The 53rd meeting of the Goods and Services Tax (GST) Council was convened in Delhi with Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs, presiding over the session on Saturday (June 22). During the meeting, the council proposed tax adjustments for items like milk cans and solar cookers, as well as introduced tax relief for students residing in specific types of rented accommodations. Additionally, the GST on cartons was reduced from 18% to 12% to assist apple farmers in Himachal Pradesh and Jammu and Kashmir.
The meeting was attended by Chief Ministers of Goa and Meghalaya, Deputy Chief Ministers of Bihar, Haryana, Madhya Pradesh, and Odisha, as well as Finance Ministers of States & UTs (with legislature). This is an overview of the council's operations and significance.
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The GST Council was established following the enactment of the Constitutional (122nd Amendment) Bill in 2016, which received approval from both Houses of Parliament. Subsequently, over 15 Indian states ratified the bill in their respective state Assemblies, and it was ultimately given assent by then-President Pranab Mukherjee.
The GST Council was established in 2017 to streamline the complex tax system in India by unifying the tax structure across both the Centre and states. The Council, as per Article 279A (1) of the amended Constitution, consists of members such as the Union Finance Minister (chairperson), the Union Minister of State (Finance) from the Centre, and a nominated minister from each state responsible for finance, taxation, or other relevant portfolios.
The primary objective of the GST Council, as outlined in Article 279, is to provide recommendations to both the Union and states on critical GST-related matters, including the taxation of goods and services, the formulation of model GST Laws, and the determination of GST rate slabs. This collaborative approach ensures that decisions regarding GST rates and categories are made collectively, fostering a more cohesive and efficient tax system.
In a 2023 publication, Haseeb A Drabu, the former Finance Minister of Jammu and Kashmir, emphasized the significance of the GST Council as a groundbreaking institution that symbolizes a shift towards true federalism in India. Drabu described the Council as a pioneering experiment that merges Union and State sovereignty, reshaping the traditional boundaries of federalism in the country.
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The transfer of certain taxation powers from the states may be perceived as undemocratic by some, as stated by the author. However, he emphasized that within the GST Council, there is a high level of intergovernmental cooperation that is not only discussed but also dependent on various factors. For instance, the states hold a considerable amount of voting power when it comes to making decisions collectively.
Furthermore, he pointed out that the GST Council has shown an innovative approach to creating laws. There have been instances where the Council has transformed into a drafting committee, meticulously reviewing draft laws section by section—even line by line—while incorporating real-time changes based on inputs from all members.
