GST Council

What is the Goods and Services Tax Council? 

• In order to implement Goods and Services Tax (GST), the Constitutional (122nd Amendment) Bill was passed by the Parliament and by more than 15 states, and thereafter Hon’ble President gave assent on the 8th of September, 2016. 
• Since then, the GST council has been notified, bringing into existence the Constitutional body to decide issues relating to GST and responsible for providing recommendations to the Union and the State governments on matters related to Goods and Services Tax (GST).

Objectives of GST Council 

The objectives of the GST Council are: 

• To ensure a smooth implementation of the GST, regulate the goods and services tax regime in India. 
• To harmonize tax laws across states, to simplify the tax structure, eliminate cascading taxes, and reduce compliance costs.
• To monitor all the taxation processes to avoid fraudulent processes.

 

What are the Constitutional provisions pertaining to the GST Council?

GST Council

Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.

Composition of the GST Council

Article 279A(2): The Goods and Services Tax Council shall consist of the following members:

Vice-Chairperson

Article 279A(3): The Members of the Goods and Services Tax Council shall choose one member amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. 

Functions

Article 279A(4): The Goods and Services Tax Council shall make recommendations to the Union and the States on

• The taxes, cesses, and surcharges levied by the Union, the States, and the local bodies which may be subsumed in the goods and services tax.
• The goods and services that may be subjected to, or exempted from, the goods and services tax.
• Model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A, and the principles that govern the place of supply.
• The threshold limit of turnover below which goods and services may be exempted from goods and services tax.
• The rates include floor rates with bands of goods and services tax. 
• Any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.
• Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand; and any other matter relating to the goods and services tax, as the Council may decide. 

Article 279A(5): The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, and aviation turbine fuel. 

Article 279A(8): The Goods and Services Tax Council shall determine the procedure for performing its functions.

Article 279A(11): The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute arising out of the recommendations of the Council or implementation thereof between: 

• the Government of India and one or more States
• the Government of India and any State or States on one side and one or more other States on the other side
• two or more States  

Functioning of GST Council

Article 279A(7): One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings. 

Article 279A(9): Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:

• the vote of the Central Government shall have a weightage of one-third of the total votes cast. 
• the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting.

Other provisions

Article 279A(6): While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.

Article 279A(10): 

• No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of.
• Any vacancy in, or any defect in, the constitution of the Council.
• Any defect in the appointment of a person as a Member of the Council.
• Any procedural irregularity of the Council not affecting the merits of the case. 

 

What are some of the significant outcomes of the GST Council?

GST Council’s decisions have a direct impact on the tax burden of businesses and consumers and on the overall economic environment of the country. Some of the major outcomes of the GST Council include

• The GST Council has recommended implementing a dual GST model in India, under which both the Central and State Governments levy GST on the supply of goods and services.
• The GST Council has classified goods and services into five tax slabs: 0%, 5%, 12%, 18%, and 28%. Some goods and services have also been exempted from GST, while others have been subjected to additional cesses on top of the applicable GST rate.
• The GST Council has implemented a comprehensive GST compliance system, including an online portal for filing GST returns and making tax payments.
• The GST Council has reduced the compliance burden on businesses by allowing businesses to avail of input tax credits for GST paid on their purchases and allowing for the composition scheme for small businesses.

 

What are the outcomes of the 49th GST Council meeting?

• The Government of India has decided to clear the entire pending balance of GST compensation for June 2022. 
• The Council approved the Report of GoM on Capacity Based Taxation and Special Composition Scheme in certain Sectors on GST, with a view to plugging the leakages and improving the revenue collection from the commodities like pan masala, gutkha, and chewing tobacco. 
• GST rate cut on Rab from 18% to nil or 5% if sold prepackaged and labelled and on pencil sharpeners has decreased from 18% to 12%.
• Exemptions to educational institutions and Central and State educational boards for the conduct of entrance examinations.
• Extended the dispensation available to Central Government, State Governments, Parliament, and State Legislatures with regard to payment of GST to the Courts and Tribunals, also in respect of taxable services supplied by them.
• The Council recommended increasing the time period for filing of return from the present 30 days to 60 days, extendable by another 60 days, subject to certain conditions and amnesty schemes by way of conditional waiver/ reduction of late fee.
• The Council recommended rationalizing the late fee for delayed filing of annual returns for FY 2022-23 and rationalizing the provision of a place of supply for services of transportation of goods.