1. Establishment of the GST Council

  • Background: The GST Council was established following the 101st Amendment Act of 2016 to manage the Goods and Services Tax, promoting cooperation between the central and state governments.
  • Constitutional Basis: Article 279-A was inserted into the Constitution, empowering the President to form the GST Council.
  • Secretariat: Located in New Delhi, with the Union Revenue Secretary as its ex-officio Secretary.

2. Vision and Mission

  • Vision: To set high standards of cooperative federalism in GST administration, making it the primary decision-making body on GST matters.
  • Mission: To create an IT-driven, user-friendly GST structure through widespread consultation and collaboration.

3. Composition of the GST Council

Members:

  • Union Finance Minister – Chairperson
  • Union Minister of State for Finance or Revenue
  • Finance/Taxation Ministers or nominated ministers from each state
  • Vice-Chairperson: Selected by state members, with the term decided by them.
  • Permanent Invitee: Chairperson of the Central Board of Indirect Taxes and Customs (CBIC), as a non-voting member.

    4. Working Mechanism of the Council

    Decision-Making:

    • Meetings require a quorum of half the Council members.
    • Decisions need a three-fourths majority, with voting weights distributed as:
      • Central Government: One-third of total votes
      • State Governments: Two-thirds of total votes
    • Validity of Actions: The Council’s actions remain valid despite procedural or appointment irregularities.

    5. Functions of the GST Council

    Recommendations to Center and States:

    • Taxes to be Included in GST: Identifies taxes, cesses, and surcharges from central, state, and local bodies for inclusion.
    • Goods and Services Exemptions: Determines items subject to or exempt from GST.
    • Model GST Laws and Principles: Provides guidelines on GST law, inter-state supply tax apportionment, and supply location principles.
    • Threshold for Exemption: Sets turnover limits below which businesses are exempt from GST.
    • Rates and Special Rates: Suggests base and ceiling rates, including special rates for disaster-related revenue generation.
    • Special Provisions for Specific States: Recommendations for states with unique economic needs, including northeastern states, Himachal Pradesh, and Uttarakhand.
    • Miscellaneous Matters: Covers other GST-related aspects as deemed necessary.

    6. Other Key Functions of the Council

    • Date for GST on Petroleum Products: Recommends when GST should apply to petroleum crude, diesel, petrol, natural gas, and aviation fuel.
    • Dispute Resolution: Establishes procedures for resolving disputes related to recommendations or implementation issues between:
      • Center and one or more states
      • Groups of states or a state against the Center
    • Compensation for States: Advises on compensating states for revenue losses due to GST implementation, as legislated in the Goods and Services Tax (Compensation to States) Act, 2017.