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Goods and Services Tax (GST) Council

GST Council- Relevance for UPSC Exam

  • GS Paper 2: Indian Constitution- Appointment to various Constitutional posts, powers, functions and responsibilities of various Constitutional Bodies.

Goods and Services Tax (GST) Council_30.1

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GST Council- Context

  • Recently the 45th Goods and Services Tax (GST) Council meeting was chaired by the Union Finance Minister in Lucknow, Uttar Pradesh.

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Key Outcomes of the 45th GST Council Meeting

  • Exclusion of Petroleum Products and Natural gas: The GST Council has decided to keep petroleum products and Natural gas out of the GST regime.
  • Extension of tenure of Compensation Cess: consumers will have to keep paying the Compensation Cess levied on products like automobiles till March 2026 instead of July 2022 as originally envisaged.
    • The GST Council had decided last year that the Compensation Cess levy will be extended to repay the principal amount as well as the interest payable on these borrowings.
  • Formation of two groups of ministers (GoMs): They would recommend measures to shore up GST revenues.
    • The first one has been tasked with reviewing tax rate, rationalization issues to correct anomalies in the rate structure, and
    • Second one will look to tap technology to improve compliance and monitoring. It will look at e-way bills, Fastags, compliance and composition schemes to plug loopholes.

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GST Council- Key Points

  • Background: The Parliament passed the 101st Amendment Act of 2016 which paved the way for the introduction of the goods and services tax (GST) in the country. The GST Council was established to-
    • To ensure smooth and efficient administration of the GST tax and
    • Cooperation and coordination between the centre and the states.
  • About GST Council: The 101st amendment inserted a new Article 279-A in the Constitution of India. This article empowered the President to constitute a GST Council by an order.
    • Secretariat: located in New Delhi and the Union Revenue Secretary acts as the ex-officio Secretary to the Council.
    • The GST Council is considered as a constitutional federal body where both the centre and the states get due representation.
  • Mandate of GST Council: Responsible for making recommendations to the Union and State Government on issues related to Goods and Service Tax.
    • It is the first constitutional federal body vested with powers to take all major decisions relating to GST.
  • Vision: To establish the highest standards of the cooperative federation in the functioning of the Council.
  • Composition of the Goods and Services Tax (GST) Council: It consists of the following members-
    • Chairperson: The Union Finance Minister
    • The Union Minister of State in charge of Revenue or Finance
    • Ministers in-charge of Finance or Taxation of all the States
      • Vice-chairperson: The members of the Council from the states have to choose one amongst themselves to be the Vice-Chairperson of the Council.
    • Chairperson of the Central Board of Excise and Customs (CBEC): to be included as a permanent invitee (non-voting) to all proceedings of the Council.

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Working of the GST Council

  • Quorum for GST Council: One-half of the total number of members of GSTC form quorum in meetings of GST Council.
  • Voting Share and Decision Making in GST Council:
    • Decision Making: Decisions in GST Council are taken by a majority of not less than three-fourth of weighted votes cast.
    • Voting share: Centre has one-third weightage of the total votes cast and all the states taken together have two-third of the weightage of the total votes cast.
  • Voting in the council will not be considered invalid only because-
    • There was a vacancy or deficiency in the constitution of the GST Council
    • There was a defect in the appointment of a person as a member of the GST Council
    • There were procedural irregularities in the functioning of the GST Council.


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