SSC Typing Practice Passage: The GST Council and cooperative federalism

The Goods and Services Tax, introduced on 1 July 2017, replaced a long list of central and state taxes with a single tax on the supply of goods and services. Before it came into force, a truck carrying goods from one state to another often waited for hours at check posts, and a trader selling in several states had to deal with many different rules. The new system aimed to create one national market in which the same product would face the same tax everywhere.

At the centre of this system stands the GST Council, created under Article 279A of the Constitution. The Union Finance Minister chairs the Council, and the finance ministers of all the states and of the Union Territories with legislatures are its members. The Council recommends tax rates, exemptions, threshold limits and the rules for collection. Its decisions need a three-fourths majority of the weighted votes, with the Centre holding one-third of the weight and the states together holding two-thirds. Neither side can therefore push through a decision on its own.

This arrangement is often described as an example of cooperative federalism. In earlier decades, the Centre and the states usually met as rivals when money was discussed. In the Council, they sit at the same table, argue openly and still have to reach a common position. Many meetings have run late into the evening, and several difficult questions, such as the rate on a particular product or the treatment of a new service, have been settled only after long debate.

The system has not been free of problems. Small traders found the early filing rules complicated, and some states worried about losing revenue. Over time, returns were simplified, technology on the common portal was improved and many rates were revised. Collections have also grown as more businesses have joined the formal economy.

The real lesson of the GST Council is that a large and diverse country can make shared decisions without weakening either the Union or the states. When governments trust each other enough to give up a little control, citizens and businesses gain a simpler and fairer system.