Evaluate the GST Council as an instrument of cooperative fiscal federalism after the end of the compensation period.

Article 279A, inserted by the 101st Constitutional Amendment Act, 2016, created the GST Council. The Union Finance Minister chairs it and every State is a member. The Centre holds one-third of the vote, the States hold two-thirds, and decisions need a three-fourths majority [1]. The five-year compensation guarantee (2017–2022) is now over [2]. So the Council must reach consensus without a fiscal cushion for States. On balance it has held up, but the strains are real.

Strengths: consensus without the safety net

• Major reform still agreed: the 56th meeting (September 2025) cut four slabs to 5% and 18%, added a 40% de-merit rate, and ended the compensation cess by merging it into GST [3].
• Shared sovereignty: in Mohit Minerals (2022), the Supreme Court held that Council recommendations do not bind Parliament or State legislatures, because Article 246A gives both simultaneous power [4]. Consensus is therefore negotiated, not imposed.
• Joint administrative reform: the Council approved automated registration within 3 working days for low-risk applicants and the operationalisation of GSTAT [5]. The 57th meeting (October 2026) took up a five-pronged reform of tax administration, not rates [2].
• Stable revenue: steady collections give room for taxpayer-friendly measures [2].

Weaknesses: strains after compensation

• States carry the revenue risk alone: a State hit by rate cuts now bears the full loss. Several opposition-ruled States sought revenue protection before GST 2.0.
• Asymmetric voting: the Centre's one-third weight works as a de facto veto, while States cannot pass a proposal without the Centre [1].
• Uneven outcomes hidden by averages: steady national collections can mask shortfalls in consuming States.
• Process reforms have a cash cost: faster refunds and easier input tax credit reduce short-run receipts, so every item becomes a bargaining point.

The Council has kept consensus through a historic rate overhaul even after compensation ended, so it remains India's most functional federal forum. Its legitimacy now depends on trust rather than transfers. Three steps would help: activate the dispute-settlement mechanism that Article 279A(11) already provides [1], build a transparent, rule-based revenue-monitoring framework for vulnerable States, and keep decision-making consensual. These steps would keep the Council true to the cooperative federalism the Constitution envisaged.