The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, will meet after a gap of eight months on June 22.

The 52nd meeting of the GST Council was held on October 7, 2023.

Goods and Services Tax (GST)

• The introduction of the Goods and Services Tax (GST) in India marked a significant reform in indirect taxation by consolidating numerous central and state taxes into a single unified tax.

• The primary objective was to eliminate cascading taxes and create a unified national market.

• Prior to its implementation, the proposal underwent extensive deliberation by various bodies such as the empowered committee of state finance ministers, select committee of Rajya Sabha, and Parliamentary Standing Committee on Finance.

• The Constitution (One Hundred and First Amendment) Act was passed after being ratified by a majority of states and received presidential assent on September 8, 2016.

• Subsequently, key legislations including the Central Goods and Services Tax (CGST) Act, Integrated Goods and Services Tax (IGST) Act, Union Territory Goods and Services Tax (UTGST) Act, and Goods and Services Tax (Compensation to States) Act were enacted to facilitate the implementation of GST from July 1, 2017.

• The implementation of GST aimed to streamline taxation, promote ease of doing business, and realize the vision of ‘one nation, one market’ across India.

GST Council

• Goods and Services Tax Council is a constitutional body for making recommendations to the Union and state government on issues related to GST. 

Composition:

• The chairperson of the GST Council is the Union Finance Minister.

• A member of the GST Council includes the Union Minister of State in charge of revenue or finance.

• Each state government nominates a minister responsible for finance or taxation, or another designated minister, as a member of the GST Council.

• The role of vice-chairperson rotates among the state representatives.

The chairperson of the Central Board of Excise and Customs (CBEC) attends as a permanent invitee to the GST Council but without voting rights.

• The secretary of the revenue department serves as the ex-officio secretary to the GST Council.

Powers of GST Council:

• A GST Council meeting requires at least 50 per cent of its total members to be present for decisions to be valid.

• Decisions of the GST Council are based on a majority of not less than three-fourths of the weighted votes of members present and voting.

• The central government holds one-third of the total votes, while states collectively have two-thirds weightage in voting.

Functions of GST Council:

• The GST Council determines which taxes, cesses, and surcharges are to be subsumed under GST.

• It decides on the goods and services to be taxed under GST and those exempted from GST.

• The council formulates GST laws and principles for levying and distributing GST on interstate trade.

• During natural disasters, the council may levy special rates or additional resources through GST for relief efforts.

• The council sets turnover thresholds below which businesses are exempted from GST.

• It decides on GST rates, including setting a floor rate and establishing rate bands.

• The council considers and implements special GST provisions for states like Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand.

Significance of GST Council:

• Decisions made by the GST Council are based on consensus among all participating states and the central government.

• It reinforces federal principles by involving states in decision-making on tax matters.

• The council addresses emerging challenges and issues related to GST implementation.

• It oversees IT readiness, conducts consultations, workshops, and training for stakeholders involved in GST implementation.

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