Master10
Taxation & Public Finance Module

GST Architecture & GST Council Framework

The Goods and Services Tax (GST), operationalized on July 1, 2017 through the 101st Constitutional Amendment Act, replaced a fragmented array of central and state indirect taxes—including Central Excise Duty, Service Tax, State VAT, and Octroi—with a unified destination-based consumption tax. The GST architecture is structured around four primary tax tiers (5%, 12%, 18%, and 28%), governed dualistically via Central GST (CGST), State GST (SGST), and Integrated GST (IGST) for inter-state commerce. The constitutional decision-making body is the GST Council, established under Article 279A, chaired by the Union Finance Minister and comprising state finance ministers, where decisions require a 75 percent weighted majority with the Centre holding one-third and States collectively holding two-thirds of the voting weight.

Key Concepts & Examination Highlights

  • The 101st Constitutional Amendment Act, 2016 introduced the Goods and Services Tax in India with effect from July 1, 2017.
  • Article 279A provides for the GST Council, chaired by the Union Finance Minister, with voting power split 1/3rd (Centre) and 2/3rds (States).
  • GST Council decisions require a weighted majority of not less than three-fourths (75%) of the weighted votes present and voting.
  • Integrated GST (IGST) is levied by the Central Government on inter-state supplies and imports under Article 269A.
  • Article 246A confers concurrent taxing power to both Parliament and State Legislatures to enact laws regarding the Goods and Services Tax.
  • CGST and SGST/UTGST are levied equally on intra-state supplies, splitting the applicable tax rate evenly between the Centre and the respective State or UT.
  • The GST compensation cess was introduced under the GST (Compensation to States) Act 2017 to compensate states for revenue loss for an initial period of 5 years.
  • The input tax credit (ITC) mechanism allows businesses to offset taxes paid on purchases against taxes due on sales, eliminating cascading tax-on-tax effects.
  • Goods and Services Tax Identification Number (GSTIN) is a unique 15-digit alphanumeric identifier assigned to registered taxpayers based on their PAN and state code.
  • E-Way Bill (Electronic Way Bill) is mandatory for the movement of goods valued over ₹50,000 across state borders or designated intra-state limits under GST rules.
  • The Composition Scheme under Section 10 of the CGST Act allows small businesses with turnover up to ₹1.5 crore to pay a flat turnover tax with simplified quarterly compliance.
  • Anti-profiteering authority functions were transferred from the National Anti-profiteering Authority (NAA) to the Competition Commission of India (CCI) in December 2022.
  • The Constitution (122nd Amendment) Bill, 2014 was the legislative bill that was subsequently enacted as the landmark 101st Constitutional Amendment Act, 2016.
  • Assam was the first Indian state to ratify the GST Constitutional Amendment Bill in August 2016, whereas Jammu & Kashmir became the last state to implement GST on July 8, 2017.
  • Article 279A(1) mandated the President of India to constitute the GST Council within 60 days from the commencement of the 101st Amendment Act.
  • The quorum for conducting a meeting of the GST Council is constituted by at least one-half (50%) of the total number of its members.
  • The Vice-Chairperson of the GST Council is chosen from amongst the Finance Ministers of the State Governments represented on the Council.
  • Goods and Services Tax Appellate Tribunal (GSTAT), constituted under Section 109 of the CGST Act, serves as the dedicated statutory forum for second-tier appeals against orders of first appellate authorities.
  • The Harmonized System of Nomenclature (HSN) is a 6-to-8 digit code used internationally and adopted under GST to classify goods systematically for taxation.
  • Services Accounting Code (SAC) is a standardized 6-digit classification code issued by CBIC to classify and identify various taxable services under GST.
  • Dynamic QR Code on B2C invoices is mandatory under GST for taxpayers whose aggregate annual turnover exceeds ₹500 crore to encourage digital payments.
  • Reverse Charge Mechanism (RCM) is a provision under Section 9(3) and 9(4) of the CGST Act where the liability to pay GST falls on the recipient of goods or services rather than the supplier.
  • GST Suvidha Providers (GSPs) are specialized IT and financial technology intermediaries authorized by GSTN to assist taxpayers in seamless electronic tax filing and compliance.
  • GSTR-1 is the monthly or quarterly return filed by registered taxpayers detailing outward supplies of goods and services, while GSTR-3B is a simplified self-assessed monthly summary return.
  • Tax Deduction at Source (TDS) under GST is applicable at a rate of 2% (1% CGST + 1% SGST) on taxable contracts exceeding ₹2.5 lakh awarded by government departments and public agencies.
  • The 101st Constitutional Amendment Act, 2016, received Presidential assent on 8 September 2016, inserting Articles 246A, 269A, and 279A to provide the constitutional architecture for GST.
  • Article 279A empowered the President of India to constitute the Goods and Services Tax Council within sixty days of the commencement of the amendment.
  • The GST Council is chaired by the Union Finance Minister, with the Union Minister of State in charge of Revenue/Finance and State Finance/Taxation Ministers serving as constituent members.
  • Under Article 279A(9), every decision of the GST Council is taken at a meeting by a majority of not less than three-fourths (75%) of the weighted votes of the members present and voting.
  • In the weighted voting structure of the GST Council, the Central Government holds a weight of one-third (33.33%) of the total votes cast, while all State Governments combined hold two-thirds (66.67%).
  • The quorum for conducting a valid meeting of the GST Council is statutorily fixed at one-half (50%) of the total number of members of the Council.
  • Article 246A confers concurrent taxing power on Parliament and State Legislatures to make laws with respect to goods and services tax on intra-state supplies.
  • Under Article 269A, Integrated GST (IGST) on inter-state supplies and imports is levied and collected by the Government of India and apportioned between the Union and the States based on GST Council recommendations.
  • India adopted a Dual GST model, where Central GST (CGST) and State GST (SGST) or Union Territory GST (UTGST) are levied simultaneously on every intra-state supply of goods and services.
  • The GST architecture subsumed 17 major indirect taxes and 23 cesses, including Central Excise Duty, Service Tax, State VAT, Entry Tax, Luxury Tax, and Central Sales Tax.
  • Petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel are temporarily excluded from GST under Article 279A(5) until the GST Council recommends their inclusion date.
  • Alcoholic liquor for human consumption is permanently excluded from GST under the constitutional definition of GST in Article 366(12A), remaining under state excise duties.
  • Electricity duties levied by state governments remain outside the purview of GST under Entry 53 of the State List in the Seventh Schedule of the Constitution.
  • Stamp duties and registration fees on real estate property transactions continue under state jurisdiction and are not subsumed under the Goods and Services Tax.
  • GST Suvidha Providers (GSPs) are authorized third-party technology entities licensed by GSTN to build user-friendly interfaces connecting businesses and ERP systems with the GST portal.
  • Dynamic Quick Response (QR) codes are mandated on B2C invoices issued by large taxpayers with aggregate turnover above Rs 500 crore to facilitate digital payments.
  • The Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR) are constituted under State GST Acts to clarify tax liabilities and classification beforehand for applicants.
  • The National Anti-Profiteering Authority (NAA) was constituted under Section 171 of the CGST Act to ensure that businesses pass on the benefit of reduced tax rates and input tax credits to consumers.
  • With effect from 1 December 2022, anti-profiteering complaints and adjudications under GST are handled directly by the Competition Commission of India (CCI).
  • Section 109 of the CGST Act, 2017, provides for the constitution of the Goods and Services Tax Appellate Tribunal (GSTAT) as the second appellate forum in dispute resolution.
  • The Principal Bench of the GST Appellate Tribunal is located in New Delhi, headed by a President with both judicial and technical members from the Centre and States.
  • Taxpayers whose annual aggregate turnover in the preceding financial year was up to Rs 1.5 crore are eligible to opt for the GST Composition Scheme, paying a unified turnover tax (1% for manufacturers and traders, 5% for restaurants).
  • Under the Reverse Charge Mechanism (RCM) governed by Sections 9(3) and 9(4) of the CGST Act, the liability to pay tax is shifted from the supplier of goods or services to the recipient.
  • E-Invoicing is mandatory for all B2B transactions under GST for registered businesses whose aggregate annual turnover exceeds the threshold notified periodically by the CBIC (presently Rs 5 crore).
  • Input Service Distributor (ISD) is an office of the supplier of goods or services that receives tax invoices for input services and distributes the credit of CGST, SGST, or IGST to recipient branches.
Curriculum & Reference Sources: Constitution of India (Articles 246A, 269A, 279A), Ministry of Finance, GST Council Secretariat.

Sample Solved Questions & Concept Explanations

8 Verified Concept Questions
Q1.EASY

Which Constitutional Amendment Act introduced the Goods and Services Tax (GST) regime in India, coming into nationwide effect on July 1, 2017?

Q2.MEDIUM

In the Goods and Services Tax (GST) Council constituted under Article 279A, what proportion of the total weighted voting power is held by the Central Government?

Q3.MEDIUM

Under Article 269A of the Indian Constitution, who levies and collects the Integrated Goods and Services Tax (IGST) on inter-state supply of goods and services?

Q4.HARD

Under Article 279A of the Constitution, any decision of the GST Council requires a weighted majority of not less than what proportion of the weighted votes of members present and voting?

Q5.EASY

Who serves as the ex-officio Chairperson of the Goods and Services Tax (GST) Council in India?

Q6.EASY

How many alphanumeric digits comprise the Goods and Services Tax Identification Number (GSTIN) assigned to registered taxpayers in India?

Q7.EASY

What constitutes the minimum quorum required to conduct a valid meeting of the GST Council under Article 279A?

Q8.EASY

In the voting mechanism of the GST Council, what combined weighted voting share is held by all State Governments taken together?