GST Council Endorses 2-Tier Framework

What is the GST Council?

A constitutional authority established by Article 279A of the 101st Amendment to the Constitution in 2016.

Advises on GST rates, exemptions, regulations, and levy principles.

Participants:

Finance Minister of the Union → Chairperson

Minister of State for Finance/Revenue at the Union level

Ministers of Finance/Taxation from all States/UTs

In specific situations, a representative appointed by the Governor (in the event that President’s Rule is enacted).

Quorum (Minimum Attendance):

A minimum of 50% of all members needs to be in attendance.

Voting Method:

Consensus is favored, but if it's necessary to vote:

Union Government → 33.3% weightage

Combined States/UTs → 2/3rd significance

A decision is approved if at least 75% of weighted votes support it.

Functions:

Suggest GST rates, exclusions, and threshold limits.

Tackle problems related to the reversed duty framework.

Propose GST legal frameworks and revisions.

Establish unique pricing in times of natural calamities.

Guarantee the alignment of GST between the Centre and States.

Concerning the Two-Slab GST Framework:

What is it?

Simplification of GST into two primary rates: 5% and 18%, plus a specific 40% rate for luxury/sin items.

Objective:

Streamline GST framework for better business operations and compliance.

Alleviate financial pressure on customers.

Promote fairness by imposing lower taxes on essential items and higher taxes on luxury or vice goods.

Enhance income stability and seal gaps.