GOODS AND SERVICES TAX (GST) COUNCIL

CONTEXT
• GST was introduced through the 101st Constitutional Amendment Act, 2016.
• Based on the Constitution (122nd Amendment) Bill, 2016.
• Article 279A mandates creation of the GST Council within 60 days of commencement.
• GST Council was formally notified on 12 September 2016.
• Serves as a federal institutional mechanism for Centre–State cooperation in indirect taxation.

WHAT IS THE GST COUNCIL?
• A constitutional body under Article 279A.
• Apex decision‑making authority on GST‑related matters.
• Ensures uniformity of tax structure and harmonised national market.
• Functions as a cooperative federal platform between Centre and States.

COMPOSITION OF GST COUNCIL
• Union Finance Minister – Chairperson.
• Union Minister of State (Finance/Revenue) – Member.
• Finance/Taxation Minister of each State – Members.
• Chairperson of CBIC – Permanent invitee (non‑voting).
• Vice‑Chairperson – chosen by members from among State Ministers.
• Total voting members: 33 (2 from Centre + 31 from States/UTs with legislature).

SPECIAL FEATURES OF COMPOSITION
• Reflects cooperative federalism model.
• States collectively hold 2/3rd voting weight; Centre holds 1/3rd.
• Ensures that no decision can pass without broad consensus.
• GST Council Secretariat is located in New Delhi.

MANDATE / FUNCTIONS OF GST COUNCIL
The Council makes recommendations on:
• Taxes, cesses, surcharges to be subsumed into GST.
• List of goods/services under GST or exempted.
• Model GST laws; principles of levy; interstate supply (Article 269A).
• Threshold turnover limits for GST exemption.
• GST rate structure, including floor rates and rate bands.
• Special rates for emergency needs such as natural calamities.
• Special provisions for NE states + hill states (11 special category states).
• Date from which GST will apply on petroleum crude, high‑speed diesel, petrol, natural gas and ATF.
• Any other matter required for smooth GST administration.

GUIDING PRINCIPLES
• Harmonised national GST market.
• Uniformity in tax administration.
• Avoidance of cascading taxes.
• Promotion of ease of doing business.

DECISION MAKING PROCESS
• Decisions require ≥ 3/4th majority of weighted votes.
Weightage:
  – Centre: 1/3rd of total votes.
  – All States combined: 2/3rd of total votes.
• Quorum: 50% of total members.
• Consensus‑based functioning preferred; voting used rarely.

ABSENTEEISM OR VACANCY – EFFECT
• Decisions of Council remain valid even if:
  – Some seats are vacant.
  – A member is improperly appointed.
  – Procedural irregularity exists (not affecting merits).

DISPUTE RESOLUTION MECHANISM
Council must establish a mechanism to resolve disputes between:
• Centre vs one or more States.
• Centre + group of States vs other States.
• State vs State.
Issues may arise from Council recommendations or their implementation.

ADDITIONAL POINTS
• GST Council is considered India’s most successful model of cooperative federalism.
• It meets regularly – more than 50 meetings held since inception.
• Has introduced major tax reforms, inverted duty corrections, rate rationalisation.
• Plays key role in resolving compensation issues under GST Compensation Act, 2017.
• Strong example of fiscal federal negotiation – often compared to Australia’s Council of Australian Governments (COAG).
• Has power to form committees and GoMs (Groups of Ministers) on specific issues.
• Acts as a forum for dispute minimisation rather than adversarial federal litigation.
• Strengthened digital governance – e‑way bill, GSTN integration, invoice matching processes.
• Ensures predictability and stability in indirect taxation.
 

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Subject: Polity

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