Introduction:
Centre-State GST disputes are emerging as a major concern in India’s tax framework. With the GST Council not meeting for over five months—despite rules mandating quarterly meetings—State governments are finding it harder to raise concerns. This lack of dialogue impacts both tax revenue sharing and policy trust.
Why GST Council Meetings Are Crucial
The Goods and Services Tax (GST) Council is the key constitutional body for coordinating indirect tax policies between the Centre and States. As per Article 279A(8) of the Constitution and GST Council Rules, the Council must ideally meet every quarter.
When this doesn’t happen, several problems arise:
- States can’t raise urgent issues on rate anomalies or revenue losses.
- Centre’s decisions may seem one-sided, breeding mistrust.
- Small businesses face delays in policy relief or clarifications.
What the Law Says
According to the Constitution (101st Amendment) Act, 2016:
- GST Council decisions require consensus.
- The Centre holds one-third voting power; States share the rest.
- The Council should meet at intervals decided by the Chairperson but ideally once every quarter (as per Rule 6 of the GST Council Rules).
Current Gap: The Council last met over five months ago (as of May 2025), creating a legal and operational void.
Recent State-Level Concerns
At the 10th NITI Aayog Governing Council meeting held in May 2025:
- States expressed dissatisfaction over infrequent GST Council meetings.
- Many could not voice sector-specific issues like delayed IGST settlements or GST compensation claims.
- Andhra Pradesh CM proposed forming State sub-groups for:
- Economic growth strategy
- Leveraging demographic advantage
- Tech-driven governance
This shows that States are seeking structural changes to make the federal framework more responsive.
Key Centre-State GST Disputes
| Issue | Centre’s View | States’ Grievance |
|---|---|---|
| GST Compensation Delay | Blames lower tax collections | Funds not released on time |
| IGST Settlement | Done as per formula | Lacks transparency in calculations |
| GST Rate Changes | Council approval needed | Delayed discussions hurt industries |
| Data Sharing | Limited real-time data to States | Hurts tax enforcement capabilities |
Expert View: Why This Matters for Taxpayers
CA Priya Mehta, Indirect Tax Expert at Efiletax, says:
“When GST Council meetings are delayed, clarity on rate changes and exemptions is also delayed. This affects pricing decisions for MSMEs and tax planning for CAs and businesses alike.”
What Should Happen Next?
For smoother Centre-State tax coordination:
- Quarterly GST Council meetings must be enforced
- Sub-groups of States (as suggested by Andhra Pradesh) can fast-track topic-based solutions
- Real-time data sharing mechanisms between Centre and States should be improved
What This Means for You as a Taxpayer
- Delayed decisions = delayed relief.
Whether it’s a GST amnesty scheme or rate rationalisation, the taxpayer pays the price for Centre-State gridlocks. - More transparency = better compliance.
Regular meetings mean faster clarifications, smoother return filing, and fewer disputes.
Summary
Centre-State GST disputes are rising due to delayed Council meetings. Quarterly GST Council sessions are essential for transparency, rate clarity, and trust in India’s indirect tax system.
Frequently Asked Questions (FAQs)
Q1. Who decides the GST Council meeting schedule?
The Chairperson (Union Finance Minister) decides the date, but meetings should be held at least every quarter.
Q2. Can a State force a GST Council meeting?
No, but States can collectively request one. Final decision rests with the Chairperson.
Q3. What is the consequence of not meeting regularly?
Delayed rate changes, poor coordination, and eroding trust between Centre and States.