GST Council: Composition, Function, Members, GST Council UPSC

By BYJU'S Exam Prep

Updated on: November 14th, 2023

GST Council is a constitutional body that has the power to make recommendations to the State government and Union on issues and other things related to the Goods and Service Tax of India. Goods and Service Tax was implemented on July 01, 2017. According to Article 279A (1) of the Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.

GST Council is a constitutional body that plays a vital role in decision-making related to the GST system in India. Understanding the functions and role of the GST Council is crucial for aspirants appearing for the UPSC exam, especially in topics related to Indian Economy, Fiscal Policy, and Taxation. It provides an opportunity for candidates to showcase their knowledge of current economic reforms and their understanding of the challenges and implications of GST implementation in India.

GST Council

GST Council is a constitutional body that is responsible to make recommendations to the Union or State government regarding issues involving the Goods and Service Tax. GST Council plays a crucial role in taking decisions regarding the Goods and Service Tax in India.

The vision of the GST Council is to uphold the greatest norms of cooperative federalism in the Council’s operations. The GST Council is the first constitutional federal body with the authority to make all significant GST decisions.

History of the GST Council

The 101st Amendment Act of 2016 brought a new tax regime (Goods and Services Tax) to the country. An efficient and smooth administration of GST requires coordination and corporation between the states and the center. To ease the consolation process, the amendments provided for the formation of a GST Council.

Article 279-A was inserted in the Indian Constitution, and it empowered the Indian President to form a GST Council. So, the President constituted the GST Council in 2016, and the secretariat of the Council is now located in New Delhi.

Composition of GST Council

The council is a joint forum of the center and states. The chairperson of the GST Council is Union Finance Minister.

  • The other members of the GST Council include the Union State Minister of Revenue or Finance and Ministers in charge of Finance or Taxation of all the States.
  • The Council members from the states have to choose one member amongst themselves who would become the Vice-Chairperson of the GST Council. They have also the power to decide his term.
  • GST Council has 33 members, out of which 2 members are from the center and 31 members are from 3 Union territories and 28 states with legislation.
  • Chairperson of the CBEC (Central Board of Excise and Customs) as a permanent invitee (Non-Voting) to all the proceedings.

Functions of GST Council

The function of the GST Council is to make recommendations to the States and Unions on the following matter:

  • The cesses, taxes, and surcharges levied by the States and Union and the local bodies which are under the Goods and Services Tax
  • Any special rates for a certain period to raise additional resources during any natural disaster or calamity.
  • Model GST laws, Principles of the levy, apportionment of Goods and Services Tax levied on supplies in the course of commerce or Inter-state trade under article 269A, and the principles that control the place of supply.
  • The goods and services that may be exempted or subjected to the Goods and Services tax.
  • The threshold limit of turnover below which the services and goods may be exempted from GST.
  • The rates include the floor rates with the bands of Goods and Service Tax,
  • Special provision with respect to the states– Arunachal Pradesh, Mizoram, Nagaland, Tripura, Assam Sikkim, Manipur, Meghalaya, Himachal Pradesh, and Uttarakhand.
  • Additionally, the GST Council has the power to recommend the date on which the GST may be levied on petrol, high-speed diesel, petroleum crude, aviation turbine fuel, and natural gas.
  • Furthermore, the GST Council has to recommend compensation to the states for the loss of revenue due to the introduction of GST for a period of 5 years. According to the recommendation, the parliament decided on the compensation.

GST Council 2023: 49th GST Council Meeting

The 49th GST council was chaired by the Union Finance Minister Nirmala Sitharaman and the state counterparts. At its 49th meeting, the GST Council recommended changes to the GST Compensation, GST Appellate Tribunal, Special Composition Scheme for Certain Commodities, GST Rates, and the GoM Report on Capacity-Based Taxation, and Additional Trade Facilitation Measures. Check the highlights of the 49th GST Council meeting below.

  • With some modifications, recommendations for establishing GST Appellate Tribunals have been adopted.
  • For FY 2022-23 and thereafter, late fees under Section 47 for small taxpayers who file their GST Annual Return in Form GSTR 9 after the deadline have been rationalized.
  • The entire Rs 16,982 crore GST Compensation Cess would be paid. The Center will release the money from their holdings and make up the difference from subsequent collections.
  • Amnesty programs offering conditional waivers or reductions for overdue GST returns must be publicized.
  • A unique composition method will be adopted for several industries, like Tobacco, Gutkha, PAN masala, etc.
  • On an RCM basis, GST will be imposed on all commercial services rendered by the Court.
  • The window of opportunity for submitting a request to revoke or cancel registration has been extended to 90 days from 30 days.

How GST Council Takes Decisions?

The GST Council takes every decision at a meeting where a majority of not less than three-fourths of the votes of the present member and voting, as per the following conditions:

  • While making a decision the Central Government of India has a weightage of one-third of the total votes cast.
  • Also, the votes of the States Governments taken must have a weightage of two-thirds of the total votes cast.

On the following grounds, any proceedings or acts of the GST Council will not become invalid

  • Any deficit or vacancy in the constitution of the GST Council
  • Any defect in the appointment of any member of the GST Council
  • Any procedural irregularity of the GST Council does not affect the merits of the case

Key Facts about GST Council

The mission of the GST Council is to make the GST structure user-friendly, and which is information technology-driven. GST Council is constituted as per Article 279-A of the Indian Constitution.

  • The GST Council Secretariat is located in New Delhi.
  • The main goal of the GST Council is to ensure to have one uniform tax rate for Goods and Services across India.
  • Union Revenue Secretary is the ex-officio secretary of the GST Council.
  • GST Council is responsible for dictating the tax exemption, tax rate, tax laws, and the due date of forms, keeping in mind the special rates, tax deadlines, and provisions.

GST Council UPSC

Goods and Services Tax (GST) Council is a constitutional body responsible for making crucial decisions related to the GST system in India. It is composed of representatives from both the Central and State governments. The GST Council plays a significant role in determining tax rates, exemptions, and other important aspects of the GST framework.

The topic of the GST Council is covered under the Economics section of the UPSC Syllabus. It falls within the broader domain of Indian Economy, Fiscal Policy, and Taxation. Understanding the functions and role of the GST Council is important for aspirants preparing for the UPSC exam as it pertains to the economic and fiscal policies of the country.

GST Council UPSC Questions

Apart from covering the basic books on the topic, candidates also need to focus understand the core concepts and glance through the Current Affairs Questions to see the types of questions asked. Some sample questions related to the GST Council are given below:

Question: The GST Council has fixed the threshold limit for exemption of tax to be: (A) 20 Lakh, (B)15 Lakh, (C) 25 Lakh, (D) 12 Lakh

Answer: (A) 20 Lakh

Question: Which constitutional body in India is responsible for making key decisions regarding the Goods and Services Tax (GST)? (A) Reserve Bank of India, (B) Securities and Exchange Board of India, (C) GST Council, (D) Planning Commission

Answer: (C) GST Council

Question for Mains: What do the GST and GST Council mean to you? What are the obstacles to its operation? In the context of federalism, suggest actions to ensure its proper operation.

Question for Mains: What changes have been made by the GST Council recently and what potential changes to India’s indirect tax system are there?

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