GST Council: Structure, Functions, and Key Decisions (2025 Update)

Learn about the GST Council's structure, powers, and recent decisions. Discover how it impacts tax rates, compliance, and economic policies in India

What is the GST Council?

The GST Council is a constitutional body responsible for governing GST policies in India. Chaired by the Union Finance Minister, it includes state finance ministers and determines tax rates, exemptions, and regulations

What Are the Powers and Functions of the GST Council?

• Tax Rate Decisions: Recommending GST tax rates and revisions across goods and services.
• Exemptions and Thresholds: Deciding on tax exemptions and turnover thresholds for GST registration.
• Policy Formulation: Creating and amending GST rules and regulations to ensure smooth implementation.
• Revenue Distribution: Establishing mechanisms for revenue sharing between the central and state governments.
• Resolution of Disputes: Addressing issues between states or with the central government regarding GST.
• Special Provisions: Making recommendations for Union Territories or special economic zones to facilitate trade and compliance.
• The GST Council ensures uniformity and fairness in India’s GST framework.

Formation of the Goods and Services Tax (GST) Council

The GST Council, established under the 101st Constitutional Amendment Act, plays a crucial role in India’s indirect taxation framework. Created in accordance with Article 279A of the Indian Constitution, the Council is responsible for overseeing the implementation of the Goods and Services Tax (GST) and ensuring uniformity in tax policies across the nation. The Union Cabinet approved the formation of the GST Council and its Secretariat on September 12, 2016. The Secretariat, which facilitates the Council’s operations, is headquartered in New Delhi.

• Constitutional Basis of the GST Council

Accordingly, the GST Council has been enacted by Article 279A of the Indian Constitution. It authorises the President to form the Council, involving the Union Finance Minister, the State Finance Ministers and others for efficient running of GST in India.

• First GST Council Meeting

The first meeting of the GST Council took place on 22nd and 23rd September, 2016, in New Delhi. This meeting set the stage for critical decisions regarding the GST tax rates, the approach to its implementation, and the transition to an integrated system of indirect taxation. It is regarded as a milestone in India’s tax reform journey, marking a significant step towards streamlining and unifying the country’s tax structure.

Structure of GST Council

The GST Council comprises key representatives from both the central and state governments, reflecting India’s federal structure. The Council’s design ensures collaborative decision-making to maintain uniformity and efficiency in the implementation of GST across the country.

• How Many Members Are There in GST Council?

Category	Number of Members	Details
Central Government	2	Representatives from the Centre
State Governments	28	Finance Ministers from all States
Union Territories	3	Finance Ministers from UTs with legislatures
Total Members	33	Governing authority for GST

 

• Who is the Chairman of the GST Council in 2025?

According to the GST act and as of today, the Union Finance Minister of India Nirmala Sitharaman chairs the GST Council. The role of the council under her leadership is to formulate most of the policies concerning the rate and structure of tax among other matters concerning the GST. 

• How Does the GST Council Decide Tax Rates?

The GST Council has a structure of voting majority where the Centre gets 1/3rd votes and the rest 2/3rd votes belong to all the states. The majority of the time it takes a vote where the central and state governments collectively decide matters sensitive to GST such as GST rates, policies and the rest. This system guarantees both levels of government a huge input into the formulation of GST regulations.

GST Rate Recommendations

The Fitment Committee that is part of the GST Council evaluates the ability of different goods and services to bear tax amounts and advises on the correct rate. This way, Introduction of GST rates supports the growth of the entire economic sector, benefits the business houses and keep the consumer interest in mind. From the Council’s recommendations it becomes manageable to arrange the tax slabs since the society as well as the government interest is put into consideration.

GST Compliance and Enforcement

The GST Council standardizes GST compliance, ensuring clarity through official circulars. These circulars provide directions to the business on matters of procedure to ensure that they are harmonised throughout the country. The Council also oversees compliance enforcement to and also addresses concerns and recommends adjustments to ease the process for improved tax compliance.

GST Compensation to States

In order to reduce losses of revenue for that an equal amount of compensation mechanism is provided by the Council for states. This mechanism awards states the revenue shortfall for five years. In the process of transition it enhances fiscal federalism by guaranteeing states’ solvency, and preserves the balance of tax revenues in India.

Role of GST Council

The GST Council has responsibility in developmental growth of India’s economy by its best taxation policy for business enhancement and revenue improvement. Through rationalisation of taxes and increasing compliance, the Council has contributed towards the enhancement of the efficiency thus enhancing the economies stability.

• Economic Impact of GST Tax Rate Decisions

GST rate changes significantly impact industries like manufacturing, retail, and services. Many industries such as manufacturing, retail trade and services sectors simplify their process and have got the relief of taxes that has helped all in the process of formation and growth of economic sectors.

• Taxpayer Benefits from GST Council Reforms

The GST Council has modified the system to enhance the experiences of stakeholders through avoiding the misuse of Input Tax Credit (ITC), decreasing costs of compliance and fighting against tax fraud. Companies and organisations have little hindrances in managing tax issues which makes it easier to conduct business in the legal structures as compared to past years the government on the other hand ensures proper collection and equitable taxes.

Challenges Faced by the Goods and Services Tax Council

Several challenges have been realised by the GST Council over the implementation of the system including the following; Revenue shortfalls have remained persistent, non-compliance to the law by the public and the various states have continued to disagree over various aspects of the system.

Some of the major challenges that still persist include the difficult task of making sure that states receive sufficient revenue to compensate for their losses, the many issues of GST compliance especially to the small businessmen.

• Revenue Shortfalls and Compensation Issues

Compensating states for potential revenue losses has been a significant challenge. The GST Council must manage the compensation fund, especially during economic downturns, to ensure fiscal balance and that states do not face financial distress due to the new tax regime.

• Complexity of GST Compliance

Small and medium businesses experience a lot of challenges in GST mainly in filing returns, eway bill and documentation. GST laws are complex, with multiple compliance requirements, making it challenging for small businesses and regulations that provide lawyers with an opportunity to make the work of non-tax lawyers rather complicated thus causing delays, penalties and general lack of taxes compliance.

Conclusion on GST Council

It can also be said that thanks to the work of the GST Council, India has achieved progressive outcomes in the sphere of taxation, increased the transparency of tax legislation, and improved the general environment in the sphere of economic activities of the country. Coordinated by the Council, problems remain solved with regard to tax rates, exemptions, and state compensations whereas the ease of business has been enhanced with its decisions. In its current form, the GST Council has not ceased to discover further efficiencies in taxation and the Indian economy is preparing for those changes in the future.

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FAQs on GST Council

What is the GST council?

The GST Council is a constitutional body responsible for making decisions on Goods and Services Tax (GST) laws, rates, and policies in India. It includes representatives from the central and state governments to ensure uniform taxation across the country.

How many members are there in gst council?

The GST Council consists of 33 members, including the Union Finance Minister as the Chairperson, the Union Minister of State for Finance, and State Finance Ministers from all 28 states and 3 Union Territories with legislatures.

Who heads the GST Council in 2025?

The GST Council is chaired by the Union Finance Minister, Nirmala Sitharaman, who oversees policy decisions and tax structure modifications.

How does the GST Council decide tax rates?

The GST Council votes on tax rates, with the central government holding 1/3rd votes and state governments 2/3rd votes, ensuring balanced tax decisions.

How does the GST Council’s decision impact small and medium enterprises (SMEs)?

The GST Council considers SMEs in its decisions, aiming to simplify compliance, reduce GST rates on essential goods and services, and improve the ease of doing business for smaller enterprises.

What is the process for taxpayers to raise concerns to the GST Council?

Taxpayers can raise concerns through their state representatives, submit feedback to the Fitment Committee, or use the online grievance redressal system available on the GSTN portal.

Has the GST Council faced any legal challenges in its decisions?

Yes, certain decisions, like those on compensation distribution or rate changes, have faced legal challenges. The Council reviews such issues to ensure they align with legal and constitutional requirements.

What measures does the GST Council take to prevent tax evasion?

The Council implements anti-evasion measures such as the e-way bill system, audits, data analytics through GSTN, and stricter penalties for non-compliance to ensure higher tax revenue and prevent evasion.

How does the GST Council collaborate with other ministries or bodies?

The GST Council works closely with the Ministry of Finance, the Central Board of Indirect Taxes and Customs (CBIC), and other regulatory bodies to ensure the seamless implementation of GST laws across sectors.