India’s GST council in Indirect taxation have strengthened compliance & encouraged a friendly business environment. It has also helped in reducing tax evasion.
In 2017, India adopted a new tax rule called GST, or Goods and Service Tax. This comprehensive tax structure replaced the complex indirect tax system already prevailing in the country. With the implementation of GST, a uniform tax system became applicable and headed by the GST council – a constitutional body comprising members representing central and state government. Its primary purpose is to ensure seamless implementation of the Goods and Service Tax (GST). This body is also responsible for decision-making, such as tax rates, exemptions, and the administrative framework of GST.
Compliance with the tax structure is of the utmost importance for it to work. It is the responsibility of all taxpayers to comply with GST. As governed by the Council, all taxpayers must register with the GST, maintain proper records, and file their returns on time. Failure to do so will attract penalties and even prosecution.
The council has taken steps to oversee compliance with the GST. They have simplified the GST tax filing process to ensure a smooth process compared to the initial stage. The new approach has made it easier for taxpayers to comply with the Goods and Service Tax structure and returns.
Another step the council takes to ensure compliance with GST is using technology. The council is leveraging every aspect of technology. For example, the Goods and Service Tax Network (GSTN) is the backbone of GST which enables smooth registration for taxpayers and making payments online.
Compliance is essential for the tax system to be a success. The GST council is taking measures to ensure this happens. Today, GST compliance rates have increased. Moreover, monitoring compliance is critical, and steps should be taken if any related issue occurs.
Who Are the Members of the GST Council?
The GST Council, a joint forum of the Centre and the States, consists of the following members:
- The Union Minister of Finance (as Chairman).
- The Union Minister of State, in-charge of Revenue of finance (as Member)
- The Minister In-charge of finance or taxation or any other Minister nominated by each State Government (as Members)
The Union Cabinet also approved the appointment at its meeting held on September 12, 2016:
- The Secretary (Revenue) as ex-officio Secretary.
- The Chairman of the Central Board of Excise and Customs (CBEC) shall be invited as a permanent (non-voting) guest to all meetings of the Council.
GST Compliance Decision-Making
The GST council follows a democratic and consultative decision-making approach to enable proper GST compliance. Individual council members have equal votes, and the decision is finalized by three-fourths of the majority. The Union Finance Minister is the chairperson, assisted by the minister of state for finance and other representatives from central and state governments.
Meetings are held regularly to discuss and decide on matters related to GST and its compliance. All meetings, whether held physically or virtually, and all decision taken is then communicated to the public through the media and other official channels to keep them updated.
Role and Functioning of the GST Council:
The GST Council is responsible for a range of functions related to implementing and administering the GST regime in India. These include:
Deciding on tax rates and tax slabs:
One of the primary responsibilities of the GST Council is to decide on the tax rates and tax slabs for different goods and services. The Council considers various factors such as the revenue implications, impact on businesses and consumers, and the broader economic context before making these decisions.
Addressing issues related to tax administration:
The GST Council also plays a crucial role in addressing issues related to tax administration, including the registration and filing of returns, tax payment, and compliance.
Making recommendations on policy matters:
The Council also recommends to the central and state governments on policy matters related to the GST regime, such as changes to tax rates, exemptions, and other measures to improve the functioning of the GST system.
GST Milestone Achieved Since its Inception
The GST has undergone many changes since its inception. Here are some of the changes made to it for a better tax system and improved efficiency for compliance.
|24th June 2017||GSTN (Goods and Services Tax Network) portal went live|
|1st July 2017||GST launched in India as a comprehensive indirect tax reform|
|5th August 2017||GST Council reduced tax rates on various goods and services|
|10th November 2017||GST Council simplified the tax return filing process|
|22nd December 2017||GST Council allowed SMEs to file tax returns quarterly|
|1st July 2018||One year of GST implementation completed|
|22nd December 2018||GST Council raised the annual turnover limit for the composition scheme to Rs. 1.5 crore|
|22nd December 2018||GST Council reduced tax rates on various goods and services|
|1st January 2019||E-way bill system for the interstate movement of goods became mandatory.|
|1st April 2021||The E-invoicing system became mandatory for businesses with a turnover of over Rs. 50 croreGST Council introduced a new composition scheme for service providers|
|31st August 2019||The due date for filing annual returns for FY 2017-18 has been extended to 31st August 2019|
|20th September 2019||GST Council reduced the tax rate on hotel rooms|
|14th March 2020||GST Council waived late fee for delayed filing of returns for Jan-Feb 2020|
|3rd April 2020||GST Council extended the due date for filing annual returns for FY 2018-19|
|24th March 2021||GST Council reduced the tax rate on COVID-19-related items|
|28th May 2021||GST Council waived late fee for delayed filing of returns for Mar-May 2021|
|1st January 2022||The new GST return filing system, RET 1.0, became effective.|
Goods and Service Tax: the Impact on the Indian Economy
During the initial stages, the Goods and Service Tax (GST) needed to be clarified among many taxpayers. This was due to several technical glitches and unpreparedness. Other challenges faced during the rollout were that high tax rates on some goods and services increased the cost of living in some sects of society. Such issues became very crucial for the council to address. Hence, they improvised on it and created a simplified version of GST, significantly impacting the Indian economy.
One of its most significant impacts was removing the burden of several indirect taxes and bringing them to one singular structure. This removed the complication involved with filing procedures and different taxes across states. With the implementation of GST, the complexities were eliminated, and the entire tax structure was streamlined. This made it simpler for businesses to comply with tax laws and regulations. It was also responsible for reducing compliance costs which in turn increased profitability. A singular tax regime and the removal of multiple authorities made it easy for businesses to expand their venture across the nation while encouraging foreign investment.
GST has further increased government revenues due to its compliance. With this new structure, the government can invest in better infrastructure, social welfare programs, and other vital areas of the Indian economy. With further improvements and refinements to the GST regime, the benefits to the nation’s economy are likely to continue to grow.
Better Decision Equals Better Business
Regarding compliance and regulation of GST, the council is vital in administering it. Its decision-making approach has created a transparent and seamless tax structure. This has helped boost the manufacturing sector while increasing the revenue for the government.
The efforts of the GST council in ensuring complete compliance have encouraged a friendly business environment. It has also helped in reducing tax evasion. However, there is still room for improvement, and the Council must continue to work towards addressing the challenges and improving the functioning of the GST regime in India.