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With the President's seal of approval on the 122nd Constitutional amendment bill, the GST council was promulgated, which comprised of the Union Finance Minister as its head, the Union Minister of State for Finance and State Finance Ministers as the prominent members. The GST council is expected to take decisions on number of critical items before the beginning of the winter session of Parliament. Meanwhile, the Centre and State Governments will also table the IGST, CGST and SGST laws in the winter session. These laws coupled with the sensitive outcomes of the GST council meetings will pave the way for the implementation of GST from 1st of April, 2017.

Since its formation, till date, the council has met for three times. Some key decisions have been taken during these three meetings, which are summarized in following paragraphs.

The first meeting of the GST council was conducted on the 22nd and 23rd of September, 2016. Some key decisions taken during this meeting are:
- The businesses with a turnover of less than INR 20 lakh are exempted from GST. This threshold limit has been reduced to INR 10 lakh for the north-eastern states.
- The taxation control would vary depending on the turnover of the business and whether it is goods or services which are to be taxed.
- For goods, the business with a turnover of less than INR 1.5 crore per annum will be taxed by States. Where the turnover is greater than INR 1.5 crore, the centre and states will both have the taxation control.
- For the service tax assessees, the GST will be imposed by the Centre and the revenues collected would be judiciously distributed to the states.

The second meeting of the council was held on 30th September, 2016 and during this meeting, following two decisions were taken -

- An agreement was reached on five subordinate legislations which include rules for registration, rules for payments, returns, invoices and refunds.
- GST tax would be paid by all entities and exemptions would be phased out. Currently, the Centre has given some excise duty exemptions to 11 north-eastern and hill states. Similarly, the state government also gives the exemptions. The GST that will be collected by the state or centre would be reimbursed to the exempted entity from its budget.

However, cracks did appear during this meeting. This was when the Minutes of earlier meeting was put up for approval. Finance Minister chose the consensus route instead of voting route for approval of Minutes of meeting. Two states did not agree to the Centre's jurisdiction of taxing 11 lakhs service tax assesses. A discussion was initiated on the subject but it remained inconclusive. This discussion was then postponed for 18th October meeting.

As scheduled, the third meeting was held on 18th October, 2016 and ended on 19th October, 2016. This meeting was crucial in nature as the agenda of the meeting was to decide the all-important GST rate and work out the formula for compensating the states in case of a revenue shortfall resulting from GST implementation.

However, this meeting did not result into any consensus amongst states for various reasons, which are as follows -

- Source of funding the compensation to states should be finalised first.
- Levy of Cess on demerit goods as suggested by Central Government was objected as contrary to the spirit and object of GST.

Background - The Centre proposed a Cess on demerit goods in the name of Clean Environment Cess. Whereas, all other taxes and Cess would be subsumed in GST, but it was not acceptable to the States. The States have their logic that a levy of Cess will not result into subsuming of all taxes. Whereas, GST is being implemented to subsume all taxes. Whereas, the Centre finds Cess to be a best way out to make a pool for funding compensation to States.

- Consolidated fund model was proposed by states for compensation of loses.

Fortunately, the modalities for calculating the losses incurred by states were agreed with consensus in this meeting. But, a decision on the compensation funding mechanism is still a big challenge.

The next meeting of GST Council is scheduled on 3rd November 2016.