GST Council: Constitutional Provisions and Functions

The Goods and Services Tax (GST) Council is the apex decision-making body for matters related to GST in India. It was established through the 101st Constitutional Amendment Act, 2016, under Article 279A, to create a harmonized tax structure across the country. As a constitutional body, the Council ensures cooperative federalism by bringing together the Union and State governments to decide on crucial aspects of GST policy, rates, exemptions, and administration.

Constitutional Provisions of the GST Council

The GST Council derives its authority directly from the Constitution. Important provisions include,

• Formation of the GST Council: Article 279A(1) mandates the President to constitute the Council within 60 days of the 101st Amendment.
• Recommendations on Levy: Article 279A(5) allows the Council to recommend when GST should be levied on products such as petroleum, diesel, and aviation fuel.
• Guiding Principles: Article 279A(6) ensures that Council recommendations foster a unified national market.
• Procedural Authority: Article 279A(8) empowers the Council to set its own procedures.
• Validity of Proceedings: Article 279A(10) maintains that decisions remain valid even if vacancies or procedural irregularities occur.
• Dispute Resolution: Article 279A(11) authorises the Council to resolve disputes between the Centre and States over GST matters.

Composition of the GST Council

The Council represents both the Centre and States, ensuring a balance of power,

• Chairperson: Union Finance Minister.
• Vice-Chairperson: Elected from among the State Finance Ministers.
• Members: Union Minister of State for Revenue or Finance.
• Finance or Taxation Ministers (or nominees) of each State.
• Permanent Invitee: Chairperson of the Central Board of Indirect Taxes and Customs (CBIC) (non-voting).
• Ex-Officio Secretary: Union Revenue Secretary.

Functions of the GST Council

The primary functions of the GST Council are outlined in Article 279A(4). They include making recommendations on,

• Taxes to be Subsumed: Identifying Union, State, and local taxes to be merged under GST.
• Goods and Services: Specifying items subject to or exempt from GST.
• Model Laws: Framing model GST laws and principles for inter-state trade under Article 269A.
• Thresholds: Fixing turnover limits for GST exemptions.
• GST Rates: Recommending standard, floor, and band rates of GST.
• Special Rates: Suggesting additional rates during natural calamities or disasters.
• State-Specific Provisions: Making special provisions for Northeastern and hilly states.
• Other Matters: Any issue relating to GST implementation or administration.

Working of the GST Council

The Council functions on a model of cooperative federalism, with equal participation from Centre and States,

• Quorum: At least half of the total members must be present.
• Decision-Making: Requires at least three-fourths majority of weighted votes.

Vote Weightage

• Central Government: One-third of total votes.
• State Governments (collectively): Two-thirds of total votes.

Major Outcomes of GST Council Meetings

Since its formation, the Council has delivered several landmark decisions,

• Adoption of the dual GST model, where both Centre (CGST) and States (SGST) levy tax.
• Classification of goods and services under tax slabs.
• Launch of an online GST compliance system for return filing and payments.
• Introduction of Input Tax Credit (ITC) to reduce cascading taxes.
• Provision of composition schemes to ease compliance for small businesses.
• Regular rationalisation of GST rates to reduce the burden on consumers.