What is GST ? The Goods and Services Tax in India

What is GST Council?

GST council is a governing body to regulate and direct each and every step for the implementation of goods and service tax in the nation with decisions over tax rates and further implementation measures. GST council assimilates suggestions and regulation into one form and improvise the changes formally through notifications and circulars with its departments and finance ministry.

The Supreme Court has urged the GST council to take special note of issues in the present GST Act and try to resolve the formula of assessment for claiming a GST refund. While pronouncing its judgement, the SC said, “Provisions of Article 246a are available to both parliament and state. Article 246a embodies the constitutional principle of the simultaneous levy.” “Cannot expand the regime beyond what the legislature has provided. Anomalies in the law is a matter of legislative policy. GST council should take note of the anomalies,” the court added.

Cabinet Ministry has given approval for the establishment of the GST Council while the notification regarding the establishment of Council was issued on Saturday the 10th day of September 2016 and the provisions came into force on Monday the 12th day of September 2016. Also, Article 279A having provisions regarding the establishment of the GST Council was inserted after Article 279 of THE CONSTITUTION (ONE HUNDRED AND FIRST AMENDMENT) ACT, 2016. The Union Finance Minister is the head of the GST Council while the First Meeting of the council was held on 22nd and 23rd September 2016 in New Delhi.

What are the structures of the GST Council?

The structure of the GST Council is determined by Article 279 (1) of the amended Constitution of India. This Article states that the GST Council should be constituted by the President of India within a period of 60 days of the inception of Article 279A. The Article states that GST Council should be a joint forum of the Central Government as well as the State Governments. It would consist of the following members –

  • The Chairperson of the council would be the Union Finance Minister of the country. Presently, Mr Arun Jaitley is the Union Finance Minister of India and as such he is also the Chairperson of the GST Council
  • The Union Minister of State would be a member of the GST Council. He/she would be in charge of Revenue of Finance
  • The members of the GST Council would be the minister who is in charge of finance or taxation or any other minister as nominated by the respective State Governments. Each State Government would nominate one minister to act as a member of the GST Council

What are the functions of the GST Council?

Besides governing GST implementation in the country, the GST Council has two major duties to dispose of. These include making recommendations and holding GST Council meetings. Let’s understand these duties in detail:

  • GST Council recommendations

According to the provisions laid down under Article 279A (4), the GST Council has the duty to make recommendations about GST to the Union Government as well as the State Governments. The council would decide which goods and services would be charged to GST and which would be exempted from it. Thereafter, the GST Council has the duty of creating laws and principles about the place of supply, threshold limits, special rates of GST for the certain States of India, the applicable GST rates on various goods and services and special rates of GST during a natural calamity or a disaster so that additional resources can be raised for meeting the financial losses suffered, etc.

  • GST Council meetings

Another important duty of the GST Council is to meet and discuss the GST rules and laws which would be beneficial for dealers. Ever since the GST Council has been formed, various meetings have taken place. In the last GST Council meeting, the council decided that GST should be implemented on e-way bills which require goods valuing more than INR 50,000 to be registered before they are moved. The GST Council also extended the deadline of filing the GSTR –  Anti-profiteering screening committees were also set up in the latest meeting of the GST Council. The aim of setting up these committees was to strengthen the National Anti-Profiteering Authority under the laws of GST. Besides formulating laws on GST, the GST Council also took decisions on the following aspects:

  • For the Indian States, except the special category States, the threshold limit for exemption of GST would be set at INR 40 lakhs
  • In the case of special category States, the threshold limit for exemption of GST is set at INR 10 lakhs
  • In case of composition schemes, the threshold limit for GST exemption is set at INR 1.5 cr for the Indian States. However, for the North Eastern States and for Himachal Pradesh, the threshold limit of GST exemption is set at INR 50 lakhs
  • Goods like tobacco, pan masala, ice cream and other types of edible ice manufacturers would not be eligible to avail composition levy. However, in the case of restaurant services, the composition levy would be allowed on these goods and manufacturing activities.

What is the GST slab rate?

GST RateGoodsServices
5%Edibles, fuel, fertilizers, lifesaving medicines and drugs, accessories for specially-abled individuals, agarbatti, footwear, handmade items, natural cork, fly-ash blocks, ice and snow, kites, marbleAircraft leasing, crude and petroleum products, takeaway food, economy class flight tickets, newspaper printing, tailoring, transport services via AC and radio taxi, restaurants, print media advertisement, tour operator services
12%Processed food, dairy product, dry fruit, packaged product, cooking utensils, sewing machines, flint buttons, corrective spectacles and glasses, exercise books, walkie talkies, handmade matches, fixed speed diesel engines, ornamental framed mirrors, containers, photographs, diagnostic kits, plastic beads, man-made yarnBusiness-class flight tickets, movie tickets worth less than Rs. 100, Hotel stay with daily cost less than Rs.7500, Room tariff above Rs.1000 and below Rs.2500 per day, Mining and drilling of natural gas, Real estate construction for sale IP rights on a temporary basis, Foremen-led chit fund services, Railway coaches, wagons, or rolling stock sans refund of ITC,  Eating and drinking at outlets without a liquor license or AC, Goods Transportation in containers via rail not under the Indian Railways
18%Processed Eatables, Capital goods, Household products, Perfume, Cosmetic preparations, Make-up and beauty products,  Weight-measuring devices, Installations, Electrical and electronic appliances, Containers, Dental wax, Kajal pencils, Electrical transformer,  Measuring devices like callipers, tapes, etc., Leather clothing, Wristwatches, Cooking items, Telescope, Razor and razor blades, Goggles, Binoculars, Stationary, Carriages for specially-abled individuals and babies, Sports goods, Video game consoles, Other products with HSN code 9504Movie tickets worth more than Rs.100, Hotel accommodation bill equal to or above Rs.7500, Daily room tariff ranging between Rs.2500 and Rs.5000, Eating at restaurants located in hotels with above Rs.7500 daily tariff, Telecom and IT services, Outdoor catering, Performance arts, Eating and drinking at outlets with a liquor license, AC and heating arrangement.
28%Without cess:
Eatables, ATM vending machines, Air conditioners, Dishwashers, Yachts, Aircraft, State-owned and state-authorised lotteries, Accessories,  Fax machines, TV monitors over 32 inches, Stoves (excluding LPG and kerosene ones), Powder
With Cess: Caffeinated beverages, Tobacco and tobacco products, Pan masala and Gutkha, Fuel, Motorised vehicles (except motorcycles)
Hotel stay with over Rs.7500 bill, 5-star hotel services, Gambling, Go-karting, Ballet, Racing club services, Casinos, Entertainment services, Theme parks, amusement parks, and joy rides, Sports events
Total
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