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GST Council — How India Sets GST Rates

The GST Council recommends every GST rate, exemption, and rule in India. Here is how it is structured, how it votes, and why its decisions bind every state and the centre.

Introduction

Before GST launched on 1 July 2017, each state set its own taxes on goods, and the centre set taxes on services and inter-state sales. The result was a patchwork of rates and rules that made India look like 29 different markets. The GST Council was created to fix that.

The GST Council is a constitutional body chaired by the Union Finance Minister. It brings together the centre and all states to agree on GST rates and rules. Once it recommends something, the centre and every state must implement it through their respective GST Acts.

How the Council works

Constitutional status

The GST Council was set up by the 101st Constitution Amendment Act 2016. Article 279A of the Constitution gives the Council the power to recommend GST rates, exemptions, threshold limits, and rules. Both the centre and all states must follow its decisions.

Voting structure

The Council has one vote for the centre and one vote for all states acting together. Decisions require a three-fourths supermajority of the weighted votes present (centre = one-third, states together = two-thirds).

Rate changes need special majority

Any change to a GST rate — including moving goods between slabs — requires the special three-fourths majority. A simple majority can decide other matters such as process changes and threshold adjustments.

Uniform GST across India

Because the Council's decisions bind all states and the centre, GST is the same rate on the same product in every state. Before GST, each state set its own VAT rate, creating a fragmented market.

Voting majorities required

Decision type Majority required
Rate changes, new exemptions, threshold changes 3/4 supermajority of votes present (centre 1/3 + states 2/3)
Process changes, rule modifications, IT changes Simple majority of votes present
Any decision to be tabled Chair must agree to place it on agenda

Frequently asked questions

What is the GST Council?
The GST Council is the constitutional body that recommends GST rates, exemptions, threshold limits, and rules for GST in India. It was set up in 2016 by a constitutional amendment and is chaired by the Union Finance Minister. Both the centre and all 28 states must follow its decisions.

Who is on the GST Council?
The GST Council is chaired by the Union Finance Minister. The other members are the Union Minister of State (Revenue) and the Finance Ministers of each of the 28 states and 3 union territories with legislatures. A representative of the GST Council Secretariat assists the meetings.

How does the GST Council decide things?
Each decision requires a three-fourths supermajority of votes present. The centre has one-third of the total votes (calculated by GST revenue share); all states together have two-thirds. Any state can raise a concern, but the supermajority must agree for rates to change.

Does the GST Council's decision apply to all states?
Yes. Under Article 279A of the Constitution, both the centre and all states are bound by the GST Council's recommendations. Once the Council recommends a rate or rule, it becomes law through the CGST Act, SGST Acts, and IGST Act — no separate state vote is needed.

Where can I read GST Council decisions?
All GST Council decisions are published on gstcouncil.gov.in, including the press releases and rate recommendations from each meeting. CBIC at gst.gov.in then issues the corresponding notifications under the CGST Act to give legal effect to the Council's decisions.

Sources

Last reviewed by FinWiz24 Research Desk.