Why in the news?
The 54th GST Council meeting was held in New Delhi. Smt. Nirmala Sitharaman, the Union Minister for Finance and Corporate Affairs, chaired the session.
What is the Goods and Services Tax Council?
- To implement the Goods and Services Tax (GST), the Constitutional (122nd Amendment) Bill was approved by Parliament and over 15 states, and received presidential assent on September 8, 2016.
- Since then, the GST Council has been established as a constitutional body tasked with addressing GST-related issues and providing recommendations to both Union and State governments on matters concerning Goods and Services Tax (GST).
Objectives of the GST Council
The GST Council aims to:
- Facilitate the effective implementation of GST and regulate the goods and services tax system in India.
- Harmonize tax laws across states, streamline the tax structure, eliminate cascading taxes, and reduce compliance costs.
- Oversee taxation processes to prevent fraud and ensure integrity.
What are the Constitutional Provisions Regarding the GST Council?
- According to Article 279A(1) of the amended Constitution, the GST Council must be established by the President within 60 days of the commencement of Article 279A.
Composition of the GST Council
Under Article 279A(2), the GST Council is composed of the following members
- Chairperson: The Union Finance Minister
|
Chairperson |
|
|
Members |
|
Vice-Chairperson
According to Article 279A(3), the members of the Goods and Services Tax Council will select one among themselves to serve as the Vice-Chairperson for a term determined by the Council.
Functions
According to Article 279A(4), the Goods and Services Tax Council is responsible for making recommendations to the Union and State governments on:
- The taxes, cesses, and surcharges imposed by the Union, States, and local bodies that may be included in the Goods and Services Tax.
- The goods and services that should be subject to or exempt from the Goods and Services Tax.
- Model Goods and Services Tax laws, the principles of levy, and the apportionment of GST on inter-state trade or commerce under Article 269A, as well as the principles governing the place of supply.
- The turnover threshold below which goods and services may be exempt from GST.
- GST rates, including minimum rates and ranges.
- Any special GST rates or provisions for a specified period to generate additional resources during natural disasters or emergencies.
- Special provisions for the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand, and any other GST-related matters as decided by the Council.
Article 279A(5): The Goods and Services Tax Council is responsible for recommending the date on which GST will be applied to petroleum crude, high-speed diesel, petrol, natural gas, and aviation turbine fuel.
Article 279A(8): The Goods and Services Tax Council will establish the procedures necessary for carrying out its functions.
Article 279A(11): The Goods and Services Tax Council will set up a mechanism to resolve disputes arising from its recommendations or their implementation, including disputes between:
- The Government of India and one or more individual States
- The Government of India and one or more States on one side, versus one or more other States on the other side
- Two or more States
Functioning of the GST Council
- Article 279A(7): A quorum for GST Council meetings is constituted by half of the total number of its members.
- Article 279A(9): Decisions of the GST Council are made during meetings by a majority of at least three-fourths of the weighted votes of the members present and voting. The voting weightage is as follows:
- The Central Government’s vote carries one-third of the total votes cast.
- The combined votes of all State Governments carry two-thirds of the total votes cast in the meeting.
Other Provisions
- Article 279A(6): In carrying out its functions, the Goods and Services Tax Council must be guided by the need for a unified GST structure and the creation of a harmonized national market for goods and services.
- Article 279A(10): The validity of any act or proceeding of the Goods and Services Tax Council cannot be challenged on the grounds of:
- Any vacancy or defect in the Council’s composition.
- Any irregularity in the appointment of a member of the Council.
- Any procedural error that does not affect the substance of the case.
What are some significant outcomes of the GST Council?
The GST Council’s decisions directly influence the tax burden on businesses and consumers as well as the broader economic environment of the country. Key outcomes include:
- The introduction of a dual GST model in India, where both the Central and State Governments impose GST on the supply of goods and services.
- The classification of goods and services into five tax slabs: 0%, 5%, 12%, 18%, and 28%, with some items exempted from GST and others subject to additional cesses.
- The implementation of a comprehensive GST compliance system, including an online portal for filing returns and making tax payments.
- The reduction of compliance burdens for businesses through provisions for input tax credits on purchases and the introduction of a composition scheme for small businesses.
Key Recommendations of the 54th GST Council :
Changes/Clarifications in GST Tax Rates
- Namkeens & Extruded Savoury Products: GST reduced from 18% to 12% on extruded or expanded savoury/salted products, excluding un-fried or uncooked snack pellets.
- Cancer Drugs: GST on certain cancer drugs lowered from 12% to 5%.
- Metal Scrap: Reverse Charge Mechanism (RCM) introduced for metal scrap supplies from unregistered to registered dealers. TDS of 2% applies to B2B transactions.
- Railway Air Conditioning Units: Roof Mounted Package Units (RMPU) for railways, classified under HSN 8415, are subject to 28% GST.
- Car & Motorcycle Seats: GST on car seats increased from 18% to 28%, aligning with the rate for motorcycle seats.
Services
Life & Health Insurance: A Group of Ministers (GoM) has been established to review GST on life and health insurance, with their report expected by October 2024.
Passenger Helicopter Transport: GST is set at 5% for passenger helicopter transport on a seat-sharing basis, while helicopter charters will attract an 18% GST rate.
Flying Training: GST exemptions apply to flying training courses approved by the DGCA.
R&D Services: Research and development services funded by government or institutions are exempt from GST.
Preferential Location Charges (PLC): PLCs bundled with construction services will be subject to the same GST rates as those services.
Affiliation Services: Affiliation services provided by educational boards such as CBSE are taxable, though there are some exemptions for government schools.
Trade Facilitation & Compliance
- Waiver of Interest/Penalty: Rule 164 has been introduced to allow the waiver of interest or penalties on tax demands for the fiscal years 2017-18 to 2019-20.
- Amendments to Section 16: Clarification provided on the special procedure for correcting orders related to incorrect input tax credit (ITC) under Section 16.
- Exports & Refunds: Provided clarification on IGST refunds for exports and streamlined the refund procedures.
Other Measures
- B2C E-Invoicing: A pilot program for B2C e-invoicing will be launched in select sectors to enhance business efficiency and transparency for customers.
- Invoice Management System: A new system will be introduced, enabling taxpayers to accept, reject, or hold invoices, which will aid in better input tax credit reconciliation and minimize errors.
Explore our courses: https://apnipathshala.com/courses/
Explore Our test Series: https://tests.apnipathshala.com/
