The council, composed of central and state ministers on Thursday, cleared five draft bills linked to the GST, which will create a national sales tax. It will be submitted to the parliament and state assemblies for approval.
Analysts said GST would benefit fast-moving consumer goods (FMCG) and transportation companies through a one-size-fits-all national sales tax, which would mean these firms will no longer have to meet tax requirements of different states.
Market sentiment has been bolstered as Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) won the key state elections in Uttar Pradesh, and after the Federal Reserve stuck to its planned tightening pace this year.
"The implementation of GST will benefit FMCG and logistics companies," said Mahantesh Marilinga, senior research analyst, Finquest Securities.
"The rally in the market is expected to continue until the fourth-quarter results are out."
The Nifty hit a record high of 9,218.4, but pared gains to trade 0.02 per cent higher at 9,153.05.
The benchmark Sensex rose as much as 0.81 per cent to 29,824.62, its highest since March 4, 2015.
The Nifty has gained 2.77 per cent so far this week, while the Sensex has climbed 2.72 per cent, in what could be its highest weekly gain since the end of January.
The rupee also eased after hitting a 17-month high on Thursday, trading at 65.5575/5600 from its close of 65.42.
The Nifty FMCG index surged 4 per cent to a record high after cigarette maker ITC Ltd rose as much as 7.34 per cent within the first hour of trade. ITC contributed to more than half of the NSE index's gains.
But profit-taking capped gains on sectors such as state-owned banks and auto. The Nifty PSU Bank index and Nifty Auto index slid 1.1 per cent and 0.7 per cent after gaining for three and five straight sessions respectively.