Who runs GST, and why does the GST Council matter so much?

GST is meant to be one tax for one national market. So why isn’t it simply run by Delhi, like the income tax? Because a broad tax on all consumption was too valuable for the states to hand over, and too important to let fragment back into dozens of state systems. The way out was to run it jointly. Every rate, exemption, and threshold is set not by the Centre or the states alone but by both together, in one body: the GST Council.

The Council is written into the Constitution itself (Article 279A) and seats the Union finance minister alongside a minister from every state. Its arithmetic is deliberately balanced so neither side can override the other: the Centre holds a third of the votes, the states together two-thirds, and nothing passes without a three-fourths majority. Any big change needs the Centre and a broad coalition of states to agree.

In practice the Council barely votes at all. For its first 37 meetings it never once forced a vote. The first came only in December 2019, over the tax on lotteries, and even then the finance minister stressed how hard she had tried to avoid it (Business Today). That habit of consensus is the Council’s glue, and its constraint. It keeps the body stable, but it also means anything a single state dislikes, such as raising a rate or scrapping an exemption, moves at a crawl. The strain showed in the pandemic, when collections collapsed and the Centre and states fell out bitterly over who should borrow to cover a compensation shortfall of more than ₹2 lakh crore.

That is the bargain, and it cuts both ways. Businesses get one predictable set of rules across the country. States give up the power to set their own tax rates.