Taxation · GST in India - An Introduction

GST Council and Key Features of GST Law

Updated 5 October 2026 · Fact-checked

The GST Council is the constitutional body that recommends GST rates, exemptions, thresholds and model laws to the Union and States. GST is a destination-based, multi-stage tax on supply of goods or services, with input tax credit. To answer questions, state the provision, apply it to the facts, and conclude.

Understand GST Council and Key Features of GST Law

Before GST, the Centre and States taxed different things under different laws. GST replaced many of these taxes with one tax on supply of goods or services. It is charged at every stage, but credit of tax paid on inputs is allowed. So the real burden falls on the final consumer.

GST is a destination-based consumption tax. Tax goes to the State or Union where goods or services are finally consumed, not where they are produced. This is why IGST is used for inter-State supplies: the tax reaches the consuming State. The place of supply rules decide where consumption is deemed to happen.

The GST Council is set up under Article 279A of the Constitution. It makes recommendations on taxes to be subsumed, goods and services to be exempted, model GST laws, rates, threshold limits and special provisions in respect of the North-Eastern States, Jammu and Kashmir, Himachal Pradesh and Uttarakhand (Article 279A(4)(g)). Jammu and Kashmir is now a Union Territory. The Council exists so that the Centre and States decide together, which keeps the tax uniform across India.

GSTN (Goods and Services Tax Network) is a non-profit company that provides the common IT portal. It handles registration, return filing, payment and other services for taxpayers and for tax authorities. It does not decide tax policy.

The main features of the law: one tax on supply, dual structure (CGST and SGST/UTGST on intra-State supplies, IGST on inter-State supplies and imports), input tax credit across the chain, GSTIN-based registration, electronic compliance, and a uniform law with State laws mirroring the Central law. Petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel are outside GST until the Council recommends a date. Alcohol for human consumption is outside GST altogether.

Key rules to remember

Constitutional basis of the Council: Article 279A: GST Council; Constituted by the President. It is a joint forum of the Centre and States.
Composition of the Council: Union Finance Minister (Chairperson) + Union Minister of State in charge of Revenue or Finance + Minister in charge of Finance or Taxation (or any other Minister) nominated by each State Government; The Council elects one of the State Ministers as Vice-Chairperson.
Quorum: Quorum = 50% of the total number of Council members; Meeting cannot validly proceed without it.
Voting weightage: Centre's vote = 1/3 of total votes cast; all State Governments together = 2/3 of total votes cast; Votes are weighted in the meeting, not counted per head.
Decision rule: Decision needs a majority of not less than 3/4 of the weighted votes of members present and voting; The Centre's weightage is 1/3 of the total votes cast, and the 3/4 is measured on the weighted votes of members present and voting. A proposal is therefore blocked if the votes against it exceed 1/4 of the weighted votes cast. Every proposal needs the Centre's affirmative vote: without it the most a proposal can get is 66.67, which is below 75. So the Centre has a veto, because its 33.33 is more than 25. The States together hold 66.67, so a bloc of States holding more than 25 weighted votes against can also block a proposal. Always state the blocking rule against the weighted votes cast, not a fixed total.
Destination principle: Tax accrues to the State or Union where supply is consumed; Applies to goods and services; place of supply rules fix the destination.
Dual GST structure: Intra-State supply: CGST + SGST (or UTGST); Inter-State supply and imports: IGST; Taxable event is supply, not manufacture, sale or provision of service separately.

How to solve GST Council and Key Features of GST Law questions

Use this method for any question on the Council, GSTN or features of GST law.

1Read the question and identify what is asked: Council, GSTN, destination principle, or a general feature.
2Write the source of the provision first, such as Article 279A for the Council.
3State the rule in plain words with exact numbers: quorum, weightage, 3/4 majority.
4If the question has facts, apply the rule to them and compute the votes or check the condition.
5For a difference or feature question, write point by point, one line each.
6End with a one-line conclusion that answers the question asked.

Quickest way: Quick method for MCQs and written answers

When to use it: Use when you have little time and the question is a recall or short-application question.

Memorise the numbers: 50% quorum, 1/3 and 2/3 weightage, 3/4 majority.
For voting problems, convert everything into weighted votes cast, taken as 100. Centre = 33.33, States = 66.67.
A decision needs 75 of 100 weighted votes cast. The Centre alone cannot pass it, and States alone cannot pass it. Every proposal needs the Centre's affirmative vote, because without it the maximum is 66.67, which is below 75. A proposal is blocked if votes against exceed 25, which is 1/4 of the weighted votes cast. The Centre has a veto because its 33.33 is more than 25. A bloc of States holding more than 25 weighted votes against can also block it.
In MCQs, eliminate options that say simple majority, or that give the Council power to make law directly. It only recommends.
For destination-based questions, ask where the consumer is. Tax goes there.
In written answers, use short numbered points: provision, fact, conclusion. This earns step marks.

Common mistakes in GST Council and Key Features of GST Law

Writing that the Council can make GST law or rates on its own.
Students confuse its influence with legal power.
Fix: Write that the Council makes recommendations. Law is made by Parliament and State Legislatures, and rates are notified by the Government.
Saying decisions are taken by simple majority.
Confusion with ordinary meetings.
Fix: Remember the 3/4 weighted majority of members present and voting.
Applying one vote per member while counting.
Students ignore weightage.
Fix: Count weighted votes: Centre 1/3, all States together 2/3.
Thinking GST goes to the State where goods are produced.
Mixing GST with the old origin-based taxes.
Fix: Write destination-based: tax goes to where consumption happens.
Writing that GSTN sets tax policy or collects the tax.
Students see GSTN as a tax authority.
Fix: State that GSTN is a non-profit company providing the common IT platform for registration, returns and payment.
Saying all goods and services are under GST.
Overgeneralising from 'one nation one tax'.
Fix: Mention alcohol for human consumption is outside GST, and petroleum products (crude, HSD, motor spirit, natural gas, ATF) are outside until the Council recommends a date.

Worked examples

Example 1

The GST Council meets and quorum is satisfied. Explain how a decision is taken, and state whether the Centre alone can pass a proposal and whether the States alone can pass it.

Show the solution

Provision: Under Article 279A, every decision of the Council needs a majority of not less than 3/4 of the weighted votes of members present and voting.
Weightage: The Centre's vote has a weightage of 1/3 of the total votes cast. All State Governments together have 2/3. This weightage is fixed relative to the total votes cast, whatever the number of members voting.
Take total weighted votes as 100. Centre = 33.33. States = 66.67.
Required majority = 3/4 × 100 = 75.
Centre alone has 33.33, which is less than 75, so it cannot pass a proposal alone.
States alone have 66.67, which is also less than 75, so they cannot pass it alone.
Conclusion: A decision needs the Centre and States together. The Centre's affirmative vote is mandatory, because without it the maximum is 66.67, which is below 75. If the Centre votes in favour with its full 33.33, the States must supply at least 75 − 33.33 = 41.67 of their 66.67 weighted votes.

Answer: A decision needs at least 75% of weighted votes. Neither the Centre (33.33%) nor the States together (66.67%) can pass a proposal alone, and the Centre's affirmative vote is always required. With the Centre in favour, States must supply at least 41.67 of their 66.67 weighted votes.

Example 2

Explain what is meant by GST being a destination-based consumption tax. A manufacturer in Gujarat sells goods to a customer in Kerala. Which State gets the tax?

Show the solution

Meaning: A destination-based tax is collected in the place where goods or services are consumed, not where they are produced.
Consumption tax: The burden is meant to fall on the final consumer. A registered business can generally claim input tax credit, subject to conditions (and blocked credits under Section 17(5)), so it ordinarily does not bear the tax.
Facts: Supply is from Gujarat to Kerala. The supplier and the place of supply are in different States, so this is an inter-State supply.
Levy: IGST applies to inter-State supplies.
Revenue: The Centre collects the IGST and apportions it under Section 17 of the IGST Act, 2017. The goods are consumed in Kerala, so the revenue is meant to flow towards Kerala, the State of consumption, through settlement between the Centre and the States. The IGST is first set off against the supplier's input tax credit, and the final settlement depends on the ITC utilised. So the exact amount that reaches each State depends on that utilisation.
Conclusion: Under the destination principle, the revenue from this supply moves towards Kerala through apportionment and settlement under Section 17. Do not say that Gujarat keeps nothing. The final position depends on the ITC utilised.

Answer: GST is a destination-based tax, so the revenue is meant to flow to the State of consumption. Here IGST is charged and collected by the Centre, which apportions it under Section 17 of the IGST Act, 2017. The revenue flows towards Kerala, the place of consumption, through settlement, and the final amounts depend on the ITC utilised.

Exam tips

Learn the numbers cold: 50% quorum, 1/3 and 2/3 weightage, 3/4 majority. MCQs often test exactly these.
Always use the word 'recommends' for the Council. It is a frequent trap.
In descriptive answers, list functions of the Council as bullet points, then add the voting rule.
For GSTN, write its role as a common portal and non-profit company. Avoid adding powers it does not have.
For 'salient features' questions, give 6 to 8 crisp points and include dual structure, destination basis, input tax credit and electronic compliance.

Practice questions from GST in India - An Introduction

GST Council and Key Features of GST Law: frequently asked questions

What does the GST Council do?

It recommends to the Union and States on taxes to be subsumed, exemptions, model laws, rates, threshold limits and special provisions for the North-Eastern States, Jammu and Kashmir, Himachal Pradesh and Uttarakhand. It also recommends the date from which GST applies to petroleum products. Its decisions are recommendations, which the Government then gives legal effect to.

How does voting work in the GST Council?

Votes are weighted. The Centre has 1/3 of the total votes cast and all States together have 2/3. A decision needs a majority of at least 3/4 of the weighted votes of members present and voting, so neither side can decide alone.

What is the role of GSTN?

GSTN is a non-profit company that runs the common GST portal. Taxpayers use it for registration, filing returns and making payments, and tax authorities use it for the related data. It does not make tax policy.

What does destination-based consumption tax mean in GST?

It means GST is received by the State or Union where goods or services are finally consumed, not where they are made. This is why inter-State supplies attract IGST, and place of supply rules decide the destination.