GST Council Approves 2-Slab Structure

Source: LM

Context: The GST Council, in its 56th meeting, approved a two-slab GST structure of 5% and 18% with a special 40% rate for sin and luxury goods.

About GST Council Approves 2-Slab Structure:

• What is GST Council?

• A constitutional body under Article 279A of the 101st Constitutional Amendment Act, 2016. Recommends GST rates, exemptions, laws, and principles of levy.

• A constitutional body under Article 279A of the 101st Constitutional Amendment Act, 2016.

• Recommends GST rates, exemptions, laws, and principles of levy.

• Members:

• Union Finance Minister → Chairperson Union Minister of State for Finance/Revenue Finance/Taxation Ministers of all States/UTs In special cases, a Governor-nominated representative (if President’s Rule is imposed).

• Union Finance Minister → Chairperson

• Union Minister of State for Finance/Revenue

• Finance/Taxation Ministers of all States/UTs

• In special cases, a Governor-nominated representative (if President’s Rule is imposed).

• Quorum (Minimum Presence):

• At least 50% of total members must be present.

• Voting Procedure:

• Consensus preferred, but if voting is required: Union Govt. → 1/3rd weightage All States/UTs combined → 2/3rd weightage Decision passes if ≥75% weighted votes are in favour.

• Union Govt. → 1/3rd weightage

• All States/UTs combined → 2/3rd weightage

• Decision passes if ≥75% weighted votes are in favour.

• Functions:

• Recommend GST rates, exemptions, threshold limits. Address inverted duty structure issues. Suggest model GST laws & amendments. Decide special rates during natural disasters. Ensure harmonisation of GST across Centre & States.

• Recommend GST rates, exemptions, threshold limits.

• Address inverted duty structure issues.

• Suggest model GST laws & amendments.

• Decide special rates during natural disasters.

• Ensure harmonisation of GST across Centre & States.

About Two-Slab GST Structure:

• What it is?

• Rationalisation of GST into two main slabs: 5% & 18%, plus a special 40% rate for sin/luxury goods.

• Simplify GST structure for ease of business & compliance. Reduce cost burden on consumers. Ensure equity by taxing essential goods lower and luxury/sin goods higher. Improve revenue buoyancy and plug leakages.

• Simplify GST structure for ease of business & compliance.

• Reduce cost burden on consumers.

• Ensure equity by taxing essential goods lower and luxury/sin goods higher.

• Improve revenue buoyancy and plug leakages.