What is GST Council - How is GST Implementated?

The concept of GST, Goods and Services Tax, is not relatively a new one. The concept of a single tax called the Goods and Services Tax was proposed in the year 1999. GST was also accepted by the then Prime Minister of India, Mr. Atal Bihari Vajpayee and he gave it a go ahead. He constituted a committee to design a GST model.

The head of the committee was then Finance Minister Mr. Asim Dasgupta, under the flagship of Vajpayee Government. However, that time, the GST model was not completely designed. Later on, in February 2006, the acting Finance Minister, Mr. P Chidambaram continued working on the GST model. The final model was implemented on 1st July 2017 by the Finance Minister, Mr. Arun Jaitley. From July 2017. GST replaced all other forms of indirect taxation and became the uniform, comprehensive and a destination-based form of indirect tax. After the concept of GST was implemented, the Government of India also formed a GST Council. The reason for establishing the council was to ensure that the rules of GST would be implemented in all parts of India and that every eligible establishment would abide by the GST rules. So, the GST Council became the governing body of GST implementation in India.

Creation of the GST Council

Creation of the GST Council was facilitated by the Constitution (One Hundred and Twenty Second Amendment) Bill 2016 was approved by the President of India on 8th September 2016. The objective of the Bill was to introduce GST in India. Thereafter, the notification for enforcing Article 279A was issued on 10th September 2016 and the Article came into effect from 12th September 2016. On this date, in a Union Cabinet meeting, the establishment of the GST Council was approved along with the establishment of the GST Council’s Secretariat. The Finance Minister at the time, Mr. Arun Jaitley, also convened the first meeting of the GST Council on 26th and 27th September 2016.

Need for a GST Council

As stated earlier, GST Council is the governing body for the implementation of GST rules in India. It is tasked with the duties to make important decisions and changes in GST. The GST Council is authorised to determine the rate of tax applicable under the GST model, tax exemption rules, the due date of submitting GST forms, tax related laws and deadlines and special exemptions for some States of India. The GST Council is tasked to ensure that one uniform rate of GST is applied on goods and services all across India.

Features of GST Council

GST Council has the following features –
  • The office of the council is located in New Delhi
  • The Ex-officio Secretary to the GST Council is the Revenue Secretary of India
  • The Central Board of Excise and Customs (CBEC) is a chairperson and a permanent, non-voting invitee for all the meetings of the GST Council
  • A post for Additional Secretary to the GST Council would be created. This post would be equivalent to the level of the Additional Secretary to the Indian Government.
  • At the level of Joint Secretary of the GST Council, four posts of commissioner would be created in the GST Council Secretariat
  • The GST Council Secretariat would consist of officers on a deputation basis appointed from the Central as well as the State Governments

Structure of the GST Council

The structure of the GST Council is determined by Article 279 (1) of the amended Constitution of India. This Article states that the GST Council should be constituted by the President of India within a period of 60 days of the inception of Article 279A. The Article states that GST Council should be joint forum of the Central Government as well as the State Governments. It would consist of the following members –

  • The Chairperson of the council would be the Union Finance Minister of the country. Presently, Mr. Arun Jaitley is the Union Finance Minister of India and as such he is also the Chairperson of the GST Council
  • The Union Minister of State would be a member of the GST Council. He/she would be in charge of Revenue of Finance
  • The members of the GST Council would be the minister who is in charge of finance or taxation or any other minister as nominated by the respective State Governments. Each State Government would nominate one minister to act as a member of the GST Council

Duties of the GST Council

Besides governing GST implementation in the country, the GST Council has two major duties to dispose of. These include making recommendations and holding GST Council meetings. Let’s understand these duties in details –

GST Council recommendations

According to the provisions laid down under Article 279A (4), the GST Council has the duty to make recommendations about GST to the Union Government as well as the State Governments. The council would decide which goods and services would be charged to GST and which would be exempted from it. Thereafter, the GST Council has the duty of creating laws and principles about the place of supply, threshold limits, special rates of GST for certain States of India, the applicable GST rates on various goods and services and special rates of GST during a natural calamity or a disaster so that additional resources can be raised for meeting the financial losses suffered, etc.

GST Council meetings

Another important duty of GST Council is to meet and discuss about the GST rules and laws which would be beneficial for dealers. Ever since the GST Council has been formed, various meetings have taken place. In the last GST Council meeting, the council decided that GST should be implemented on e-way bills which require goods valuing more than INR 50,000 being registered before they are moved. The GST Council also extended the deadline of filing the GSTR – 1. Anti-profiteering screening committees were also set up in the latest meeting of the GST Council. The aim of setting up these committees was to strengthen the National Anti-Profiteering Authority under the laws of GST. Besides formulating laws on GST, the GST Council also took decisions on the following aspects –

  • For Indian States, except the special category States, the threshold limit for exemption of GST would be set at INR 40 lakhs
  • In case of special category States, the threshold limit for exemption of GST is set at INR 10 lakhs
  • In case of composition schemes, the threshold limit for GST exemption is set at INR 1.5 cr for Indian States. However, for North Eastern States and for Himachal Pradesh, the threshold limit of GST exemption is set at INR 50 lakhs
  • Goods like tobacco, pan masala, ice cream and other types of edible ice manufacturers would not be eligible to avail composition levy. However, in case of restaurant services, the composition levy would be allowed on these goods and manufacturing activities.
Similarly, in the 34th GST Council meeting, some of the decisions taken by the council included the following –
  • The GST rate on non-affordable houses was lowered 5%. For affordable houses, the GST rate was lowered to 1%. This lowered GST rate would be applicable on under-construction properties
  • Realty estate developers can choose older GST rate of 12% on non-affordable houses. In case of affordable houses, the GST rate of 8% can be chosen till May 10, 2019
  • If the old GST rate is chosen by any builder, the builder would not be able to claim input tax credit.

Besides these two duties, the GST Council also makes rules regarding GST registration, valuation, payment of GST, input tax credit, GST return, composition, transitional provisions, invoice and claiming refund, etc.

Quorum of GST meetings and decision making

Whenever a GST Council meeting is held, the following rules must be complied with –
  • At least 50% of the total number of GST members must be present at every GST Council meeting so that the meeting can be called a valid meeting
  • Every decision that is taken in GST Council meetings should be backed by a minimum of 75% majority of the weighted votes cast by the members of the council. The members should be present in the meeting and should also vote. For understanding the weighted votes cast by the Central Government and State Government members, Article 279A lays down the following rules –
  • The vote of the Central Government would have the weightage of 1/3rd of the total votes cast
  • The votes of the members of the State Government would have the weightage of 2/3rd of the total votes cast
  • Any type of act, decision taken or proceedings of the GST Council meeting would not be considered invalid if there have been the following deficiencies when the GST Council was established –
  • A vacancy remained in the council
  • There was a defect in the constitution of the council
  • There was a defect in appointing an individual as the member of the council
  • In case of non-compliance of a procedure

Dispute handling by the GST Council

The GST Council is also charged with the duty to create a mechanism with which the following disputes would be settled –

  • Disputes between the Central Government and the State Government of a State
  • The disputes between the Central Government and one or more States on one side and one or more States on the other side
  • Disputes between two or more States which occurred due to any recommendation of the GST Council or due to the implementation of the recommendation of the
  • council.

Frequently Asked Questions

Q - How many GST Council meetings have happened so far?

So far, 34 GST Council meetings have been convened

Q - Who chairs the meetings of GST Council?

The Union Finance Minister of India chairs the meetings of the GST Council. Currently, the Union Finance Minister is Mr. Arun Jaitley and as such he is the chairperson of the GST Council meetings.

Q -What is the attendance criterion for a valid GST Council meet?

For a GST Council meeting to be valid, at least 50% of the members of the council should be present at the meeting.

Q -What is the GST Council Secretariat?

GST Council Secretariat is the body which manages the GST Council. The Secretariat consists of members who are deputation officers of the Central as well as the State Governments.

Q -Who bears the cost of managing the GST Council Secretariat?

The Central Government bears the total cost of managing the GST Council Secretariat. In the first ever GST Council meeting which was conducted after establishing the GST Council, the Union Cabinet allocated sufficient funds for taking care of the recurring as well as non-recurring expenses of the GST Council Secretariat.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.