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GST Council

• It is a constitutional body established under article 279-A of the Indian constitution. 
• It made recommendations to the union and state government on issues related to GST and was introduced by the constitution 101st constitutional amendment act of 2016. 
• It is an example of a federal body where the Centre and states get representation. 

Composition

• The union finance minister chairs it 
• Other members include the union state minister of revenue and finance and 
• Minister in charge of finance or Taxation of all the states.

Vision and mission

• Vision: to establish the highest standard of cooperative federalism in the functioning of the GST Council, which is the first constitutional federal body vested with the power to take all major decisions related to GST.
• Mission: evolving through broader consultation, a goods and services tax structure that is information technology-driven and user-friendly.

The GST replaced the following taxes:

• Taxes are currently levied and collected by the Center.

• Central Excise duty
• Duties of Excise (Medicinal and Toilet Preparations)
• Additional Duties of Excise (Goods of Special Importance)
• Additional Duties of Excise (Textiles and Textile Products)
• Additional Duties of Customs (commonly known as CVD)
• Special Additional Duty of Customs (SAD)
• Service Tax
• Central Surcharges and Cesses so far as they relate to the supply of goods and services

• State taxes that would be subsumed under the GST are:

• State VAT
• Central Sales Tax
• Luxury Tax
• Entry Tax (all forms)
• Entertainment and Amusement Tax (except when levied by the local bodies)
• Taxes on advertisements, g. Purchase Tax
• Taxes on lotteries, betting and gambling
• State Surcharges and Cesses so far as they relate to the supply of goods and services

Functions of the Goods and Services Tax Council

• The Council must advise the central and State government on the following issues:
• The GST would incorporate all the taxes, cesses, and surcharges levied by the central government, the states, and local governments.
• The products and services that are exempted from GST.
• Model GST laws, levy principles, apportionment of GST levied on purchases made during interstate trade or commerce, and rules governing the place of the supply.
• The minimum turnover amount below which goods and services are subject to Tax exemption.
• The prices include GST bands and floor prices.
• Any unique rate or rates for a predetermined time period to raise more money during a natural disaster or crisis.
• Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand are given special consideration.
• Any other GST-related topic that the Council deems appropriate.
• The Council will also suggest the date when the GST may be applied to petroleum crude, high-speed diesel, petrol, natural gas, and aviation turbine fuel.
• Process of Decision-making
• A three-fourths majority is required to decide, with the central government's vote having a one-third weight.
• The vote of each State Government will be given two-thirds of the weight.

Significance of GST

• Create a Unified Common Market: help India establish a single, uniform national market. Additionally, it will support the "Made in India" initiative and foreign investment. 
• Streamline Taxation: harmonizing laws, procedures, and tax rates between the central government and the states and among the states. 
• Increase Tax Compliance: improved compliance environment since all returns must be filed online, input credits must be validated online, and more paper records of transactions are encouraged at all supply chain levels;
• Discourage Tax evasion: By reducing rate arbitrage between neighbouring States and intra- and inter-state sales, uniform SGST and IGST rates will lessen the incentive for evasion.
• Bring about Certainty: The taxation system will be more assured if taxpayer registration, tax refunds, tax return formats, tax bases, and classification of products and services are all standardized;
• Reduce Corruption: A more significant usage of Technology will lessen the amount of human interaction between taxpayers and the tax administration, significantly lowering corruption;
• Boost Secondary Sector: It will improve manufacturing and export activity, create more jobs, and raise GDP (Gross Domestic Product), with gainful employment resulting in significant economic growth.

Issues in GST Regime in India

• The GST regime in India is officially recognized as an economic failure in the 15th Finance Commission report since it fell short of its initial promises.
• Multiple Tax Rates: India has several tax rates, contrasting to many other economies adopting this tax system.
• New Cesses crop up: While the GST eliminated multiple taxes and cesses, a new fee called the compensating cess was added for luxury and sin products. Later, this was extended to cover vehicles.
• Economy Outside GST purview: Almost half of the GDP is still exempt from GST. Duty on petroleum, real estate, and electricity is still exempt from the GST.
• The complexity of tax filings: The GST statute mandates that certain taxpayers submit their yearly returns with a GST audit. However, for taxpayers, filing annual returns can be challenging and confusing.
• In addition, the annual report contains much information that should be included in the monthly and quarterly filings.
• Higher tax rates: Despite pricing rationalization, 50% of items fall under the 18% bracket.
• In addition, several necessities for fighting the pandemic were subject to higher taxes.
• For instance, the 12% tax on oxygen concentrators, the 5% tax on vaccines, and the import duty on humanitarian aid

Way forward

• Expansion Of Tax Base: Several products continue to fall outside the GST net, which hinders the smooth flow of input tax credits.
• Electricity, alcohol, petroleum products, and real estate are important items outside its purview.
• Including aviation and natural gas as fuels would be conceivable under the GST. 
• Infusing tax predictability: Just once a year can the GST Council adjust the rates. Furthermore, the Centre should refrain from introducing any Cess to bypass GST.
• States will be guaranteed tax stability, and conducting business will be made easier.
• More accommodative approaches from the Centre: The Center must be more accommodating to the State's interests to avoid an irreparable breakdown during the epidemic.
• For instance, correctly allocating the State's portion, purchasing vaccines internationally, etc. This will increase the State's dependability on the GST.