GST Council: Key Functions and Structure

What is the GST Council?

The GST Council is a constitutional body in India tasked with making significant decisions related to the Goods and Services Tax (GST). It plays a crucial role in shaping the country's tax landscape.

Functions of the GST Council

The GST Council undertakes various important functions, including:

• Recommending taxes to be subsumed under GST.
• Determining which goods and services are subject to or exempt from GST.
• Formulating model GST laws and principles.
• Setting the threshold limit for GST exemption.
• Recommending GST rates and special rates for natural calamities.
• Making special provisions for certain states.
• Recommending the date for levying GST on petroleum products and natural gas.
• Deciding how disputes arising from its recommendations will be resolved.

Members of the GST Council

The GST Council comprises key members, including:

• The Union Finance Minister (Chairman).
• The Union Minister of State for Revenue.
• State Finance Ministers (including those from Delhi and Puducherry).

Voting Process in the GST Council

Decisions within the GST Council are generally made by consensus. If consensus is not possible, a voting procedure is followed:

• The Center's vote holds 1/3 weight.
• States' combined votes account for 2/3 weight.

A 3/4 majority of the weighted votes is necessary for a decision to be made.

Are GST Council Recommendations Binding?

No, the recommendations made by the GST Council are not binding on the central or state governments. However, these recommendations are influential and are usually adhered to by the authorities.

Frequency of GST Council Meetings

The Constitution does not specify how often the GST Council must meet. Typically, the Council convenes at least four times a year, depending on current needs and issues to be addressed.

Dispute Resolution in the GST Council

The GST Council has the authority to establish the modalities for resolving disputes arising from its recommendations. This is crucial for maintaining harmony in tax administration and ensuring compliance among states.

Frequently Asked Questions (FAQs)

Q1. What is the primary role of the GST Council?
Answer: The GST Council is responsible for making key decisions related to the Goods and Services Tax, including recommending tax rates and exemptions.

Q2. Who chairs the GST Council?
Answer: The Union Finance Minister serves as the Chairman of the GST Council, guiding its decisions and recommendations.

Q3. How are decisions made in the GST Council?
Answer: Decisions are generally made by consensus, but if needed, a weighted voting system is used where states hold 2/3 of the votes.

Q4. Are the GST Council's recommendations mandatory for states?
Answer: No, the recommendations are not binding but carry significant weight and are usually followed by both central and state governments.

Q5. How often does the GST Council convene?
Answer: The GST Council typically meets at least four times a year, though the frequency may vary based on urgent issues.

UPSC Practice MCQs

Question 1: What is the main function of the GST Council?
A) To impose taxes directly
B) To make recommendations related to GST
C) To audit state finances
D) To collect GST revenue
Correct Answer: B

Question 2: Who holds the position of Chairman in the GST Council?
A) Prime Minister
B) Union Finance Minister
C) State Finance Minister
D) Chief Justice of India
Correct Answer: B

Question 3: What is required for a decision in the GST Council when consensus is not reached?
A) Simple majority
B) 3/4 majority
C) 2/3 majority
D) Unanimous agreement
Correct Answer: B

Question 4: Are the recommendations from the GST Council binding on the states?
A) Yes, always
B) No, they are advisory
C) Only for certain states
D) Yes, but only for the central government
Correct Answer: B

Question 5: How frequently does the GST Council usually meet?
A) Once a month
B) At least four times a year
C) Twice a year
D) Only when necessary
Correct Answer: B

Question 6: Which of the following members is part of the GST Council?
A) Chief Minister of states
B) Union Minister of State for Finance
C) Reserve Bank Governor
D) Chief Economic Advisor
Correct Answer: B