GST: Structure, Rates, Compensation and Administration

Goods and Services Tax (GST) is India’s unified indirect tax system, designed as a destination-based levy on the supply of goods and services. It replaced multiple central and state taxes to simplify compliance, improve tax coordination, and create a common national market.

The GST framework rests on the GST Council for rate and policy decisions, while disputes are handled through the GST Appellate Tribunal (GSTAT). Recent changes have also rationalized tax slabs and clarified the treatment of compensation cess.

Constitutional Framework and Voting Dynamics

• Article 279A: The GST Council is a constitutional body established under Article 279A of the Constitution of India.
• Chairperson: The Union Finance Minister chairs the Council.
• Representation: It includes representatives from the Union and all States and Union Territories with legislatures.
• Voting share: The Centre has one-third of the weighted votes, while the States collectively hold two-thirds.
• Decision rule: A three-fourths majority of weighted votes cast is required for Council decisions.
• Cooperative federalism: The voting structure ensures that neither the Centre nor the States can unilaterally impose GST decisions.

GST Rate Structure and GST 2.0

• Rate simplification: The earlier 12% and 28% slabs were removed under the revised GST structure referred to as GST 2.0.
• Current slabs: The active rate structure now consists of 0% (Nil), 5% (merit rate), 18% (standard rate), and 40% for specified luxury and demerit goods.
• Nil rate: Individual life and health insurance premiums are exempt from GST.
• Medicines: 33 life-saving medicines attract Nil GST.
• Concessional rate: Select medicines for cancer and rare diseases are taxed at 5%.
• Standard rate: The 18% slab applies to the majority of ordinary goods and services.
• 40% slab: This applies to luxury and demerit items such as large passenger vehicles, motorcycles above 350cc, yachts, casinos, and online gaming.

GST Compensation Cess and Transition Timelines

• Extension of levy: Under the GST (Period of Levy and Collection of Cess) Rules, 2022, compensation cess collection continues until March 31, 2026.
• Purpose: The cess is being used only to service and repay loans and interest of ₹2.69 lakh crore raised during COVID-19 to support state revenues.
• Luxury and demerit items: After the GST 2.0 changes, the cess on most such items was merged into the flat 40% GST rate.
• Tobacco products: These are to move to a separate HSNS Cess framework from February 1, 2026.
• Future of cess: A Group of Ministers on rate rationalization is reviewing the future use of compensation cess and the projected surplus in the compensation fund after March 31, 2026.
• Projected surplus: The estimated surplus in the fund is ₹48,000 crore.

GST Appellate Tribunal Structure and Operations

• GSTAT: The Goods and Services Tax Appellate Tribunal is the dedicated appellate forum for GST disputes.
• Nationwide operations: It began nationwide adjudicatory operations on February 16, 2026.
• First President: Its first President is Justice (Retd.) Sanjaya Kumar Mishra.
• Bench structure: GSTAT has a Principal Bench in New Delhi and multiple State Benches.
• Chennai Bench: The Chennai Bench became operational on January 22, 2026.
• E-filing backlog: The deadline for filing backlog and historically time-barred appeals on the GSTAT portal was extended to July 31, 2026.
• Appeal categories: Appeals are divided into Category I disputes covering tax, valuation, classification and input tax credit, and Category II disputes covering registration, cancellation and other procedural issues.
• Initial scrutiny: All appeals must first be examined by a two-member Division Bench consisting of a Judicial Member and a Technical Member.
• Digital portal: The GSTAT e-filing portal was launched on September 24, 2025, and tokens grant 60 days to file appeals.
• Filed appeals: As of August 2026, GSTAT had received 74,758 appeals and generated around 30,000 tokens.

Key Prelims Takeaways

• GST Council: A constitutional body under Article 279A, chaired by the Union Finance Minister.
• Voting pattern: Centre has 33.33% voting share and States collectively have 66.67%.
• Decision threshold: Council decisions require a 75% majority of weighted votes cast.
• Rate slabs: GST 2.0 simplified the structure to 0%, 5%, 18% and 40%.
• Insurance: Individual life and health insurance premiums are Nil-rated.
• Compensation cess: Collection continues till March 31, 2026, mainly for repayment of COVID-era borrowing.
• GSTAT: Appeals are first screened by a two-member Division Bench before further hearing.