.
    
  • State Governments’ votes carry two-thirds of the weight.
    

Major Decisions and Developments

The GST Council’s decisions directly affect the tax burden on businesses and consumers. Some significant outcomes include:

• Dual GST Model: The GST Council introduced a dual model where both the Centre and States levy GST on goods and services.
  
• Five Tax Slabs: GST has five tax rates: 0%, 5%, 12%, 18%, and 28%. Certain goods and services are exempted or subject to additional cesses.
  
• GST Compliance System: The GST Council has created an online portal for GST returns and payments, simplifying compliance.
  
• Reduction of Tax Burden: The Council has reduced the compliance burden by allowing businesses to claim input tax credits and offering a composition scheme for small businesses.
  

Recent Developments

The GST Council recently held meetings where significant changes were introduced:

• 53rd GST Council Meeting: Reduced GST on paper cartons and milk cans.
  
• 54th GST Council Meeting: Reduced GST on cancer drugs.
  
• 55th GST Council Meeting: Reduced GST on fortified rice kernels and proposed exemptions for gene therapy treatments. It also suggested increasing GST on the sale of used vehicles and adjusting the Compensation Cess rate.
  

These decisions reflect the Council’s ongoing role in refining and adapting the GST framework to the country’s economic needs.