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.

• 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).

• 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.

• 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.

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.

• Aim:

• • 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.