From UPSC perspective, the following things are important :
Prelims level : GST Council
Mains level : Functioning of the GST Council
- Breaking the tradition of consensus-based decisions in its 37 earlier meetings, the GST Council voted for the first time in its 38th meeting held on December 18.
GST Council voting rules
- As per The Constitution (One Hundred and First Amendment) Act, 2016, in case of a voting, every decision of the GST Council has to be taken by a majority of not less than three-fourths of the weighted votes of the members present.
- The vote of the central government has a weightage of one-third of the total votes cast, and the votes of all the state governments taken together have a weightage of two-thirds of the total votes cast in that meeting.
- As of now, out of the total 30 states and UTs (excluding J&K), 20 are ruled by the NDA.
- This essentially means that a vote in the Council could largely be an academic exercise — unless a number of the BJP’s allies switch sides.
Impacts of imbibing Voting
- With the precedent of voting now established, consensus at the Council could be challenged again in the future.
- The rules of voting in the GST Council are such that the odds are stacked in favour of the Centre in the normal course.
- However, in case of a vote, any disagreements within the ruling coalition at the Centre may bring its support below the three-fourths majority that is needed for the passage of a decision.
- Differences of opinion are likely to crop up on proposals to raise rates, especially of the lower slabs, in the future — a concern that made most states rule out an immediate rate hike in the last Council meeting, even as they were in agreement over a broader overhaul of the GST structure.
- So far, even if states voiced their differences over a proposal in the Council, all decisions had been taken by consensus in the meetings of the GST Council.
- With a departure from the consensus approach having been made, there could be more instances of voting exercises going forward — especially as revenue-raising measures come up in future meetings.
- The GST Council is a federal body that aims to bring together states and the Centre on a common platform for the nationwide rollout of the indirect tax reform.
- It is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of goods and services tax in India.
- The GST Council dictates tax rate, tax exemption, the due date of forms, tax laws, and tax deadlines, keeping in mind special rates and provisions for some states.
- The predominant responsibility of the GST Council is to ensure to have one uniform tax rate for goods and services across the nation.
How is the GST Council structured?
- The Goods and Services Tax (GST) is governed by the GST Council. Article 279 (1) of the amended Indian Constitution states that the GST Council has to be constituted by the President within 60 days of the commencement of the Article 279A.
- According to the article, GST Council will be a joint forum for the Centre and the States. It consists of the following members:
- The Union Finance Minister will be the Chairperson
- As a member, the Union Minister of State will be in charge of Revenue of Finance
- The Minister in charge of finance or taxation or any other Minister nominated by each State government, as members.
Terms of reference
- Article 279A (4) specifies that the Council will make recommendations to the Union and the States on the important issues related to GST, such as, the goods and services will be subject or exempted from the Goods and Services Tax.
- They lay down GST laws, principles that govern the following:
- Place of Supply
- Threshold limits
- GST rates on goods and services
- Special rates for raising additional resources during a natural calamity or disaster
- Special GST rates for certain States