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UPSC Exam  >  UPSC Notes  >  Indian Polity for UPSC CSE  >  Laxmikant Summary: Goods and Services Tax Council

Laxmikant Summary: Goods and Services Tax Council | Indian Polity for UPSC CSE PDF Download

Establishment

Goods And Services Tax CouncilGoods And Services Tax Council

In 2016, the Joint Amendment Act laid the groundwork for a new tax system called the Goods and Services Tax (GST). For this tax to work smoothly, the central government and state governments need to cooperate and coordinate. To make this happen, the amendment created a special body called the Goods and Services Tax Council (GST Council).

Article 279-A of Indian ConstitutionArticle 279-A of Indian Constitution

To formalize the council's existence, a new Article 279-A was added to the Constitution, giving the President the power to establish the GST Council through an official order. The President issued this order in 2016 to bring the council into action.

The GST Council's main office is in New Delhi, and the Union Revenue Secretary automatically serves as the Secretary to the Council. This setup ensures effective communication and collaboration between the central and state governments in managing the GST.

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Vision and Mission

While carrying out its functions, the Council aims to create a harmonized structure for GST and develop a unified national market for goods and services. The Council also has the authority to determine the procedure for performing its functions.

The vision of the Council is to establish the highest standards of cooperative federation in its functioning. It's the first constitutional federal body with the power to make significant decisions related to GST.

The mission of the Council is to develop a GST structure through broad consultation, focusing on information technology-driven and user-friendly approaches. They aim to achieve this by involving a wide range of opinions and perspectives.

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Composition

The Council is a group that includes members from both the central government and the states. Here are the key members:

Composition of Goods & Service Tax CouncilComposition of Goods & Service Tax Council

  1. The person in charge of the country's finances, called the Union Finance Minister, is the Chairperson. 
  2. The Union Minister of State responsible for Revenue or Finance is also a member. 
  3. Each state government nominates a Minister in charge of Finance or Taxation or any other Minister to be part of the Council.

The state members of the Council need to choose one among themselves to be the Vice-Chairperson, and they can decide how long this person will serve in that role. Additionally, the Union Cabinet decided to include the head of the Central Board of Indirect Taxes and Customs (CBIC) as a permanent guest (non-voting) in all Council proceedings.

Working

The decisions of the Council are made during its meetings. For a meeting to proceed, at least half of the total members need to be present—this is called the quorum. To make a decision, it requires a majority of not less than three-fourths of the weighted votes from the members present and voting.

Laxmikant Summary: Goods and Services Tax Council | Indian Polity for UPSC CSE

Here's how decisions are made:

  1. The central government's vote has a weightage of one-third of the total votes in the meeting.
  2. The combined votes of all state governments have a weightage of two-thirds of the total votes in the meeting.
  3. Importantly, any act or proceedings of the Council won't be considered invalid for the following reasons:
    • Any vacancy or problem in the Council's formation.
    • Any issue in appointing a person as a Council member.
    • Any procedural mistake by the Council that doesn't affect the merits of the case.

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Functions

The Council is responsible for providing recommendations to both the central government and the states on various matters related to the Goods and Services Tax (GST). Here are the key areas:

Advantages of GSTAdvantages of GST

  1. Determine which taxes, cesses, and surcharges currently imposed by the central government, states, and local bodies should be combined into GST.
  2. Decide which goods and services should be included or excluded from GST.
  3. Formulate Model GST Laws, principles of levy, and the division of GST on supplies during inter-state trade or commerce. Also, establish principles for determining the place of supply.
  4. Set a threshold limit of turnover, below which goods and services may be exempted from GST.
  5. Establish GST rates, including floor rates with bands.
  6. Determine any special rate or rates for a specific period to generate extra resources during natural calamities or disasters.
  7. Create special provisions for specific states like Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand.
  8. Address any other matters related to GST, as decided by the Council.

Other Functions

In addition to its main responsibilities, the Council has some other important functions:

Summary of GSTSummary of GST

  1. The Council recommends the date when the Goods and Services Tax (GST) should be applied to items like petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel.
  2. If there is a disagreement about the Council's recommendations or how they are put into action, the Council sets up a way to resolve the disagreement:
    • Between the central government and one or more states.
    • Between the central government and any state or states on one side and one or more other states on the other side.
    • Between two or more states.
  3. The Council also recommends compensation to the states for any loss of revenue due to the introduction of GST for a period of five years. Based on this recommendation, the Parliament decides the compensation. In 2017, the Parliament enacted the law accordingly.

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FAQs on Laxmikant Summary: Goods and Services Tax Council - Indian Polity for UPSC CSE

1. What is the Goods and Services Tax Council?
Ans. The Goods and Services Tax Council is an establishment responsible for the administration and implementation of the Goods and Services Tax (GST) in India.
2. What is the vision and mission of the Goods and Services Tax Council?
Ans. The vision of the Goods and Services Tax Council is to create a transparent and simple tax environment for businesses and taxpayers in India. Its mission is to ensure the smooth implementation of the GST by formulating policies, rules, and regulations related to the tax.
3. How is the Goods and Services Tax Council composed?
Ans. The Goods and Services Tax Council is composed of the Union Finance Minister (as the Chairman), the Union Minister of State in charge of Revenue or Finance, and the Finance Ministers of all the states and union territories in India.
4. What is the working process of the Goods and Services Tax Council?
Ans. The Goods and Services Tax Council holds regular meetings to discuss and decide on various issues related to the GST. These meetings involve deliberations on policy matters, tax rates, exemptions, and any other relevant topics. The decisions taken by the Council are binding on both the central and state governments.
5. What are the functions and other functions of the Goods and Services Tax Council?
Ans. The primary function of the Goods and Services Tax Council is to recommend and make decisions on various aspects of the GST, such as tax rates, exemptions, and thresholds. It also addresses any implementation challenges and provides clarifications on the GST to businesses and taxpayers. Additionally, the Council acts as a forum for dispute resolution between the central and state governments on GST-related matters.
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