The GST Council is the only constitutional body in India where Union and state governments sit as co-equal participants to determine tax policy. Created under Article 279A through the 101st Amendment, it requires a three-fourths supermajority for every decision; the Centre holds one-third of the weighted vote, the states collectively hold two-thirds. Unilateral action by either side is mathematically impossible; the architecture forces consensus by design. How does an institution this consensus-bound deliver tax policy at scale?
The Council's distinction extends beyond its voting design. The Union Finance Minister chairs it, the states elect a Vice-Chairperson from among themselves, every state Finance Minister is a member, and decisions reached become the recommendations on which both Centre and states issue notifications. There is no executive forum above the Council that can override a Council decision, no judicial forum where a disagreement can be resolved without re-tabling, and no body below it that can break an impasse the Council itself has not. The Council is institutionally terminal on every GST decision: no architecture above can override its recommendations, and no architecture below can resolve what the Council has not.
Across 56 meetings held till date, the Council has resorted to formal voting only once, on the uniform GST rate for lotteries at its 38th meeting in December 2019. Every other decision, including the sweeping GST 2.0 rate rationalisation in September 2025 that collapsed the four-slab structure into a two-slab framework, has been arrived at through consensus. This is not because disagreements do not exist. They do, often sharply. States like West Bengal and Kerala have publicly dissented on specific rate proposals. But the administrative culture of the Council has evolved to absorb these disagreements through negotiation rather than vote. The real work of the Council happens not in the plenary meetings, but in the layers underneath. The Fitment Committee, composed of tax officers from both the Centre and states, does the technical heavy lifting.
For every item under review, the Fitment Committee evaluates the revenue impact of a rate change, whether an inverted duty structure exists, the compliance implications, and the cascading effect on related goods in the same Harmonised System of Nomenclature chain. Their recommendations feed into Groups of Ministers, smaller ministerial panels constituted to examine specific issues. The GoM on rate rationalisation examines the political and fiscal feasibility of the technical recommendations. This is where state-level concerns get articulated. At the Council meeting, the Finance Minister tables the GoM recommendations. Once consensus is reached, the decisions are recorded as "recommendations" and translated into legal form by the Central Board of Indirect Taxes and Customs through central tax notifications. In the September 2025 rationalisation, the Council met on 3rd September, and CBIC issued the implementing notifications on 17th September; a 14-day window to draft, vet, and gazette rate changes across hundreds of tariff items.
What makes rate rationalisation structurally difficult is that every rate change creates winners and losers, not just among consumers and businesses but among states. The 55th Council meeting in Jaisalmer in December 2024 took up Aviation Turbine Fuel inclusion in GST. The technical case was straightforward: capital goods and services used to produce ATF were already in GST while ATF itself remained outside, creating embedded tax and input credit blockage. Every state's position on the proposal was driven not by the merits but by its own fiscal structure. The Council's resolution was characteristically process-oriented: no decision was taken, but the matter was not closed. It was held open for "structured deliberation", the Council's way of keeping a reform alive without forcing a vote that would expose the depth of disagreement. The 56th Council meeting in September 2025 then quietly brought the supply of transportation of natural gas, petroleum crude, motor spirit, high speed diesel and ATF through pipeline under GST, at 5% without ITC and 12%/18% with ITC tiers. This is precisely the incremental approach the architecture defaults to when a frontal reform is politically blocked; the first institutional foothold of petroleum-related services within the GST net, achieved not through the contested ATF debate but through the Fitment Committee's sectoral recommendations.
The same dynamic governs technical corrections. The 45th Council meeting in 2021 approved raising the GST rate on textile fabrics from 5% to 12% to correct an inverted duty structure where input rates exceeded output rates and producers accumulated unutilisable input tax credits. The Fitment Committee had recommended the change after extended technical examination. But the rate hike was deferred indefinitely once it became politically visible, with multiple states objecting on cost-of-living grounds and industry associations mobilising publicly against the change. The Fitment Committee's technical correction did not survive contact with state political economy; the Council's design forces every technical fix to clear a political filter the architecture cannot override.
At the same 55th meeting, the GoM on Life and Health Insurance was expected to present its report recommending exemption of GST on individual health and life insurance premiums. This had enormous public visibility: the 18% GST on health insurance had become a political issue.
The GoM convener requested more time, stating that additional issues had been raised by states and that consultations with the Insurance Regulatory and Development Authority of India were still pending. Multiple states agreed that more deliberation was needed. But the most consequential intervention came from a state Finance Minister. He supported giving the GoM more time, but with a specific condition: rate rationalisation should be introduced alongside the insurance decision. His reasoning was explicit; while rate rationalisation would be revenue-positive for states, the insurance exemption would impose a fiscal cost. The two should be decided together so that the revenue gain from one offsets the revenue loss from the other. The insurance exemption eventually came through in the 56th meeting as part of the GST 2.0 overhaul in September 2025. It was not a standalone decision.
It was delivered as part of the comprehensive rate rationalisation that collapsed four slabs into two; a package where the revenue arithmetic worked because the losses from insurance exemption were absorbed by the revenue gains from the new structure. In the GST Council, no fiscally consequential decision travels alone; every revenue-negative proposal must find a revenue-positive companion before it can achieve consensus. This bundling logic; invisible in the headlines; is what actually determines the timing and sequencing of Council decisions. The Council does not resolve divisive issues through force. It resolves them through sequencing, bundling, and the patient accumulation of institutional readiness. The process is slow. But it has never broken.
The framework the Council built has delivered more than many critics anticipated. State GST collections have risen substantially, and the institutional discipline of monthly compliance has broadened the tax base. But the governance architecture that yielded this result is the same one that makes structural reform difficult: the consensus mechanism that prevented the system from collapsing also prevents it from being redesigned. The fiscal outcomes this architecture has yielded, however, vary dramatically across states. Maharashtra, India's most economically advanced state, has posted near-stagnant growth in its own tax effort. Karnataka, one of the most fiscally self-reliant states with own tax revenue contributing around 70% of total revenue, still recorded a real decline because a strong tax base was not enough to offset weakening non-tax revenues and reduced asset monetisation. GST has created a fiscal opportunity. Some states are leveraging it through diversified revenue management, effective asset monetisation, and competitive business environments. Others are subsisting on it. The Council engineered the consensus. What each state does with that consensus is driving dramatically different fiscal realities.