Goods and Services Tax (GST)

In news: GST Council Decisions


From UPSC perspective, the following things are important :

Prelims level: GST, GST Council

Mains level: NA

Central Idea

  • The Goods and Services Tax (GST) Council convened its 50th meeting on July 11, announcing significant revisions and clarifications to tax rates.
  • Additionally, the council discussed the establishment of GST Appellate Tribunals.
  • It sought to address the concerns surrounding inclusion of the GST Network under the Prevention of Money Laundering Act (PMLA).

What is GST Council?

  • The Goods and Services Tax (GST) Council is a crucial body established under the 101st Constitutional Amendment in 2016 to oversee the implementation of the GST regime in India.
  • Comprised of representatives from the central government and the states, the Council plays a pivotal role in making recommendations and decisions related to GST.

Composition of the GST Council

  • Joint forum: The GST Council is a joint forum consisting of members from the Centre (Union Finance Minister and Union Minister of State for Finance) and representatives from the states.
  • State representation: Each state nominates a minister in charge of finance, taxation, or any other relevant minister to be a member of the Council.

Objectives of the GST Council

  • Recommendation-making authority: The Council is responsible for making recommendations to the Union and the states on important GST-related issues. This includes suggestions on the goods and services that should be subjected to or exempted from GST, as well as the formulation of model GST laws.
  • Decision-making on tax rates: The Council determines the various rate slabs under the GST regime. It has the authority to decide the applicable tax rates for different goods and services.

Recent Tax Rate Changes proposals

  • Uncooked and unfried snack pellets and fish soluble paste: The tax rate on these items was reduced from 18% to 5%.
  • Imitation zari threads or yarn: The GST rate on these items was reduced from 12% to 5%.
  • Food and beverages consumed inside cinema halls: The GST rate for these items was reduced to 5% without any input tax credits, compared to the previous 18% levied on cinema services.
  • Special utility vehicles (SUVs): The tax treatment for SUVs was clarified, ensuring that the higher GST compensation cess does not affect sedans. The conditions for classifying a vehicle as an SUV were revised to exclude the requirement of being popularly seen as an SUV. The ground clearance of 170 mm should now be for an unladen vehicle.
  • Exemption for satellite launch services: The Council offered an exemption on GST for satellite launch services provided by private organizations.

Other recommendations: GST Appellate Tribunals

  • Proposal for setting up GST Appellate Tribunals: States’ proposals to establish 50 Benches of GST Appellate Tribunals were examined. These tribunals will play a crucial role in resolving GST disputes.
  • Operational timeline: The government aims to make the tribunals operational within four to six months, starting with the establishment of Benches in State capitals and places where High Courts have Benches.
  • Appointment and service conditions: The Council cleared the appointment and service conditions for tribunal members and the president, which will come into effect from August 1.

Inclusion of GST Network under PMLA

  • Concerns raised by non-BJP ruled states: Representatives from states not governed by the BJP criticized the decision to bring the GST Network under the purview of the Prevention of Money Laundering Act (PMLA) administered by the Enforcement Directorate (ED).
  • Tamil Nadu’s opposition: Tamil Nadu expressed opposition to the move, stating that it is against the interests of taxpayers and goes against the objective of decriminalizing offenses under the GST law.
  • Explanation and clarification: Revenue Secretary presented an explanation of the provision, stating that it is a requirement of the Financial Action Task Force (FATF) and not directly related to the GST law.
  • Information sharing: The GSTN will not share information about private businesses with other law enforcement agencies. The ED will neither receive nor provide information, but the director of the Financial Intelligence Unit may provide information to the GSTN to empower tax authorities in combating tax evasion and money laundering.


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