The Hindu Editorial Analysis- 21st June 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The U.S.-Saudi agreement, from fist-bump to embrace

Why in News?

Over eight decades of eventful ties between the United States and the Kingdom of Saudi Arabia have had their ups and downs — from the oil embargo of 1973 to the Jamal Khashoggi assassination in 2018. However, two images of this relationship remain iconic: the first is of the meeting between the U.S. President Franklin D. Roosevelt and the King of Saudi Arabia, Abdul Aziz Al-Saud on Valentine’s Day 1945 aboard a U.S. cruiser beginning seven decades of an unbroken bilateral bromance.

Why in News?

Revenues from the Goods and Services Tax (GST), which completes seven years at the end of this month, hit a record high of ₹2.1 lakh crore in April that typically sees higher inflows due to a year-end compliance rush. Receipts in May, for transactions undertaken in April, were the fifth highest ever at ₹1,72,739 crore, rising almost 10% from a year ago, compared with a 12.4% uptick in the previous month.

About the Goods and Services Tax (GST) Council

1. Constitutional Body: The GST Council is a constitutional body in India, ensuring it has a legal mandate and formal authority.

2. Establishment and Purpose:

   • Established to make decisions and provide recommendations to both the Union and State Governments on all matters related to the Goods and Services Tax (GST).
   • Aimed at facilitating a unified tax structure across the country.

3. Apex Decision-Making Body:

   • Responsible for formulating policies, rules, and regulations that govern the GST system in India.
   • Ensures that the GST framework is coherent and uniformly applied across different states.

4. Secretariat Location:

   • The Secretariat of the GST Council is located in New Delhi, serving as the administrative and operational hub for the Council's activities.

Meaning of Goods and Services Tax (GST)

1. Indirect Tax: GST is an indirect tax levied on the supply of goods and services in India.

2. Value-Added Tax: It is a value-added tax applied to most goods and services sold for domestic consumption.

3. Launch: Introduced in 2017 as a comprehensive indirect tax reform for the entire country.

4. Comprehensive, Multistage, Destination-Based Tax:

   • Subsumes almost all indirect taxes except for a few state-specific taxes.
   • Applied at multiple stages of production but ultimately borne by the end consumer.
   • Collected at the point of consumption rather than the point of origin.

5. Payment and Remittance:

   • Consumers pay GST, which businesses then remit to the government.

6. Types of GST:

   • CGST (Central Goods and Services Tax): Levied by the Centre.
   • SGST (State Goods and Services Tax): Levied by the States.
   • IGST (Integrated Goods and Services Tax): Levied on inter-state supplies of goods and/or services.

7. Rate Agreement:

   • Tax rates are mutually agreed upon by the Centre and the States.
   • Governed and decided by the GST Council.

Constitutional Provisions Related to GST Council

1. 101st Amendment Act of 2016: Facilitated the introduction of GST in India.

2. Article 279-A:

   • Inserted into the Constitution by the 101st Amendment Act.
   • Empowers the President to constitute the GST Council.

3. Constitution of the GST Council:

   • Formed by an order issued by the President in 2016.

Vision of Goods and Services Tax Council

• Federal Body:
  • The GST Council, as a constitutional federal body, aims to establish high standards of cooperative federalism.
  • Focuses on collaborative decision-making related to GST.

Mission of GST Council

• Consultative Process:
  • To develop a GST structure that is driven by information technology and is user-friendly through a process of extensive consultation.

Composition of the GST Council

1. Chairperson:

   • The Union Finance Minister.

2. Vice-Chairperson:

   • Chosen from among the state members of the Council.
   • The members decide the term of the Vice-Chairperson.

3. Members:

   • The Union Minister of State in charge of Revenue or Finance.
   • State Ministers in charge of Finance or Taxation, or any other Minister nominated by the State Government.

4. Permanent Invitee:

   • The Chairperson of the Central Board of Indirect Taxes and Customs (CBIC) is a non-voting permanent invitee to all proceedings.

5. Ex-Officio Secretary:

   • The Union Revenue Secretary (Department of Revenue, Ministry of Finance) acts as the ex-officio Secretary to the GST Council.]

Working of the GST Council

1. Decision-Making Process:

   • Decisions are made by a majority of at least three-fourths of the weighted votes of the members present and voting.
   • A quorum of 50% of the total number of members is required to conduct a meeting.

2. Weightage of Votes:

   • Center’s Vote: The Central Government's vote has a weightage of one-third of the total votes cast.
   • States’ Votes: The combined votes of all state governments have a weightage of two-thirds of the total votes cast.

3. Validity of Proceedings:

   • The proceedings or acts of the GST Council remain valid despite:
     • Any defect or vacancy in the constitution of the GST Council.
     • Any defect in the appointment of any member.
     • Any procedural irregularity that does not affect the merits of the case.

Functions of the GST Council

1. Recommendations to Centre and States:

   • Taxes, cesses, and surcharges to be subsumed into GST.
   • Goods and services that may be subjected to or exempted from GST.
   • Model GST Laws, principles of levy, and apportionment of GST on inter-state trade or commerce.
   • Principles governing the place of supply.
   • Threshold limit of turnover below which goods and services are exempt from GST.
   • Rates, including floor rates with bands of GST.
   • Special rates for a specified period to raise resources during natural calamities or disasters.

2. Other Functions:

   • Recommending the date for levying GST on petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel.
   • Establishing a mechanism to adjudicate disputes:
     • Between the Centre and one or more States.
     • Between the Centre and any State or States and other States.
     • Between two or more States.
   • Recommending compensation to States for revenue loss due to GST introduction for five years.
     • The Parliament determines the compensation based on these recommendations.

Conclusion

The Goods and Services Tax (GST) Council stands as a testament to India’s commitment to fostering cooperative federalism and streamlining its indirect tax regime. Since its inception, the Goods and Services Tax Council has played a pivotal role in formulating policies, resolving disputes, and ensuring the smooth implementation of the GST system across the country. By bringing together representatives from the Union and State governments, the Council has facilitated constructive dialogue, consensus-building, and decision-making on crucial aspects of GST. As India continues its journey towards economic growth and fiscal consolidation, the GST Council remains at the forefront, guiding the nation towards a more transparent, efficient, and unified tax regime.