GST Council (Article 279A)

The GST Council is a body of the Union Finance Minister and the finance ministers of all states. It decides the main rules of the Goods and Services Tax (GST): what the tax rates are, which goods and services are taxed, and which are exempt. It was created by the Constitution itself, through Article 279A.

Because the Centre and the states now share one common tax on goods and services, they need one common table to decide on it together. That table is the GST Council.

Why does it exist?

Before GST, the Centre charged its own taxes (like excise duty and service tax), and each state charged its own taxes (like VAT and entry tax). A truck crossing five states faced five different tax systems, and taxes were charged on top of taxes. GST replaced most of these with one tax across India. But states gave up much of their own power to tax goods.

The GST Council was created so that states would still have a strong voice in every decision. It is often called the best example of cooperative federalism, meaning the Centre and states working together as partners.

Where did it come from?

• The idea of a national GST was discussed for over a decade, starting in the early 2000s.
• The Constitution (One Hundred and First Amendment) Act, 2016 made GST possible. The bill was passed as the 122nd Amendment Bill and got the President's assent on 8 September 2016.
• Article 279A (the GST Council) came into force on 12 September 2016. The Union Cabinet approved setting up the Council and its Secretariat the same day.
• The first meeting of the Council was held on 22-23 September 2016.
• GST itself came into force on 1 July 2017.
• The Council met for the 56th time on 3 September 2025. It approved a simpler rate structure, often called "GST 2.0", which took effect from 22 September 2025.

Who is in the Council?

Under Article 279A(2), the members are:

• The Union Finance Minister, who is the Chairperson
• The Union Minister of State in charge of Revenue or Finance
• The Finance or Taxation Minister (or any other minister nominated) of each state

The state members choose one among themselves as the Vice-Chairperson. Union Territories with their own legislature (Delhi, Puducherry and Jammu and Kashmir) also take part like states. The Union Revenue Secretary acts as the ex-officio Secretary of the Council.

What does it decide?

Under Article 279A(4), the Council makes recommendations on:

• Which central, state and local taxes are merged into GST
• Which goods and services are taxed and which are exempt
• Model GST laws, and the rules on where a sale is counted (the "place of supply")
• The turnover limit below which small businesses need not register
• Tax rates, including floor rates with bands
• A special extra rate for a limited time to raise money during a natural disaster
• Special provisions for certain states (originally eleven states: the eight North-Eastern states, Himachal Pradesh, Uttarakhand and Jammu and Kashmir)
• Any other GST matter

Under Article 279A(5), the Council also decides the date from which GST will apply to five petroleum products: crude oil, diesel, petrol, natural gas and aviation turbine fuel (ATF). These are still outside GST. Alcohol for human consumption is outside GST altogether, by the definition of GST in the Constitution.

How does voting work?

This is a favourite Prelims topic. Let us take it step by step.

• Quorum: At least one-half of the total members must be present for a meeting (Article 279A(7)).
• Weight of votes: The Centre's vote counts as one-third of the total votes cast. All the states together count as two-thirds of the total votes cast.
• Passing a decision: A decision needs at least three-fourths (75%) of the weighted votes of members present and voting.

A simple way to see it: the Centre alone has only 33.3%, so it cannot pass anything without most states. The states together have 66.7%, which is below 75%, so they cannot pass anything without the Centre. So the Centre has an effective veto, and states also have a collective veto if enough of them vote together. In practice, almost all decisions are taken by consensus (everyone agreeing). The first-ever vote in the Council was held in December 2019, on the tax rate for lotteries.

Article 279A(11) also asks the Council to set up a way to settle disputes between the Centre and states, or between states.

Is the Council's word final?

In Union of India v. Mohit Minerals (2022), the Supreme Court said that the Council's recommendations are not binding on Parliament or state legislatures. They have "persuasive value": they carry great weight, but lawmakers can still decide differently. The court pointed out that under Article 246A, both Parliament and state legislatures have the power to make GST laws at the same time.

Other key articles to know

• Article 246A: Gives both Parliament and state legislatures power to make laws on GST. Only Parliament can make laws on GST for inter-state trade.
• Article 269A: GST on inter-state supply (called IGST, Integrated GST) is collected by the Centre and shared between the Centre and states as the law provides.
• Section 18 of the 101st Amendment: Promised compensation to states for five years for any loss of revenue from moving to GST. The GST (Compensation to States) Act, 2017 assumed 14% yearly growth in state revenue from the base year 2015-16. The five-year compensation period ended in June 2022.

Types of GST (quick recap)

• CGST: Central GST, collected by the Centre on sales inside a state
• SGST/UTGST: State or Union Territory GST, collected by the state on sales inside the state
• IGST: Integrated GST on sales between states and on imports, collected by the Centre

Commonly confused concepts

• GST Council vs Finance Commission: The GST Council (Article 279A) is a permanent body that decides GST rules and rates. The Finance Commission (Article 280) is set up every five years to recommend how central taxes should be shared between the Centre and states.
• GST Council vs Inter-State Council: The Inter-State Council (Article 263) is a broad advisory forum on all Centre-state issues, chaired by the Prime Minister. The GST Council deals only with GST and is chaired by the Union Finance Minister.
• GST Council vs GSTN: The GST Council makes decisions. The GST Network (GSTN) is the technology company that runs the GST portal for filing returns and payments.
• Article 279A vs Article 279: Article 279 is about calculating "net proceeds" of taxes. Article 279A is the GST Council.
• 101st Amendment vs 122nd Amendment Bill: Same law. It was the 122nd Amendment Bill when introduced and became the 101st Amendment Act after it was passed.

Issues, criticism and the way forward

• Balance of power: Some states say the Centre's one-third vote gives it an effective veto, while each individual state has only a small share.
• Loss of state tax powers: States gave up most of their power to tax goods. After compensation ended in 2022, some states worried about lower revenue.
• Petroleum outside GST: Keeping petrol, diesel and natural gas out means businesses cannot claim credit for tax paid on these fuels, which raises costs.
• Frequent changes: Many rate and rule changes over the years made compliance hard for small businesses. The 2025 simplification to mainly two slabs (5% and 18%, plus a 40% rate for a few luxury and harmful goods) tried to fix this.
• Way forward suggested by experts: A working dispute settlement body under Article 279A(11), bringing petroleum products into GST in stages, fewer rate changes and simpler compliance for small traders.

Concepts to Know

• Indirect tax: A tax collected by a seller from the buyer and then paid to the government, like GST. The person who bears the tax (the buyer) is not the one who pays it to the government.
• Cooperative federalism: A system where the Centre and the states work together as partners and take joint decisions, instead of acting alone.
• Quorum: The minimum number of members who must be present for a meeting to take valid decisions.
• Input tax credit: When a business buys raw materials, it pays GST. When it sells its product, it can subtract the GST already paid from the GST it owes. This stops tax on tax.
• Compensation cess: An extra tax charged on some goods (like tobacco and luxury cars) to raise money to pay states for revenue losses from GST.