GST Council - Structure, Power, and Decisions

One of India’s most important tax changes, the Goods and Services Tax (GST), was created to streamline and simplify the nation’s intricate tax system. The main organization in charge of creating and carrying out the GST framework is the GST Council. By debating and choosing on many facets of GST, such as its rates, exemptions, and regulations, it plays a vital part in forming the country’s tax structure.

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What is GST Council Meeting (GCM)?

At intervals, representatives of the two governments- the Union and the State- meet and deliberate on all aspects of the Goods and Services Tax system in India. Such meetings are now termed as the GST Council Meetings or GCMs. These gatherings serve to ensure that the GST system continues to remain flexible and adaptable to the needs of trade and economy.

The Council is entitled to recommend on different matters such as taxes and rates, and procedures or classifications. Such meetings are called when all relevant stakeholders come together: Union Finance Minister, State Finance Ministers, and other authorities concerned-to address general taxation issues and draw a vision for future tax policy reforms under the GST regime.

The GST council enjoys powers under Article 279A of the Indian Constitution, which was introduced for the Council to afford it legality. These meetings, presiding by the Union Finance Minister, normally take place in the Government of India’s Ministry of Finance. quick decision making.

How Many GST Council Meetings (GCM) Have Been Held So Far?

As of 2024, the GST Council has held 54 meetings, with the latest taking place on September 9, 2024. These meetings focus on optimizing India’s indirect tax structure and have introduced key reforms to enhance compliance and address sector-specific concerns

Key Dates and Decisions of GST Council Meetings (GCMs)

Here’s a brief overview of significant GST Council meetings:

GCM Number	Date	Key Decisions
1st	June 14, 2017	Initial GST implementation framework approved.
28th	July 21, 2018	Rate cut on sanitary napkins from 12% to 0%.
37th	September 20, 2019	Rate reduction on hotels with tariffs up to ₹7,500 from 18% to 12%.
44th	June 12, 2021	GST exemption for COVID-19 essential medicines and equipment.
54th	September 9, 2024	E-invoicing phased for B2C transactions, new GoMs on health insurance .

Major Highlights from the Latest GST Council Meetings (GCMs)

54th Meeting (2024):
- E-Invoicing: Phased rollout extended to B2C transactions for greater transparency.
- Online Gaming Tax: 28% GST rate maintained despite industry appeals.
- GST rate on Namkeen Products: 12% GST rate on Namkeens (branded or packed).
53rd Meeting:
- Addressed concerns about ITC on demo vehicles.
- Introduced RCM for commercial property renting by unregistered entities

Constitution of the GST Council

1. Union Finance Minister: The Union Finance Minister serves as the chair of the GST Council.

2. Union Minister of State for Finance: He serves as the GST Council’s deputy chairman.

3. State Finance Ministers: Each of the 28 states and 8 Union Territories has a Finance Minister representing him.

4. The GST Council Secretariat: The GST Council Secretariat shall be headed by the Secretary (Revenue) to the Government of India, who shall be responsible for implementing the decisions made during the GST Council meetings.

So, the agenda-setting and decision-making process shall be the sole responsibility of the Chairperson (Union Finance Minister) and Deputy Chairperson (Union Minister of State for Finance) under a defined agenda. The State Finance Ministers will talk for their states to achieve the necessary voice on the part of the Union and the States in the national GST policy.

Powers of the GST Council

The GST Council has been endowed with significant powers to oversee and recommend various aspects of the GST law. These powers are laid out in the Indian Constitution, under Article 279A, which grants the Council the authority to:

Recommend GST Rates: Recommending slabs of tax rates such as 5%, 12%, 18%, 28%, and categorization of goods and services falling under each slab.
Determine Composition Scheme: The GST Council is the one that determines the composition scheme which is a simple tax regime applicable to the small taxpayers having low turnovers. It prescribes the kinds of businesses that would pay at a fixed rate on their turnover.
Recommend Exemptions: The council may recommend exemptions to various goods and services on the basis of different social or economic issues such as exemption for certain products or services such as education, food, health care and other social needs.
Formulate IGST Law: The Council is empowered to recommend the Integrated Goods and Services Tax or IGST law governing interstate sales to ensure proper collection and allocation of tax as between centre and states.
Lay Down Procedures for Taxation: Procedures are laid down by the GST Council for collection, payment, and administration of GST. This includes the framing of rules regarding the filing of returns, audits, and other compliance requirements.
Arbitrate Disputes: The GST Council mediates disputes between the Union and State governments regarding the execution of the GST law. It seeks to harmonize the conflicting interests amongst the two levels of governance. This is very important as there is bound to be some kind of inverse representation on either side. 6.
Oversee GST Network: The GST Council would have continued to oversee the GST Network (GSTN), which is the technological backbone of GST, as an extension of its power for all administrative, enforcement, and welfare purposes. Because the network receives virtually all electronic data flow, returns, and payments routinely, it also keeps the GST system efficient and clearly visible to the public.

Rights and Duties of the GST Council

1. Tax Rate Recommendation: The GST Council shall be entitled to recommend tax rates, exemptions, and penalties on goods and services.

2. Policy Recommendation: The Power bonds include making suggestion and recommendations to Union and State Government on the implementation of GST Tax law.

3. Constitution of advisory bodies: The Council shall have the power to appoint advisory bodies and committees for the purposes of decision making and forming policies: consisting experts, tax professionals, and businessmen for insights on various impacts Gst provisions may have.

4. Change Tax Rates and Exemptions: The GST Council shall be empowered to revise the enacted tax and exemption rates from time to time considering the economic scenario or political will.

5. Dispute settlement: The GST Council would be the final arbiter in all disputes arising between the Centre and the States in the context of the implementation of GST. A state can appeal to the Council for the resolution of unsatisfied judgments.

Duties of the GST Council

1. Ensure Uniformity: The primary responsibility of the GST Council was to ensure the uniformity and consistency of the GST practices across different regions of the country. It also includes the standardization of the tax rates and procedure so that the variation in taxation may be reduced among the states.

2. Transparency: The GST council is supposed to ensure that its proceeding activity is transparent and its decisions are accessible to various stakeholders such as taxpayers, business owners, and the public in general.

3. Periodic Review: The GST council will conduct periodic reviews of the GST mechanisms with the following objectives: most basic, compliance with effectiveness, rates, and income generation possibilities for the government.

4. Stakeholder engagement: The council must bring in all these stakeholders like bodies in different industries, small category businesses, and trade associations in ensuring their inclusion in policy-making and regulations.

Major Decisions in Various GST Council Meetings

Since inception, the GST Council has held many meetings and made many decisions about GST which go towards crafting the present-day GST framework in India. Some of the crucial decisions include the following:

Introduction of GST Rates: The four-tiered tax rate structure as finalised by the Council under headings such as 5 percent, 12 percent, 18 percent, and 28 percent was a significant contribution by the GST Council for goods and services. It replaced earlier multiple taxes such as VAT, excise duty, and service tax.
Introduction of GST Refund Mechanism: The GST Council has approved a mechanism for the refund of taxes paid by exporters and businesses, ensuring that such taxes are not passed on to their exported goods.
Revamping of Composition Scheme: The composition scheme has been reviewed at regular intervals by the GST Council, permitting a lower turnover business the choice of opting for a simplified tax structure. The above revisions were meant to make the tax more user-friendly for small businesses.
Exemptions on Essential Goods: Another major decision of the Council was imposing exemptions on GST to all basic essentials such as food items, health care, or educational services, ensuring affordability to common man.
Simplifying Compliance: During its tenure, the Council has passed several important resolutions that are directed towards simplifying things relating to the GST compliance procedure. This includes a drastic cut in the number of returns to be filed, making provision for quarterly filing of returns for small businesses under GST, and simplifying the GST registration and GSTIN allotment process.

Conclusion

The GST Council: A very important factor in India’s future development in tax system Beyond that, the Council will ensure that the tax system is equitable, balanced, and efficient in promoting economic progress by assembling representatives from the Union and State Governments to create fair taxation that promotes balanced economic development. The Indian Constitution enumerates things well about its constitution, rights, and obligations, thus going on to meet the ever-growing needs of the economy and changing patterns of international trade.

The GST Council has been holding regular meetings to deal with various hurdles and come up with decisions that constitute milestones in implementing the GST system in India.

FAQs related on GST council

1. In which GCM was GST on sanitary napkins reduced to 0%?
The rate was reduced in the 28th GST Council Meeting held on July 21, 2018.

2. When was the GST rate on hotel tariffs reduced?
The 37th GCM, dated September 20, 2019, reduced the rate for tariffs under ₹7,500 from 18% to 12%.

3. What major decision was made in the 54th GCM regarding online gaming?
A: The 54th GCM upheld the 28% GST rate for online gaming, casinos, and racecourses.

4. When were COVID-19 medicines exempted from GST?
A: The exemption was granted in the 44th GCM on June 12, 2021.

5. What were the highlights of the 54th GST Council Meeting?
A: The 54th GST Council Meeting, held on September 9, 2024, focused on significant reforms such as:

Expanding e-invoicing to B2C transactions for transparency.
Enhancing the Reverse Charge Mechanism (RCM) for unregistered property renters.
Approving rate reductions on critical cancer drugs and namkeens (from 18% to 12%).
Discussing online gaming GST and forming new Groups of Ministers (GoMs).

6. When and where will the 55th GST Council Meeting take place?
The 55th GST Council Meeting is scheduled for December 21, 2024, in Jaisalmer, Rajasthan. Key topics include revising GST rates on insurance premiums and compensation cess updates. Initially planned for November, it was postponed due to assembly elections.

7. Who is considered the “father of GST” in India?
Former Prime Minister Atal Bihari Vajpayee initiated the groundwork for GST in India by forming a committee led by Asim Dasgupta, the then Finance Minister of West Bengal. This committee laid the foundation for India’s GST structure.

8. Who chaired the first GST Council meeting?
The late Arun Jaitley, as India’s Finance Minister, chaired the inaugural GST Council meeting. He played a pivotal role in implementing the Goods and Services Tax.

9. How is the GST Council structured?
The GST Council consists of 33 members, including:

The Union Finance Minister, Nirmala Sitharaman (Chairperson).
The Union Minister of State for Revenue or Finance.
State Finance Ministers or their equivalents, representing all Indian states and Union Territories.