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GST Council is a constitutional body that is responsible for managing all aspects of Good and Service tax (GST). GST Council is responsible for making recommendations on issues related to GST. The 101st Amendment Act of 2016 paved the way for the introduction of a new tax regime (i.e. goods and services tax – GST) in the country.l. 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.
The GST Council plays a key role in simplifying India's goods and services tax system. It replaces the previous complex tax structure with more straightforward methods, making taxation easier for taxpayers. The Council also monitors the entire taxation process, supporting relevant departments and preventing fraud.
The GST Council is comprised of 33 members, including the Union Finance Minister, Ministers of State, and the Finance Ministers of all the states and union territories of India. Check the complete list here.
We need a GST Council to streamline the tax system by eliminating multiple taxation processes and replacing them with a unified Goods and Services Tax (GST). This simplification reduces complexities and promotes ease of doing business. Additionally, the GST Council introduces new, standardized taxation methods that enhance user-friendliness and transparency. By providing a centralized mechanism for tax regulation and monitoring, it helps prevent fraudulent practices and promotes compliance. Ultimately, the GST Council ensures a smoother and more efficient taxation process for all stakeholders, including businesses, consumers, and the government, fostering a more robust and transparent economic framework.
The 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.
The GST Council primarily makes recommendations to the Union and State governments on various GST-related matters, including:
These responsibilities make the GST Council pivotal in shaping India's indirect tax framework.
To gain a deeper understanding of the Council's functioning, it is important to explore its members and their roles, which we will cover in the next section.
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 –
Besides governing the GST implementation in the country, the GST council also plays a vital role in shaping India's indirect tax system through the following functions:
The Council decides which goods and services are subject to GST and which are exempt. These decisions are critical for revenue generation by both the Central and State governments.
It determines tax rates for various goods and services under the GST regime. These rates influence product prices, consumer behavior, and business operations, making this one of the Council's most impactful roles.
The Council formulates rules and principles for the levy, collection, and apportionment of GST. These regulations govern how GST is implemented and managed across the country.
The Council acts as a dispute resolution body, addressing conflicts between the Centre and States or among States regarding GST-related matters.
It provides special recommendations for North Eastern states and hilly regions to address their unique needs.
The GST Council is also charged with the duty to create a mechanism with which the following disputes would be settled –
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The Union Finance Minister of India chairs the meetings of the GST Council. Currently, the Union Finance Minister is Mrs. Nirmala Sitharaman and as such she is the chairperson of the GST Council meetings.
For a GST Council meeting to be valid, at least 50% of the members of the council should be present at the meeting.
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.
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.
There are a total of 33 members in the GST council, consisting of the Union Finance Minister of India (Chairperson), Union Minister of State (Finance), and representatives of all the States and Union Territories.
The GST Secretariat, responsible for managing the GST Council, is staffed by representatives from both the Central and State Governments.
The quorum for GST Council meetings is the minimum number of members required to validate the meeting. As per the Constitution, one-third of the total members form a quorum, ensuring decisions are made with adequate representation from the Council.
