The Goods and Services Tax (GST) Council is a constitutional body responsible for making recommendations on key aspects of GST in India. Established under Article 279A of the Constitution through the 101st Constitutional Amendment Act, 2016, it plays an important role in coordinating tax policies between the Central and State governments.
The Council provides a platform for cooperative federalism by bringing together representatives of the Union and the States. Its recommendations cover GST rates, exemptions, model laws, special provisions for certain states, and other matters necessary for the effective administration of the indirect tax system.
Constitutional Provisions Related to the GST Council
The GST Council derives its authority from Article 279A of the Indian Constitution. This provision establishes its composition, responsibilities, and decision-making framework.
Article 279A: Establishment of the GST Council
Article 279A(1) empowers the President to constitute the GST Council within 60 days of the commencement of the 101st Constitutional Amendment Act. The Council was formally constituted in September 2016.
Important Constitutional Clauses
- Article 279A(1): Provides for the constitution of the GST Council.
- Article 279A(4): Specifies the matters on which the Council makes recommendations to the Union and States.
- Article 279A(5): Provides for recommendations concerning the date on which GST may be levied on petroleum crude, high-speed diesel, petrol, natural gas, and aviation turbine fuel.
- Article 279A(6): Requires the Council to be guided by the need for a harmonised GST structure and the development of a harmonised national market.
- Article 279A(8): Authorises the Council to determine its procedure for performing its functions.
- Article 279A(11): Provides for a mechanism to adjudicate disputes arising from the Council’s recommendations or their implementation between the Union and States, or among States, subject to the constitutional provision.
Composition of the GST Council
The composition of the GST Council reflects the participation of both the Central and State governments in indirect tax policymaking.
Members of the Council
Under Article 279A(2), the GST Council consists of:
- Union Finance Minister: Chairperson of the GST Council.
- Union Minister of State in charge of Revenue or Finance: Member of the Council.
- State representatives: The Minister in charge of Finance or Taxation, or another minister nominated by each State government, is a member.
Representatives of Union Territories with legislatures also participate in accordance with the applicable constitutional and legal framework.
Vice-Chairperson and Secretariat
Under Article 279A(3), the State representatives choose one among themselves to serve as Vice-Chairperson for a period they decide. The Council is supported by administrative arrangements that help organise meetings, prepare agendas, and communicate decisions.
Major Functions of the GST Council
Article 279A(4) lists the principal areas on which the GST Council makes recommendations. These recommendations help maintain consistency in GST administration across the country.
GST Rates and Exemptions
The Council recommends the tax rates applicable to goods and services, along with categories that may be exempt from GST. It also considers rate adjustments to address economic conditions, revenue requirements, and the need to reduce classification-related difficulties.
Taxes to Be Subsumed Under GST
The Council recommends which Central, State, and local taxes, cesses, and surcharges should be incorporated into the GST framework. This helped create a more integrated indirect tax system when GST was introduced in 2017.
Model GST Laws and Threshold Limits
The Council recommends model GST laws and principles governing the levy and collection of GST on inter-State supplies. It also considers turnover thresholds below which businesses may be exempt from registration, subject to the applicable law.
Special Provisions for States
The Council may recommend special provisions for specified States, including those in the North-Eastern and Himalayan regions, where relevant. It can also recommend special rates for a specified period to raise additional resources during natural disasters or calamities.
How Does the GST Council Make Decisions?
The GST Council follows a constitutionally defined voting system designed to balance the interests of the Union and the States.
Quorum and Voting Requirements
Under Article 279A(7), one-half of the total number of members constitutes the quorum for a meeting. Under Article 279A(9), a decision requires at least three-fourths of the weighted votes of members present and voting.
The voting weight is divided as follows:
- Central Government: One-third of the total weighted votes.
- State Governments collectively: Two-thirds of the total weighted votes.
This arrangement ensures that neither the Union nor the States can independently secure the required majority.
Cooperative Federalism in Practice
The Council provides a forum for discussion and negotiation between different levels of government. Although its recommendations are central to GST policymaking, their legal effect must be understood in the context of the applicable legislation and constitutional principles.
In its 2022 judgment in Union of India v. Mohit Minerals Pvt. Ltd., the Supreme Court clarified that GST Council recommendations have persuasive value and are not binding on Parliament and State legislatures in the exercise of their legislative powers.
Major Contributions of the GST Council
Since its establishment, the GST Council has helped shape the functioning of India’s indirect tax system.
Development of the Dual GST Model
India adopted a dual GST structure in which the Centre and States generally levy their respective components on intra-State supplies. These are known as Central GST (CGST) and State GST (SGST). Integrated GST (IGST) generally applies to inter-State supplies and imports under the relevant legal framework.
Input Tax Credit and Compliance
The GST framework includes provisions for input tax credit, which allow eligible businesses to claim credit for qualifying taxes paid on inputs, subject to statutory conditions. The Council has also considered changes to return filing, registration, and other compliance procedures.
Rationalisation of Tax Rates
The Council periodically reviews tax rates and exemptions to address economic needs, improve consistency, and reduce disputes. These decisions can influence consumer prices, business costs, government revenue, and the competitiveness of domestic industries.
Conclusion
The GST Council is a key institution in India’s indirect taxation framework. Article 279A provides its constitutional foundation, while its recommendations help coordinate tax policies between the Union and the States. Through decisions on rates, exemptions, model laws, and compliance, the Council supports a more harmonised GST system.
Its effectiveness depends on constructive cooperation, transparent deliberations, and the consistent implementation of applicable laws. The GST Council therefore remains an important example of cooperative federalism in India’s fiscal governance.
