GST Council meeting likely to be postponed, say sources
The 57th meeting of the GST Council, originally scheduled for September 12, is likely to be postponed
A final decision is expected after consultations between the Centre and states
The meeting's agenda included several ease-of-doing-business measures: protecting buyers' input tax credit (ITC) when suppliers fail to deposit GST, simplifying taxation of corporate guarantees, allowing ITC on certain employee-related expenses, and enabling small businesses to register for GST across multiple states more easily
The postponement delays consideration of these compliance-relief measures
Article 279A — Constitutional Basis of the GST Council
Article 279A of the Constitution, inserted by the 101st Constitutional Amendment Act, 2016, established the GST Council as a joint constitutional body of the Centre and states to make recommendations on all matters related to GST. The President was required to constitute the Council within 60 days of the amendment coming into force; it was notified with effect from 12 September 2016.
Key Details
- Composition: Union Finance Minister (Chairperson), Union Minister of State for Finance/Revenue, and a Minister nominated by each state government
- Voting weightage: Centre holds one-third of votes, states collectively hold two-thirds
- Decisions require at least a three-fourths majority of votes cast, making Centre-state cooperation structurally necessary
- The Council recommends taxes to be subsumed under GST, exemptions, model GST laws, threshold limits, rate bands, and special provisions for certain states
The need to consult states before finalizing the meeting date and agenda illustrates the Council's constitutional design as a cooperative federal body where no single party (Centre or states bloc) can act unilaterally.
Input Tax Credit (ITC) Mechanism Under GST
ITC allows a taxpayer to reduce the GST payable on outputs by the GST already paid on inputs, avoiding cascading taxation. A long-standing compliance concern has been buyers losing ITC when their suppliers fail to deposit the collected GST with the government, even though the buyer has paid the invoice (including GST) in good faith.
Key Details
- ITC is governed under the Central GST (CGST) Act, 2017, with matching/reconciliation done via GSTR-2B and GSTR-3B returns
- The proposed reform would protect buyer ITC if payment (including the GST component) is shown to have been made through banking channels or other prescribed documentation
- This addresses a recurring litigation issue where honest buyers were denied credit for supplier-side defaults beyond their control
ITC protection for buyers is one of the flagship ease-of-compliance items on the postponed agenda, directly affecting how GST's core credit-chain mechanism is enforced.
GST Registration for Small Businesses Across States
Currently, a business must obtain a separate GST registration in each state where it has a place of business, based on the concept of "distinct persons" for each state registration under GST law. The proposed reform aims to simplify or streamline registration for small businesses seeking to operate in multiple states.
Key Details
- GST is a destination-based, dual tax (CGST + SGST/UTGST for intra-state; IGST for inter-state) levied under the 101st Amendment framework
- State-wise registration is treated as a "distinct person" for compliance under Section 25 of the CGST Act, 2017
- Simplifying multi-state registration is aimed at reducing compliance burden for small and medium enterprises (SMEs) expanding operations
This is one of the ease-of-doing-business measures on hold pending the rescheduled Council meeting, relevant to GS3 themes on ease of doing business and MSME growth.
- GST Council constituted under Article 279A, inserted by the 101st Constitutional Amendment Act, 2016
- Council notified effective 12 September 2016
- Voting weightage: Centre = 1/3, states (combined) = 2/3; decisions need 3/4 majority
- 57th GST Council meeting originally scheduled for 12 September 2026, in New Delhi
- Agenda items on hold: buyer ITC protection, corporate guarantee taxation, ITC on employee-related expenses (vehicles, group insurance), multi-state registration ease for small businesses