Goods and Services Tax (GST)

What is the GST Council, and what does it do?   


From UPSC perspective, the following things are important :

Prelims level: GST Council

Mains level: Powers and Functions of GST Council

Why in the news?

The 53rd meeting of the Goods and Services Tax (GST) Council convened in Delhi, chaired by Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs, on Saturday, June 22nd.

What is the GST Council?

  • The GST Council is a constitutional body established under Article 279A of the amended Constitution of India.
  • It is a joint forum consisting of the Union Finance Minister (as Chairperson), the Union Minister of State for Finance, and representatives from each state and Union Territory (UT) with legislatures.
  • The Council is responsible for making recommendations on issues related to GST, including tax rates, exemptions, and model GST laws.

Powers and Functions of the GST Council

  • Recommendations on GST Issues: The Council advises the Union and State Governments on matters related to the goods and services tax.
  • Tax Rates: It decides on the rates of GST applicable to goods and services, including any modifications or exemptions.
  • Dispute Resolution: It addresses disputes that may arise between the Union and States or among States regarding GST.
  • Administrative Changes: The Council can recommend administrative changes to improve the efficiency of GST implementation.
  • Review and Revision: Periodically review GST rates and provisions to align with economic realities and policy objectives.

Evolution of the GST Council since its inception:

  • Formation and Initial Years: Established in 2016 after the passage of the 122nd Constitutional Amendment Act. The Council began functioning in 2017 when GST was implemented nationwide.
  • Operational Efficiency: Over the years, the Council has evolved to streamline decision-making processes, including real-time discussions and consensus-building among members.
  • Expansion of Scope: Initially focusing on setting basic tax rates and exemptions, the Council’s scope expanded to include amendments to GST laws and procedural changes.
  • Judicial Scrutiny: In 2022, the Supreme Court clarified that the Council’s recommendations are not binding but reflect collaborative efforts between the Union and States.
  • Adaptation to Challenges: Adapted to economic fluctuations, pandemic challenges (like the postponement of GST filing deadlines during COVID-19), and evolving sectoral needs.
  • Interstate Dynamics: The voting structure of the Council, with states collectively having a two-thirds voting share, underscores its federal and cooperative nature.

Conclusion: The GST Council, pivotal since 2017, advises on GST matters, sets tax rates, resolves disputes, and evolves with economic shifts. Its federal structure ensures collaborative decision-making for efficient tax administration in India.

Mains PYQ:

Q Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India since July 2017. (UPSC IAS/2019)

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