Goods and Services Tax (GST) Council - An Overview

After much awaited, now it’s a matter of time that GST is going to be a reality in our Country, the seriousness of the Government to implement GST clearly appears from the passage of 122nd Constitutional Amendment Bill in both the Houses of Parliament i.e. Lok Sabha and Rajya Sabha. On the other hand, the States are also equally eager to ratifying the same by holding the special Sessions of their State Legislative assemblies. Therefore, we should appreciate the efforts of both Central Government & State Governments to implement the GST from 1st April, 2017.

As per Article 279A of the Constitution of India, the President shall establish GST Council within 60 days of the commencement of 122nd Constitutional Amendment Act, 2014 (Reports are stating that the present ‘Empowered Committee of State Finance Ministers’ will be converted into full-fledged GST Council).

Nature of GST Council

The GST Council will be quasi-legislative –cum - administrative body because it functions both legislative as well as administrative duties as assigned by the Parliament to it.

Composition of GST Council

The GST Council shall consist of following members:

• Union Finance Minister, who will be the chairperson of the Council;
• Union Minister for State in Charge of Revenue or Finance;
• The Minister in Charge of Finance & Taxation, nominated by each State Government and they will choose one among themselves to be the vice chairperson of the Council.

Quorum for conducting meetings

At least 50% of the total members of GST Council should be present to conduct a meeting.

Voting Composition

• The Central Government shall have a weightage of 1/3rd of total votes cast.
• The State Governments taken together shall have a weightage of 2/3rd of total votes cast.

Approval of Decisions by the GST Council

In GST Council, every decision shall be taken, when it is approved by atleast 75% of the weightage of members present and voting.

Statutory Powers of the GST Council

1. Analysis of Model GST Laws - Clause by Clause - which were put on public domain on 14th June, 2016 (Reports are stating that as on 31st August, 2016 received more than 40,000 suggestions from the stakeholders.
2. Key decisions relating to GST Rates, cesses and surcharges levied by the Union & States.
3. Finalization of list of Goods & Services exempted under the GST Regime.
4. Finalization of threshold limits below which goods & services are exempted from GST.
5. The apportionment of Integrated Goods and Services Tax among the Union Government & State Governments.
6. Recommend the date from which the GST would be levied on petroleum crude, high speed diesel, motor spirit (Petrol), natural gas etc.
7. Any other matter relating to GST, as the council may decide from time to time.

Challenges before GST Council

The GST Council has to face many challenges while taking the given below decisions:

1. Computation of levy in lieu of revenue loss to the States.
2. Finalization of common list of exempted Goods & services.
3. Determining the Revenue Neutral Rate (RNR).
4. Finalization of GST Rate Structure, Impact on Inflation & GST Compliance.
5. Prescribing the ‘Dispute Resolution Mechanism’ i.e. GST First Appellate Authority & GST Tribunals in all the States.

The above list is just inclusive one and there may be many more challenges erupt once the GST Council comes in to picture.

We, hope that the GST Council will be able to find constructive solutions for such issues & will make GST a successful experiment in India – a major Indirect Tax reform since Independence.  

*The author is a budding Tax Law Professional and may be contacted at sritaxandcorporate@gmail.com