GST Council: New era of indirect tax administration

The GST Council is a constitutional body set up to administer the goods and services tax in terms of article 279A of India’s constitution. The council had 10 meetings in the past six months and resolved many issues as required for a successful roll-out of GST from 1 July 2017. The council is chaired by the central finance minister and consists of the central minister of state for finance and the state ministers of finance or any other minister nominated by each state government.

Under article 279A, the GST Council has certain crucial responsibilities and is to make recommendations on the following: (a) taxes, cesses and surcharges levied by the centre, state or local body to be subsumed into GST; (b) exemptions; (c) model GST laws, principles of levy, apportionment of integrated GST (IGST) and principles of place of supply rules; (d) threshold limits of turnover below which goods and services would be exempt; (e) rates of tax including floor rates with bands for goods and services; (f) special rates for additional revenue in times of natural calamity or disasters; (g) special provisions for the Northeast; (h) any other matter that the GST Council may decide.

Administration of the taxpayer base is a contentious issue which the council needs to resolve. The council members agree that small taxpayers should be administered by one tax authority under GST. This will reduce their compliance cost and the government’s tax collection cost. To implement this welcome step, the council has deliberated on horizontal division and vertical division of the taxpayer base for GST administration.