The Goods and Services Tax (GST) Council has set up a 10-member GoM, chaired by Minister of State for Finance Pankaj Chaudhary.
About the Group of Ministers (GoM)
- Objective: To decide on the taxation of luxury, sin and demerit goods once the compensation cess ends in March 2026
- Composition: Includes members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal.
- It will submit its report by December 31.
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About Compensation Cess
- GST Compensation Cess is an additional levy imposed on certain goods and services under the Goods and Services Tax (GST) regime in India.
- Its primary purpose is to compensate the states for any loss of revenue they might incur due to the implementation of GST
- Introduced by the GST (Compensation to States) Act, 2017
- Applicability: All taxpayers, except those exporting specific goods or opting for the GST composition scheme
- Time Period: GST compensation is paid out of Compensation Cess every two months by the Centre to states
- Compensation Cess Fund: The collected cess, along with any additional amount recommended by the GST Council, is credited to the Compensation Cess Fund
About GST Council
- The GST (Goods and Services Tax) Council is a constitutional body in India responsible for making recommendations on issues related to GST, including tax rates, exemptions, and other related matters.
- It is chaired by the Union Finance Minister of India and comprises representatives from both the central and state governments.
- The council meets periodically to discuss and decide on various aspects of GST implementation.
- Its aim is to streamline taxation across the country and ensure uniformity in indirect taxation laws.
Key Provisions of the GST Council
- Formation of the GST Council: Article 279A introduced by 101st CAA stipulates that the President must constitute the GST Council within 60 days of the commencement of Article 279A.
- The notification to enforce Article 279A from September 12, 2016, was issued on September 10, 2016.
- Appointment: By Presidential Order.
GST (Goods and Services Tax)
- GST is a tax applied to the supply of goods and services. It is an improved and new tax system compared to India’s previous Value Added Tax (VAT).
- GST is applied at multiple stages of production and is destination-based, meaning it is charged at the point of consumption.
- It replaced several older indirect taxes like VAT, excise duty, and service tax, making tax administration more straightforward across the country.
- The Parliament passed the GST Act on March 29, 2017. It was officially followed on July 1, 2017.
GST is levied at various tax slabs:
- 5%: For essential items like food grains, milk, and medicines.
- 12%: For consumer goods like electronics, textiles, and footwear.
- 18%: For most goods and services, including automobiles, furniture, and restaurants.
- 28%: For luxury items, demerit goods and certain services.
Other Categories:
- Exemptions under GST
- Petroleum and tobacco products.
- Excise duty on liquor, stamp duty and electricity taxes
- Cereal grains hulled, Chicken eggs cooked, Newspapers containing advertising material etc.
- Zero-rated goods: Exports of goods and services are subject to a zero GST rate, meaning no tax is levied but the input tax credit (ITC) can be claimed.
- Composition scheme: Small businesses can opt for the composition scheme under which they pay a fixed percentage of turnover as GST.
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- Composition: Finance Minister (Chairperson) ,Union Ministers of State in charge of finance, Ministers in charge of finance or any other Minister nominated by each state government.
- Members of the Council States have to choose one amongst themselves to be the Vice-Chairperson of the Council.
- They can also decide his term.
- The Union Cabinet also decided to include the Chairperson of the Central Board of Indirect Taxes and Customs (CBlC) as a permanent invitee (non-voting) to all proceedings of the Council.
- Quorum: 50% of total members.
- Decision Making: Every decision by majority of 3/4th of members present & voting.
- Weightage of votes:
- Centre: 1/3rd
- States: 2/3rd
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Establishment and Structure of the GST Council
- The Union Cabinet approved setting up of the GST Council on 12th September, 2016 as per Article 279A.
- Creation of the GST Council Secretariat, with its office at New Delhi.
- Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council.
- Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council.
- Create one post of Additional Secretary to the GST Council in the GST Council Secretariat and four posts of Commissioner in the GST Council Secretariat (Joint Secretary level)
Functions of GST council
The Goods and Services Tax Council shall make recommendations to the Union and the States on
- Taxation Framework and Scope: The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the GST.
- Goods and Services Classification: The goods and services that may be subjected to, or exempted from the GST.
- Legislative Guidelines: Model Goods and Services Tax Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply.
- Thresholds and Rates: The threshold limit of turnover below which goods and services may be exempted from GST.
- The rates include floor rates with bands of GST.
- Special Measures: Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster.
- State-Specific Provisions: Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
- Any other matter relating to the GST, as the Council may decide.
GST Council Meetings
- It addresses key GST issues like tax rates, exemptions, and administrative procedures.
- To date, the Council has convened 51 meetings, with its decisions exerting a notable influence on GST implementation across India.
- The 52nd GST council meeting will take place on 7th of October 2024 in New Delhi.
- Some important decisions taken in the GST Council meeting are:
- Introduced a new e-way bill mechanism.
- Roll out of e-invoicing system in GST
- Reduced the effective rate from 12% to 5% on non-affordable and from 8% to 1% on affordable housing schemes applicable under construction properties.
- Rationalisation of duty on specified COVID related goods.
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28 Sep 2024
