GST Council - Tax Policy Coordination Body

The GST Council is a constitutional body established under Article 279A of the Indian Constitution to ensure coordinated administration of the Goods and Services Tax (GST) across India. Comprising the Union Finance Minister (chair), State Finance Ministers, and Union Minister of State for Finance, the council represents both central and state governments. The council's primary function is determining GST tax rates; currently goods and services are classified into four tax brackets: 5% (essential goods and services), 12%, 18%, and 28% (luxury and sin goods). The council also decides on exemptions (zero-rated items, healthcare, education, certain financial services) ensuring simplicity and uniform application nationwide. Decisions require a 3/4 (three-fourths) majority, making the council consensual; decisions cannot be made unilaterally by the center or a single state. This consensus requirement ensures fairness and broader acceptability. The council resolves tax disputes, provides interpretive guidance on tax applicability, and monitors GST revenue collections across states. A compensation mechanism reimburses states for revenue losses from GST implementation compared to previous state taxes (VAT and excise). The council meets regularly (approximately bi-monthly) to address evolving tax needs and economy challenges. Important powers include: setting tax rates for various goods/services, clarifying tax classification of new products, adjusting thresholds for business registration, and issuing policy guidance. The council publishes all minutes and decisions on gstcouncil.gov.in ensuring transparency. A critical aspect: GST Council decisions are binding on both center and states; states cannot impose additional taxes violating GST framework. This reduces fiscal federalism compared to previous tax regimes, sometimes creating tension between center and state interests.