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Cabinet Notifies Constitution of GST Council

While the Centre will have one-third vote, states together will have a two-third say. To adopt a resolution, three-fourth majority would be required.

Press Trust Of India

Updated:September 12, 2016, 1:35 PM IST
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Cabinet Notifies Constitution of GST Council
An Indian consumer goods trader shows letters GST representing "Goods and Services Tax" (AFP)

New Delhi: The Cabinet on Monday cleared the process, formation and functioning of the GST Council, which will decide on the rate of tax under the new indirect taxation regime.

The Council, to be headed by Finance Minister Arun Jaitley and comprising of representative of all 29 states and two union territories, will have to be set up by November 11.

It will decide on the tax rate, exemptions and threshold limits in the new indirect tax regime, which is expected to kick in from April 1, 2017.

The government has notified September 12, as the date from which the procedure for setting up of the GST Council will be initiated and which will be completed within 60 days.

According to sources, the Cabinet headed by Prime Minister Narendra Modi on Monday approved the process, formation and functioning of the GST Council.

The Cabinet also decided on the constitution of the GST Secretariat and the officers who will implement the decisions of the Council.

The GST Council will be chaired by the Union Finance Minister and have a Minister of State for Finance and all state finance ministers as its members.

While the Centre will have one-third vote, states together will have a two-third say. To adopt a resolution, three-fourth majority would be required.

The approval came on the day when the Constitution Amendment Act on GST came into effect.

President Pranab Mukherjee gave his assent to the bill last week, paving the way for setting up of a GST Council.

GST is a single indirect tax, which will subsume most of the central and state levies such as Value Added Tax (VAT), Excise Duty, Service Tax, Central Sales Tax, additional Customs Duty and special additional duty of customs.

Parliament on August 8 had passed the bill, which then went to the states for ratification. A Constitution Amendment Bill needs to be ratified by the legislative Assemblies of at least 50 per cent of the 29 states and 2 union territories.

The bill was sent to the President's secretariat after as many as 19 states -- BJP-ruled Assam being the first -- ratified the bill.

The other states, which passed the legislation include Bihar, Jharkhand, Chhattisgarh, Himachal Pradesh, Gujarat, Madhya Pradesh, Delhi, Nagaland, Maharashtra, Haryana, Sikkim, Mizoram, Telangana, Goa, Odisha and Rajasthan.

Revenue Secretary Hasmukh Adhia had recently said the government is ahead of schedule for implementation of GST. "Instead of 30 days kept for this (states' ratification), it is achieved in 23 days," he had tweeted.

The states and the Centre are working overtime and talking to stakeholders to draft the Central GST, State GST and Integrated GST laws, which are to be passed in Winter Session of Parliament.

The CGST and IGST will be drafted on the basis of the model GST law. The states will draft their respective State GST (SGST) laws with minor variation incorporating state-based exemptions. The IGST law would deal with inter-state movement of goods and services.

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