Discuss the institutional mechanism of the GST Council and the challenges of ensuring that tax benefits are passed on to consumers.

The GST Council, created under Article 279A by the 101st Constitutional Amendment Act, 2016, is India's principal instrument of cooperative fiscal federalism [2]. Its September 2025 rate rationalisation shows that designing a tax cut is institutionally easier than delivering it to the consumer's bill.

Institutional mechanism

• Composition: chaired by the Union Finance Minister, with the Union Minister of State for Revenue/Finance and the finance or taxation minister of every State; States elect a Vice-Chairperson [2].
• Weighted voting: decisions need three-fourths of weighted votes — Centre one-third, all States together two-thirds — with half the members forming the quorum, so neither tier can act unilaterally [2].
• Mandate: recommends rates, exemptions, thresholds, model laws. Its 56th meeting collapsed the four-slab structure into 5% and 18%, with a 40% rate for luxury/sin goods, effective 22 September 2025 [1].
• Recommendatory, not binding: in Union of India v. Mohit Minerals (2022) the Supreme Court held Council recommendations have only persuasive value, requiring notification or legislation by the Union and States [3].

Challenges in ensuring pass-through

• Enforcement vacuum: Section 171, CGST Act mandates a commensurate reduction in prices, but a sunset now bars fresh anti-profiteering applications, with pending matters routed to the GSTAT Principal Bench [4].
• Measurement difficulty: apportioning a rate cut across thousands of SKUs, bundled offers and input-credit changes makes "commensurate" hard to prove.
• Margin retention and sticky MRPs: unsold pre-revision stock and trade margins can absorb the cut instead of the buyer.
• Inflation offset: rising consumer prices — food inflation of 4.78% (May 2026) — can restore pre-cut retail levels, neutralising nominal relief [5].
• Uneven transmission across sectors, with competitive markets passing cuts faster than concentrated ones.

Rate rationalisation is therefore necessary but not sufficient. Strengthening GSTAT's capacity, mandatory re-labelling and disclosure of revised MRPs, and Council-supervised price monitoring with consumer awareness would convert a federal consensus on rates into a real welfare gain — the cooperative-federal promise of Article 279A.