GST Council in India - Definition, Structure, Role, Importance and Objectives

The Union Finance Minister serves as the chairperson of the GST Council. As the head, the Union Finance Minister steers the decision-making process and guides the other members in finalizing the key decisions related to the Goods and Services Tax (GST).

The Union Minister of State, who is in charge of revenue or finance, is a permanent invitee to the council's meetings. They bring an additional perspective and insight into the financial matters discussed.

Each state in India is represented in the GST Council by its respective minister in charge of finance or taxation or any other minister as nominated by the state government. These members ensure that the interests of their respective states are well represented in the council.

Disclaimer

: Information updated as a September 30, 2023.

The GST Council plays several roles in the indirect tax system of the country, including:

• Determining Taxes and Exemptions: The GST Council is responsible for deciding which goods and services will be subject to GST and which will be exempt. This decision is crucial as it directly impacts revenue generation for both the central and state governments.
• Deciding GST Rates: The GST Council has the power to decide the tax rates for various goods and services under the GST regime. This is a crucial aspect of the council's role, as the tax rates directly impact the prices of goods and services and, consequently, consumer behavior and business operations.
• Formulating GST Laws and Regulations:The GST Council also has the authority to formulate the rules and regulations that govern the implementation of GST. This includes establishing the principles for levy, collection, and apportionment of the Goods and Services Tax and all related matters.
• Resolving Disputes:An important role of the GST Council is to act as a dispute resolution body for any issues arising between the centre and the states or among the states in the context of GST.
• Special Provisions for States:The GST Council makes special recommendations for some states in the North East and hilly regions.

Through these roles, the GST Council ensures smooth and effective functioning of the GST regime across India, promoting a unified, cooperative approach to indirect taxation.

• Uniform Tax Structure:The GST Council has been instrumental in creating and maintaining a uniform tax structure across India. This has simplified the tax system, making it easier for businesses to understand and comply with tax regulations.
• Reduction in Cascading Effect:By consolidating multiple taxes into a single tax system, the GST Council has significantly reduced the cascading effect of taxes, where goods were taxed at multiple stages with no provision for offsetting the tax paid at previous stages. This has lowered the overall tax burden on consumers.
• Facilitating Interstate Trade:The implementation of a uniform tax structure has removed state boundaries from a commercial perspective. This has facilitated interstate trade, as businesses no longer need to worry about different tax rates and rules in different states.
• Promoting Cooperative Federalism:The GST Council is a key example of cooperative federalism in action. It comprises representatives from the centre and all the states, ensuring that all decisions are made in a manner that is fair and equitable to all the states as well as the union territories.
• Resolving Disputes:The GST Council also plays an essential role in resolving any disputes that may arise between the centre and the states in relation to GST. This ensures the smooth functioning of the GST system across the country.

The GST Council is a linchpin of the GST system in India, serving as the crucial decision-making body that guides the implementation and administration of GST across the country. It plays a significant role in establishing a uniform tax structure, reducing the cascading of taxes, and facilitating interstate trade.