The constitution of the Goods and Services Tax (GST) Council with the Finance Minister of Indiaas its chair was approved on Monday, with powers to recommend the indirect tax rate and establish a disputes redressal mechanism, among other matters.

The decision was taken at a cabinet meeting presided over by Prime Minister Narendra Modi, soon after the President gave his assent to the relevant Constitution amendment bill, followed by a notification in the official Gazette -- that also took effect on Monday.

"The GST Council will consist of the Finance Minister, Minister of State of Revenue (both from the central government) and state finance ministers," Principal Spokesperson for the Government of IndiaFrank Noronha said, soon after the cabinet meeting.

In effect, the empowered committee of state finance ministers on GST will be co-opted into the council.

"The GST Council Secretariat costs will be borne by the central government. GST implementation steps are ahead of schedule so far," Noronha added. "The GST Council Secretariat shall be manned by officers taken on deputation from both the central and state governments."

The secretariat will work out of the national capital. Officials said Finance Minister Arun Jaitley has already convened the first meeting of the GST Council over two days from September 22 in New Delhi.

Apart from recommending the tax rate and the mechanism to resolve disputes, the council will also make suggestions in areas such as goods and services that may be exempted, model laws and rules on the subject, special rates during adversities and special provisions for some states.

The GST is a pan-Indiaindirect tax that proposes to subsume most central and state taxes such as value added tax, service tax, central sales tax, excise duty, additional customs duty and special additional customs duty, into one pan-Indiatax.