Part XII - Finance • Article

Article 279A Simplified: Goods and Services Tax Council

Article 279A establishes the 'Goods and Services Tax (GST) Council.' This joint forum of the Union and States is chaired by the Union Finance Minister and includes state finance ministers. The Council decides all GST rates, tax slabs, rules, exemptions, and dispute mechanisms. Decisions require a 75% weighted majority vote, where the Center holds 1/3rd (33.3%) weightage and all states combined hold 2/3rds (66.7%), making cooperative federal consensus mandatory.

Official Text

(1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council. (2) The Goods and Services Tax Council shall consist of the following members, namely:- (a) the Union Finance Minister-Chairperson; (b) the Union Minister of State in charge of Revenue or Finance - Member; (c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government-Members. (3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. (4) The Goods and Services Tax Council shall make recommendations to the Union and the States on- (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from, the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and (h) any other matter relating to the goods and services tax, as the Council may decide. (5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. (6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services. (7) One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings. (8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions. (9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:- (a) the vote of the Central Government shall have a weightage of one-third of the total votes cast;and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting. (10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of- (a) any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a Member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case. (11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute- (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other side; or (c) between two or more States, arising out of the recommendations of the Council or implementation thereof.]

Simple Meaning

Explain Like Ten

The GST Council is a big meeting room where the Union Finance Minister and finance ministers from all states sit together. They vote to decide which goods get taxed at what percentage.

Student Mode

Inserted by the 101st Constitutional Amendment Act, 2016, Article 279A establishes the GST Council as a constitutional body for cooperative federalism. The Council is chaired by the Union Finance Minister, with representation from all states. Crucially, it recommends GST rates, exemptions, thresholds, and model laws. Decisions require a 75% weighted majority, where the Center holds 33.3% of the votes and the States hold 66.7%.

Example

If the GST Council wants to lower the tax slab for electric vehicles from 12% to 5%, the proposal must secure support from the Union Finance Minister and a significant majority of State Ministers to hit the 75% weighted voting threshold.

Key Takeaway

The GST Council is a cooperative federal body deciding all GST regulations through a 75% weighted majority voting system.

FAQs

Can the Union Government veto a decision in the GST Council?

Yes. Since the Union has 33.3% of the weighted vote and decisions require a 75% majority, no decision can be taken without the Center's support, effectively giving both the Center and a coalition of states a veto.

What is the quorum requirement for GST Council meetings?

Under Article 279A(7), one-half (50%) of the total number of members must be present to hold a meeting.

How does the GST Council handle disputes?

Under Article 279A(11), the Council must establish a mechanism to adjudicate disputes arising out of its recommendations or implementation between the Center and States, or among States.

Are petroleum products currently taxed under GST?

No, but Article 279A(5) empowers the GST Council to recommend the date on which GST will be levied on crude oil, petrol, diesel, natural gas, and aviation turbine fuel.

Quiz

What weighted voting majority is required for the GST Council to pass a decision?

Answer: Not less than three-fourths (75%)

What is the weighted voting power of all the State Governments combined in the GST Council?

Answer: Two-thirds (66.7%)

Which constitutional amendment inserted Article 279A to set up the GST Council?

Answer: 101st Amendment Act, 2016

Who is the constitutional Chairperson of the Goods and Services Tax Council?

Answer: The Union Finance Minister