Detailed Agenda Note 04th GST Council Meeting

Confidential





Agenda for
4th GST Council Meeting

3-4 November 2016
Venue: Main Committee Hall, Parliament House Annexe, New Delhi

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Agenda Items
TABLE OF CONTENTS
Agenda
No.
Topic Page No.
1 Confirmation of the Minutes of the 3rd GST Council Meeting held on 18th and 19th
October, 2016
4
2 Presentation by GSTN on status of development of GST Portal, Data
migration/Enrolment plan, Risk factors and mitigation plan
-
3 Finalisation of the bands of tax rates under GST regime (Outstanding agenda item
from the 3rd GST Council Meeting). (Agenda Note same as for the 3rd GST Council
Meeting held on 18-19 Oct 2016)
-
4 Provision for Cross-Empowerment to ensure Single Interface under GST
(Outstanding agenda item from the 3rd GST Council Meeting). (Agenda Note same
as for the 3rd GST Council Meeting held on 18-19 Oct 2016)
-
5 Date of the next meeting of the GST Council -
6 Any other Agenda item with the permission of the Chairperson -

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Discussion on Agenda Items
Agenda Item 1: Confirmation of the Minutes of the 3rd GST Council Meeting held on
18-19 October, 2016
Draft Minutes of the 3rd GST Council Meeting held on 18-19 October 2016
The third meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on 18-
19 October 2016 at Vigyan Bhavan, New Delhi under the Chairpersonship of the Hon’ble Union
Finance Minister, Shri Arun Jaitley. The list of the Hon’ble Members of the GST Council who
attended the meeting is at Annexure 1. The list of officers of the Centre and the States who
attended the meeting is at Annexure 2.
2. In his opening remarks, the Hon’ble Chairperson of the Council welcomed all the members
and noted the good progress made in the earlier meetings where several important issues had
been decided. He emphasized the need to arrive at a consensus on each issue even if it needed
discussion and re-discussion on the same issue.
3. The following seven agenda points were taken up for consideration:
(i) Confirmation of the Minutes of the 2nd GST Council Meeting held on 30th
September, 2016
(ii) Modalities for compensation to the states for possible revenue loss
(i) Definition of the term “Revenue” (outstanding issue from 2nd GSTC Meeting)
(ii) The formula for calculating the projected growth rate for compensation
(iii) Provision for Cross-Empowerment to ensure Single Interface under GST
(outstanding issue from 1st and 2nd GSTC Meeting) –
(i) Distribution of taxpayers between States and Centre under GST regime
(ii) Modalities for exercising information based enforcement action
(iii) Periodicity of review of the distribution
(iv) Finalization of the bands of tax rates under GST Regime
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(v) Delegation of powers to the Chairman, GST Council to constitute Technical
Committees of officers
(vi) Date of the next meeting of the GST Council
(vii) Any other Agenda item with the permission of the Hon’ble Chairperson

Discussion on Agenda Items
Agenda Item 1: Confirmation of the Minutes of the 2nd GST Council Meeting held on 30th
September, 2016
4. The members suggested the following amendments to the draft minutes of the 2nd meeting of
the Council –
i. The Hon’ble Minister from Maharashtra stated that in paragraph 29 (iii), a reference
also needed to be made to deferral schemes, which was agreed to by the Council.
ii. The Hon’ble Minister from Punjab observed that in the 2nd line of paragraph 5, after
“ITC reversals”, ‘ITC adjustments’ also needed to be included. The Secretary to the
Council clarified that the bracketed text in the first line indicated both ITC reversals
and adjustments and therefore, reversals also covered adjustments. It was agreed that
no change was required in the draft minutes.
iii. The Hon’ble Minister from Punjab pointed out that in paragraph 21 (i), while
referring to adoption of the draft minutes of the 1st meeting of the GST Council, the
words ‘monthly or bimonthly’ should also be added in paragraph 37 (iii). The
Secretary to the Council clarified that paragraph 37 (iii) of the draft minutes of the 1st
meeting of the GST Council only recorded the final decision namely that
compensation shall be released on a quarterly basis whereas during discussion on this
issue, monthly or bimonthly compensations were also suggested. He clarified that as
the decision was correctly recorded, there was no need to make any changes to the
draft minutes. It was accordingly agreed to. The Hon’ble Minister from Punjab
observed that it would affect their cash flow, but they would accept the Hon’ble
Chairperson’s decision. The Hon’ble Chief Minister of Puducherry stated that
compensation on bimonthly basis would be more acceptable to the States. The
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Hon’ble Chairperson stated that a final view could be taken on this issue after
consulting the Department of Expenditure, Ministry of Finance. The Hon’ble Deputy
Chief Minister of Gujarat asked whether compensation would be given in advance.
The Secretary to the Council clarified that compensation could not be given in
advance as calculating the same would be difficult.
iv. The Hon’ble Deputy Chief Minister of Gujarat stated that the first sentence in
paragraph 26 should be changed to read as follows – “The Hon’ble Deputy Chief
Minister of Gujarat alluded to examine possible legal complications.” It was agreed to
make this change.
v. The Hon’ble Minister from Bihar pointed out that in paragraph 21 (iv), there was a
reference to examination of certain issues by a committee of officers but no such
committee was formed. The Secretary to the Council clarified that in order to save
time, instead of constituting a committee, he had called a meeting of state government
officers from all States who were willing to participate on 8 October 2016 and had
discussed the relevant issues threadbare.
vi. The Hon’ble Minister from Tamil Nadu suggested that the last sentence in paragraph
7 be deleted, which read as follows: “It was agreed that this need not be incorporated
in the Minutes of the 1st Meeting of the Council.” The Secretary to the Council
clarified that this sentence only recorded that as there was no agreement to count
Central Sales Tax (CST) at the rate of 4% for computing compensation, it was agreed
not to incorporate it in the minutes of the 1st meeting of the Council. After this
clarification, it was agreed not to delete the sentence.
vii. The Hon’ble Minister from West Bengal stated that in the 4th line of paragraph 14, the
word ‘compromise’ should be replaced with the word ‘cooperation’ and in the 5th
line, the expression “93% of” should be deleted. It was agreed to make these changes.
viii. The Officer from Uttarakhand suggested deleting the last sentence of paragraph 28
which read as follows: “The Centre, therefore, could be expected to only reimburse
the units out of the remaining 58% of the fund which was not part of the devolution
and the States would also need to correspondingly reimburse such units out of the
share of revenue received through devolution.” The Secretary to the Council clarified
that the sentence could not be deleted as it was only a record of what the Hon’ble
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Chairperson had stated. The Officer from Uttarakhand pointed out that his state
would get only 2%-3% of the devolution amount and the rest of the amount would be
distributed between other States. The Hon’ble Chairperson had stated that the Centre
would be able to reimburse only 58% of the tax collected as the other 42% would be
devolved to the States and the States would need to take a decision regarding
reimbursement from the States’ budget.
5. In view of the above discussions, for Agenda item 1, the Council decided to adopt the draft
minutes of the 2nd meeting of the GST Council with the following changes –
i. To replace the existing sentence in paragraph 29 (iii) with the following – “In case the
State or Central Government decides to continue any existing
exemption/incentive/deferral scheme, then it shall be administered by way of a
reimbursement mechanism through the budgetary route, the modalities for which
shall be worked out by the concerned State/Centre.”
ii. To replace the first sentence in paragraph 26 with the following – “The Hon’ble
Deputy Chief Minister of Gujarat alluded to examine possible legal complications.”
iii. To replace the 1st two sentences of paragraph 14 with the following – “The Hon’ble
Minister from West Bengal recalled the spirit of the house in the meetings of the
Empowered Committee of State Finance Ministers in Kolkata and Delhi to allow the
States to administer all taxpayers below the threshold of Rs. 1.5 crores and that the
formulation agreed to in the 1st Meeting of the Council was in a spirit of cooperation.
However, this cooperation was limited to the Centre administering the Service Tax
assessees whose turnover was below Rs. 1.5 crores and in his understanding, the
agreement was that Service Tax assessees with turnover above Rs. 1.5 crores would
be administered jointly by the Centre and the States”
Agenda Item 2: Modalities for compensation to the states for possible revenue loss
6. On this agenda item, two issues were discussed namely –
i. Definition of the term “Revenue” (outstanding issue from 2nd GSTC Meeting).
ii. The formula for calculating the projected growth rate for compensation.
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Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue made a presentation on both
the above issues. The first issue considered was whether Input Tax Credit (ITC) reversals should
be included in the definition of the term ‘Revenue’. The Council was informed that in the
meeting of State Government Officers on 8 October 2016 under the Chairpersonship of the
Revenue Secretary, a broad consensus was arrived at to include ITC reversals in the definition of
“revenue subsumed” for the calculation of compensation. The Hon’ble Chairperson observed
that as a broad consensus was reached at the Officers’ level, the same may be adopted in the
Council. It was agreed accordingly. It was further agreed that some revenues that did not go to
the Consolidated Fund of the States but were directly devolved to ‘mandi’ or municipalities
would also be included in the definition of ‘revenue subsumed’ if these were collected under the
authority of Entries 52, 54, 55 and 62 of List II of Schedule 7 of the Constitution of India and
were subsumed in the Goods and Services Tax (GST).
7. The next issue discussed was regarding inclusion of specific tax incentives/exemptions
presently being given by States in the definition of ‘Revenue’. In the presentation, it was stated
that as decided in the 2nd GST Council Meeting held on 30th September 2016, no outright
exemption schemes were to be allowed in GST regime, and in case the Centre or State decided to
continue the incentive, the same would have to be provided through the budgetary route. JS
(Revenue) further mentioned that in the meeting held with the State Government officers on 8
October 2016, the Central Government had clarified that the revenue earned by the State
Governments after the withdrawal of exemption should be taken into account for calculation of
compensation to States as otherwise the States shall have an incentive to continue with the
exemptions with the burden being borne by the Central Government for a scheme which is
distortionary in nature.
8. The Hon’ble Minister from Jammu & Kashmir stated that the issue regarding inclusion of
exemptions in calculation of revenue collected under GST had two aspects, one for the pre-GST
period and the other for the post-GST period. He stated that for the pre-GST period, some States
had incentivized their industry through the budgetary route and for such States, the tax collected
under the incentive scheme would be added to the revenue of the State for calculating
compensation. It would be fair that those States which had given incentive by exempting tax
should also have this exempted value added to the tax collected in the base year.
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9. The Hon’ble Deputy Chief Minister of Arunachal Pradesh stated that reimbursement given
through budgetary route of a State should not be counted as revenue, as this would lead to loss to
Special Category States. He added that the amount involved would be only Rs. 20-30 crores
which was insignificant for the Central Government. The Hon’ble Minister from Telangana
stated that revenue foregone due to exemptions should be included in the revenue of the State for
calculating compensation.
10. The Hon’ble Minister from Maharashtra stated that apart from Rs. 7,000 crores that his State
stood to lose due to subsuming octroi in GST, they would also lose another Rs. 7,000 crores due
to removal of Local Body Tax from 1st August 2016 at the instance of the Hon’ble Prime
Minister of India. Similarly, his State stood to lose Rs. 700 crores due to abolition of Sugarcane
Purchase Tax. He stated that his State should not suffer any loss on this count and taxes on
account of octroi, Local Body Tax and Sugarcane Purchase Tax should be included in the
definition of revenue.
11. The Hon’ble Deputy Chief Minister of Gujarat stated that in the Empowered Committee
meeting of the Finance Ministers of the States at Bhubaneswar in 2013, it was decided that
Government of India would give compensation to States for loss of CST for delayed
implementation of GST. The loss of revenue on account of CST was to the tune of Rs. 10,000 to
Rs. 12,000 crores. The Hon’ble Minister from Bihar stated that consuming States should not bear
the burden of CST compensation. The Hon’ble Deputy Chief Minister of Gujarat responded that
this was not a subsidy issue and was related to CST compensation. The Hon’ble Minister from
Odisha stated that the decision was that if GST was not implemented by 2013, CST rate would
be restored to 4%. Therefore, revenue of State to be protected on account of CST should be at
the rate of 4%. The Hon’ble Minister from Uttar Pradesh suggested that either CST rate of 4%
should be taken in definition of revenue or States be given compensation for additional 2 years.
The Hon’ble Minister from West Bengal also stated that CST be calculated at 4% under
definition of revenue because GST implementation was delayed. He further stated that CST loss
till introduction of GST should be compensated and all arrears on account of CST compensation
to States should be released. He added that only those cesses should be included in the definition
of revenue which were getting subsumed under GST and not other cesses such as coal cess being
collected under Entry 50 of List II of Schedule 7 of the Constitution.
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12. The Hon’ble Minister from Tamil Nadu supported the suggestion of calculating revenue for
compensation taking the CST rate at 4%. He further stated that the definition of ‘revenue’ should
include grants-in-aid and the amounts devolved to States. He also suggested that the definition of
‘revenue’ should not include revenue from petroleum products till such time as it was kept out of
GST. The Hon’ble Minister from Jammu & Kashmir also supported the calculation of CST at the
rate of 4% in the definition of revenue.
13. The Hon’ble Minister from Chhattisgarh stated that the definition of revenue should include
revenue collected and revenue receivable. He pointed out that there were several cases pending
in Courts on which there was a stay and in case there was a favourable decision of Courts at a
subsequent date and revenue came to the State on this account, it should be added towards the
calculation of revenue.
14. The Hon’ble Minister from Maharashtra supported the suggestion of the Hon’ble Minister
from Chhattisgarh that revenue accruing from matters pending in the High Courts or Supreme
Court should be counted towards revenue for the year in which the dispute arose. He also
suggested that the definition of revenue should be gross collection of revenue, i.e., without taking
into account the refund of taxes made. It was pointed out that in the base year (i.e. 2015-16),
refund amount would be high because of differential rate of VAT (12.5%) and of CST (2%). He
also pointed out that Maharashtra accounted for 21% of the share of manufacturing in the
country and once exemption/deferral schemes were gone, the revenue accruing to the States
would become high and hence, the compensation figure would go down. He suggested the
following definition of revenue for the purpose of Goods and Services Tax (Compensation for
Loss of Revenue) Bill, 2016 – “Revenue collected for a State shall mean all gross
revenues subsumed on account of amendments to entries or as the case may be deletion of
entries, made in the State list by the Constitution (One hundred and first amendment) Act, 2016
and revenue collected by the State under any Act passed by the Centre shall be considered for the
purpose of calculating compensation irrespective whether they get credited to Consolidated fund
of the State or not.Explanation: For the purpose of calculating revenue under Central Sales Tax
Act 1956 revenue shall be equal to twice the amount of tax added by Input Tax Credit
adjustment of VAT.” The Hon’ble Minister from Haryana proposed an amendment in the
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definition of “Revenue Collected” so as to include past arrears or dues collected during a
particular year in the revenue of the year in which it was payable under the “earlier law”.
15. The Hon’ble Minister from Madhya Pradesh also suggested to take gross revenue in the
definition of revenue. The Hon’ble Minister from Uttar Pradesh supported the suggestion of
taking gross revenue in the definition of revenue and also to account for revenue locked in court
disputes, especially those relating to entry tax. He also suggested to include deferred revenue
such as Sugarcane Purchase Tax in the definition of revenue. The Hon’ble Minister from West
Bengal stated that in practice, taxes were first collected and refunds were given out of it which
gave the figure of net tax. Hence, the gross revenue was not a notional figure and it should be
part of the definition of revenue. He also pointed out that in the 2013 Bhubaneswar meeting, the
States had unanimously recommended full compensation on CST and it was immaterial whether
or not the Central Government had agreed to this recommendation. He also observed that there
were pending cases in the Courts in relation to entry tax and if the State Government concerned
won the case, it should be added to the definition of revenue and if it lost the case, then a
provision be made in the budget of the State to pay the refund. The Hon’ble Minister from
Haryana observed that they were likely to get revenue in the next year from some tax compliance
schemes of works contract tax and it should be accounted for in the definition of revenue. The
Hon’ble Minister from Jammu & Kashmir stated that gross tax collection meant tax collected
plus the cost of collection. He observed that the Finance Commission also followed this principle
and exemptions, etc. were not part of the concept of gross tax collection.
16. The Hon’ble Deputy Chief Minister of Delhi also supported the suggestion to calculate
revenue at the rate of 4% for CST for the purpose of compensation. He also suggested that VAT
refund on purchases by diplomatic consulates should also be added to the definition of revenue.
The Hon’ble Minister from Jharkhand supported the view that CST at the rate of 4% should be
taken for the definition of revenue. The Hon’ble Minister from Karnataka supported the demand
for giving CST compensation till the implementation of GST. The Hon’ble Minister from
Rajasthan also supported this demand.
17. The Hon’ble Chairperson observed that if the pre-existing exemptions were to be included in
the definition of revenue, this principle would apply to the revenues of the Central Government
too and this would lead to an incongruous situation. The Hon’ble Ministers from Jammu &
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Kashmir and Tamil Nadu suggested that the Central Government exemptions on indirect taxes
(except Customs) should be added in the calculation of revenue base for compensation. The
Hon’ble Minister from Tamil Nadu added that all the exemptions taken together would not add
to more than Rs. one lakh crores to the projected collection of GST. The Hon’ble Minister from
U.P. observed that the figure would be lesser than Rs. one lakh crores. The Secretary to the
Council informed that gross revenue foregone for the Central Government was very high. He
further informed that the difference in tariff rate and the effective rate in Central Excise was
treated as revenue foregone. The Hon’ble Chairperson observed that if revenue foregone on
account of incentives under VAT, Service Tax and the difference between the tariff rate and the
effective rate of Central Excise were added to the definition of revenue, the revenue figure would
become much higher than what was actually collected and to safeguard this quantum of revenue,
incidence of tax would become very high. He cautioned that for GST to be successful, the tax
rates should be realistic and the rates should not become so high that people reject GST.
18. The Secretary to the Council clarified some of the basic premises in relation to the definition
of ‘revenue’. He observed that any revenue received by the States in 2015-16 on actual basis on
account of taxes subsumed in GST would be taken as part of the definition of revenue. The taxes
collected on net basis would form the base on which the projected growth rate would be applied.
He observed that the suggestion of the Hon’ble Minister from Maharashtra and others to add
arrears of revenue realized in a future year to the definition of revenue in the base year would
create a grey area and calculation of revenue on this basis would lead to differences in figures
from State to State. As regards CST compensation raised by the Hon’ble Minister from Gujarat
and others, he stated that though the States had recommended compensation for CST beyond
2012-13 or to raise CST to 4% in the 2013 Bhubaneswar meeting of the Empowered Committee
of State Finance Ministers, the Government of India at no stage agreed to these
recommendations. It would not be possible for the Central Government to pay CST
compensation for an additional 4 years, as the financial burden would be unsustainable. He also
pointed out that if in the compensation formula, CST was to be taken at the rate of 4%, this
would mean provisioning for an additional amount of Rs. 56,000 crores towards compensation
and this would lead to a higher tax rate in GST than the presently proposed 6%, 12%, 18% and
26%. He also pointed out that it would not be correct to infer that losses were continuing due to
CST at 2% because the State Governments had used other means to compensate for such
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reduction in revenue like ITC reversals on stock transfers. He further pointed out that on the
subject of counting tax exemptions for industries in the definition of revenue, it was decided that
the cost of ‘grandfathering’ exemption schemes could not be borne by the Government of India
and it would also be discriminatory towards those States that operated a reimbursement scheme
rather than an exemption scheme. Many consuming States had also not given any incentive to
industries and it would not be fair that the cost of incentives given by some States should be
borne by taxpayers of all States.
19. The Hon’ble Chairperson stated that in order to arrive at the taxation rate for 2017-18, the
actual revenue earned by the States and the Central Government in 2015-16 should be taken as
the basis as both have run their administration on this collection. It would not be advisable to add
any notional figure. One should look at the actual collection and safeguard that rather than
inflating the base by calculating what the Centre ought to have done. He stated that a notional
approach would increase the burden of taxation on citizens in 2017-18. The Hon’ble Minister
from West Bengal stated that the Central Government had earlier given compensation for CST
on a notional basis. The Secretary to the Council pointed out that at the presently proposed rates,
there was already a shortfall of Rs. 40,000 crores in meeting the target of revenue collection in
GST for 2016-17 and there would hardly be any avenue to collect an additional amount of Rs.
56,000 crores, if CST compensation was calculated at the notional rate of 4% instead of the
actual rate of 2%.
20. The Hon’ble Minister from Jammu & Kashmir observed that development of the hill states
was in the interest of the overall economic development of the country. The amount of revenue
was small – in the range of Rs. 1,200-1,300 crores and for these States, the amount of exemption
should be added in the definition of revenue. The Hon’ble Minister from Assam supported this
proposal and stated that if it was not done, this would be a discrimination vis-à-vis those States
which used reimbursement route. The Hon’ble Deputy Chief Minister of Arunachal Pradesh and
the Hon’ble Ministers from Meghalaya, Uttar Pradesh and West Bengal supported this proposal.
The Hon’ble Chairperson observed that in the definition of revenue for the base year 2015-16,
for Special Category States, exemptions given by States should be included. The Hon’ble
Minister from Chhattisgarh stated that the Empowered Committee had decided in 1998 that no
State should allow exemption to industries and therefore, such exemptions were in violation of
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the decision of the Empowered Committee and therefore, should not be counted as revenue. The
Hon’ble Chairperson stated that the argument presented by the Hon’ble Minister from
Chhattisgarh might be valid for other States but should not be applied to the Special Category
States. He added that Special Category States were regarded as a distinct identity for which both
the Centre and the States had exempted taxes. The Hon’ble Chief Minister of Puducherry stated
that his state should also be considered for this benefit along with the Special Category States.
The Hon’ble Chairperson stated that this could be discussed separately.
21. In view of the above discussion, the Council unanimously agreed that for the eleven Special
Category States referred to in Article 279A of the Constitution, the revenue foregone on account
of exemption of taxes granted by States shall be counted towards the definition of revenue for the
base year 2015-16.
22. On the issue of including other elements in the definition of ‘revenue’ namely, CST at the
rate of 4%, gross collection of taxes and revenue receivable on account of disputes pending in
Courts, the Hon’ble Chairperson pointed out that Clause 18 of the Constitution (One hundred
and first Amendment) Act, 2016 provided that the Parliament shall provide for compensation to
the States for loss of revenue arising on account of implementation of GST for a period of five
years. The spirit of the amendment was to look at the actual collection of revenue and not to
inflate the same as this would lead to additional taxation burden on the common man. He also
stated that there was no sovereign commitment to pay CST compensation beyond 2013-14. He
added that GST was not implemented as per the original schedule due to several reasons and the
Constitutional provision for compensation was only for loss of revenue due to GST
implementation and not for some breach of promise by the Central Government in some past
period. He clarified that Clause 18 could not be read to mean a commitment to compensate
States for losses arising during the period 2013-14 to 2016-17.
23. The Hon’ble Minister from West Bengal stated that Clause 18 did not limit the Central
Government to one particular formula and that it had earlier calculated notional loss in one year.
The Hon’ble Chairperson stated that citizens could not be compelled to pay more tax than what
was provided for in the Constitution. The Hon’ble Minister from Bihar supported this
interpretation.
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24. The Hon’ble Minister from Karnataka stated that lowering of CST was linked to non-
implementation of GST and therefore, loss was on account of GST. The Hon’ble Chairperson
stated that loss in anticipation of GST was different from loss on account of implementation of
GST.
Formula for calculating the projected growth rate for compensation
25. The next issue discussed was the possible formula for projection of revenue growth. In the
presentation by Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue, it was
highlighted that some States had proposed the formula to be average of revenue growth rate of
the best three years out of the preceding five years from the base year 2015-16. It was explained
that this was unacceptable to the Central Government as it could lead to unreasonably high
revenue growth projection rates. In view of this, the following alternative formulae were
discussed with the States:
i. Average revenue growth achieved in the three years ending 31st March, 2016;
ii. Average revenue growth achieved in the five years ending 31st March, 2016;
iii. Average revenue growth achieved in three years of the five years ending 31st March,
2016 excluding outliers;
iv. Fixed rate of 12% p.a.;
v. Rate equivalent to the nominal GDP growth rate of the country
It was proposed that the projected growth rate should be equivalent to the nominal GDP growth
rate of the country or another variant could be to take the nominal GDP growth rate but with a
minimum floor rate.
26. In the discussion that followed, the Hon’ble Minister from Maharashtra suggested to take the
projected growth rate of a State on the basis of the average growth rate of the States for five
years preceding the base year or the nominal GDP growth rate, whichever was higher. The
Hon’ble Minister from Tamil Nadu observed that the options regarding outliers and best 3 out of
5 years were quite close and therefore, the latter should not be rejected. He also suggested to
keep the minimum growth rate at 12%. The Hon’ble Minister from Kerala observed that the
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proposed formula of nominal GDP growth rate of the country was not acceptable as revenue
outcome of GDP growth rate was based on efficiency of collection. He supported the proposal of
the Hon’ble Minister from Tamil Nadu. The Hon’ble Minister from Jammu & Kashmir observed
that in calculation of GDP, the basket of goods deflated had several errors and therefore, GDP
growth should not be considered for projected growth rate.
27. The Hon’ble Chairperson stated that the period subsequent to the implementation of VAT,
i.e. 2007-09, was a boom period marked by high growth and high inflation. GDP grew at 9% and
tax buoyancy was high and therefore, compensation was not needed. In such a situation, the
formula of the best 3 out of the previous 5 years would have worked. He pointed out that growth
projection for 2008-09 was moderate and inflation was also down. Therefore, a formula adopted
during such a boom period could not be the basis. He stated that there was a need to look at
future growth prospects. The Hon’ble Minister from Kerala stated that the boom period ended in
2010-11 and so, half of the five-year period was a boom and the other half was a down period.
He observed that the best 3 out of 5 years was cherry-picking and instead, it would be preferable
to adopt some method of calculating trend growth rate or maybe, even the average of 10 years.
28. The Hon’ble Minister from West Bengal stated that taking GDP as a proxy for tax-growth
was not acceptable as variations in growth rates of different States and of the Centre was very
high. He stated that national GDP growth rate was a poor reflector of States’ growth rates. He
further stated that no cross-sectional regression analysis was done before suggesting projected
growth rate to be equivalent to the nominal GDP growth rate of the country. He suggested taking
the best 3 growth rates out of the previous 5 years’ growth rate. The Hon’ble Minister from Uttar
Pradesh stated that the option suggested by West Bengal could be considered or, in the
alternative, to take the average of the growth rate of 5 years to calculate the projected revenue
growth. The Hon’ble Minister from Karnataka supported this proposal. The Hon’ble Deputy
Chief Minister of Gujarat and the Hon’ble Minister from Odisha supported the proposal to take
the average of the best 3 of the preceding 5 years’ growth rates. The Hon’ble Minister from
Meghalaya stated that if the average growth rate of the last 3 years was taken, his state stood to
lose considerably as there was only 2% rate of growth. He suggested to take the average of the
best 3 years of the preceding 5 years.
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29. The Hon’ble Minister from Punjab suggested to take a period of 10 years and to take out 4
outliers. He observed that taking an average of 6 years would be more in tune with the general
business cycle. The Hon’ble Chairperson observed that a lot of ground reality had changed in 10
years and therefore, considering a period of 5 years would be a better criterion. The Hon’ble
Minister from Telangana pointed out that for his State, the growth figures would only be
available for the years 2015-16 and 2016-17.
30. The Hon’ble Chief Minister of Puducherry observed that all states had agreed to take the
average of the best 3 out of the preceding 5 years’ growth rate. The Hon’ble Chairperson stated
that if the option of average of the best 3 out of the preceding 5 years’ growth rate was taken, the
revenue growth rate would range between 10%-18%. He observed that a consistent 18% growth
rate was not a realistic figure. The average all-India growth rate during the last 3 years was
10.6% which was closer to reality. He further pointed out that the average growth rate of the past
5 years was 14.2% and the projected nominal GDP growth rate in the next 5 years was 12%-
13%. If the growth rate was considered on the basis of removing 2 outliers and taking the
remaining 3 years, it worked out to 13% which would be burdensome for the Central
Government but would still be bearable.
31. The Hon’ble Minister from Uttar Pradesh suggested to adopt a secular rate of 14%-15%. The
Hon’ble Minister from Jharkhand suggested a secular rate of 14.5%. The Hon’ble Ministers from
Punjab and Haryana suggested a secular rate of 12%-13%. The Hon’ble Minister from Kerala
opposed this suggestion. The Hon’ble Minister from Karnataka stated that the approach of ‘one
size fits all’ was not correct as there were huge variations in the growth rates of different States.
He suggested to consider the method of taking 3 out of 5 years’ growth rate after removing the 2
outliers. The Hon’ble Minister from West Bengal observed that for removing outliers, a
regression analysis would need to be done and he instead suggested taking an average of the
previous 5 years’ growth rates. The Hon’ble Minister from Bihar stated that tax efficiency was
important and therefore, taking the average growth rate of preceding 3 years would be desirable.
The Hon’ble Minister from Punjab and Assam supported the adoption of a floor rate. The
Hon’ble Deputy Chief Minister of Gujarat supported a floor rate of 14.5%.
32. The Hon’ble Minister from Jammu & Kashmir observed that in the next 5 years, loss of
revenue could be on account of reasons other than implementation of GST like drought, flood,
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social disturbances, etc. and a mechanism could be worked out to limit the compensation to loss
of revenue suffered only on account of implementation of GST.
33. The Hon’ble Chairperson brought to the notice of the Hon’ble Members that GST was to be
implemented in the next few months. He added that if consensus could not be arrived at, then the
country could miss the deadline of 1 April 2017 for rollout of GST, but under no circumstances
could the deadline of 16 September 2017 be breached. So he exhorted that the House should
work in a spirit of statesmanship and decide the issues after comprehensive discussion and by
avoiding voting. Keeping the above spirit in mind, the Hon’ble Chairperson suggested to
calculate revenue for the base year 2015-16 at the actual rate of 2% for CST and not a notional
rate of 4% and to adopt a fixed growth rate of 13% or to take the average of 3 years’ growth rate
out of the previous 5 years after removing the 2 outliers, i.e. the highest and the lowest growth
rates during these 5 years. The Hon’ble Minister from Kerala expressed his support for
calculating revenue at the rate of 2% for CST but for the fixed growth rate, he suggested that the
rate be 14%. The Hon’ble Minister from Assam also supported this suggestion. The Hon’ble
Minister from Gujarat presented 2 options – first to calculate CST revenue at the rate of 4% and
a 13% fixed annual growth rate or to calculate CST revenue at the rate of 2% and a 14% fixed
annual growth rate. In a spirit of compromise, the Hon’ble Chairperson accepted the suggestion
of calculating CST revenue at the rate of 2% and to a fixed annual growth rate of 14%. The
Council reached a unanimous agreement on this proposal.
34. In respect of Agenda item 2, the Council decided as follows –
i. ITC reversals shall be included in the definition of ‘revenue subsumed’ for the base
year 2015-16 for the calculation of compensation to the States for any loss of revenue
owing to the implementation of GST for five years.
ii. Such revenues of States that did not go to the Consolidated Fund of the States but
were directly devolved to ‘mandi’ or municipalities would also be included in the
definition of ‘revenue subsumed’ if these were collected under the authority of
Entries 52, 54, 55 and 62 of List II of Schedule 7 of the Constitution of India and
were subsumed in the Goods and Services Tax (GST).
iii. For the eleven Special Category States as mentioned in Article 279A of the
Constitution, the revenue foregone on account of exemption of the State taxes granted
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by the States to the industries and subsumed in the GST shall be counted towards the
definition of revenue for the base year 2015-16.
iv. In the definition of ‘revenue’, CST shall be calculated at the rate of 2%.
v. The formula for calculating the projected growth rate for GST compensation shall be
a fixed rate of 14%.
Agenda Item 4: Finalization of the bands of tax rates under the GST regime
35. The Chairperson suggested to take agenda item 4 ahead of agenda item 3 to permit more time
to discuss the important issue of bands of tax rates under the GST regime. The House accepted
the suggestion. Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue made a
presentation on this item. In the presentation, it was clarified that the present discussion was
limited to consider the possible GST rate structure and the rate of tax for individual items would
be worked out subsequently by a group of officers of the Centre and the States. The presentation
highlighted that the rate structure under the GST regime was worked out after taking into
account the Central and State taxes subsumed under GST which are as follows –
 Central taxes subsumed under GST
a. Central Excise Duty;
b. Service Tax;
c. Countervailing Duty (CVD);
d. Special Additional Duty of Customs(SAD);
e. Cesses and surcharges in so far as they relate to supply of goods and services
subsumed under GST.
 State taxes subsumed under GST
a. VAT/Sales Tax;
b. Central Sales Tax (levied by the Centre and collected by the States);
c. Entry tax (all forms);
d. Taxes on luxury, entertainments, lottery, betting and gambling;
e. Taxes on advertisements;
f. State cesses and surcharges in so far as they relate to supply of goods and
services.
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36. In the presentation, it was highlighted that the broad consideration kept in view while
working out the rate structure was: (i) Present tax incidence on goods and services in the country;
(ii) Need to protect present tax revenues of Centre and States; (iii) Inflation impact of proposed
GST Rate structure; (iv) Mode of raising resources for payment of Compensation. It was pointed
out that the present tax incidence of Central and State taxes was as follows –
i. 42.3% of the Centre’s Tax Base and 64.6% of the States’ Tax Base was taxed at less
than 6% (Lower Rate)
ii. 53% of the Centre’s Tax Base and 33.3% of the States’ Tax Base was taxed between
12.4% and 14.5% (Standard Rate)
iii. 4.7% of the Centre’s Tax Base and 2.1% of the States’ Tax Base was taxed at more
than 14.5% (Higher/Demerit Rate)
37. In the presentation, it was pointed out that for 2015-16, the Central revenue to be protected
was Rs. 4.42 lakh crores and for States, was Rs. 4.40 lakh crores. The individual break-up of
Central and State taxes was also shared in the presentation. It was stated that the revenue
collection for States might change because revenue from petroleum products had also been
included by some States. The principles on the basis of which the proposed GST rate structure
was worked out was elucidated and these included: (i) proposed rate slabs should be closest to
the present combined tax incidence of Excise and VAT (including cascading); (ii) protecting
existing revenues of Centre and States; (iii) impact on inflation i.e., on items in the Consumer
Price Index (CPI) basket is minimal; (iv) proposed GST rate structure should not be regressive in
nature; (v) items of mass consumption should not be taxed at higher rate; (vi) revenue for
compensation should be raised through cess. On this basis, the following four slabs of GST rates
were proposed-
i. 6% (to cover those goods presently attracting combined tax rate of Central Excise and
VAT between 3% and less than 9%);
ii. 12% (to cover those goods presently attracting combined tax rate of Central Excise and
VAT between 9% and less than 15%);
iii. 18% (to cover those goods presently attracting combined tax rate of Central Excise and
VAT between 15% and less than 21%);
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iv. 26% (to cover those goods presently attracting combined tax rates of Central Excise and
VAT equal to or more than 21%).
It was mentioned that for calculating the present tax incidence as above, only the combined
incidence of Central Excise, VAT and their cascading was taken into account. If cascading due
to CST, Entry Tax and other non-vatable taxes were also taken into account, the present tax
incidence would be even higher. Services were proposed to be taxed at the rate of 18%. It was
clarified that impact of the proposed GST Rate Structure on the CPI basket of 300 items would
be (-)0.06%. Based on the above, the estimated revenue collection under GST was indicated to
be Rs. 8.39 lakh crores as against the projected revenue requirement of Rs. 8.82 lakh crores
which did not include compensation requirements. In this regard, it was clarified that Table 11 of
the agenda note was revised through a corrigendum as the original figure of expected tax
collection under GST indicated as Rs. 8.72 lakh crores was due to a mistaken calculation for
Standard Rate 2 at the rate of 20% instead of 18%. The revised Table 11 of the note for agenda
item 4 reads as below –
Table 11(R1): Estimated revenue collection with proposed GST rate structure
(in Lakh crore Rs.)
Rate Rate of tax Tax base Tax collected % of Tax Base
(a) Lower rate 6% 3.66 0.22 7.08%
(b) Standard rate 1 12% 14.66 1.76 28.30%
(c) Standard rate 2 18% 5.50 (Goods)
10.60 (Services
0.99
1.91
2.90
31.30%
(d) Higher rate 26% 12.83 3.34 24.80%
Total (a+b+c+d) 47.26
(e)Gold 4% 4.5 0.18 8.70%
51.76 8.39

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38. The presentation also dealt with the mechanism for funding compensation to the States for 5
years after implementation of GST. It was proposed to fund compensation by imposing cess on:
(a) items presently being taxed at rate higher than the highest proposed rate slab of 26%; (b) cess
on tobacco equal to a rate mentioned at (a); and (c) Clean Environment Cess on Coal, Peat and
Lignite. It was mentioned that a compensation fund was proposed to be created in Public
Account and cess revenues would be credited to this Compensation Fund. Any amount
remaining in this account after the compensation period of 5 years was to be devolved to the
States. It was also informed that the National Calamity Contingency Duty (NCCD) was to
continue for funding the National Disaster Relief Fund (NDRF). The amount of revenue
proposed to be raised from cess in a year was Rs. 51,552 crores as per the break-up given in the
table below –
Raising Revenue for Compensation
Category of item Taxable Base
(Rs. in
Crores)
Estimated
Revenue
(Rs. in Crores)
Cess on items presently taxed
at rates higher than 26%
• Pan Masala
• Aerated waters
• Luxury Motor
vehicles
93,500 13,090
Cess on tobacco 12,314
Clean environment cess
(estimated in 2016-17)
26,148
Total 51,552
39. After the presentation, the Hon’ble Members gave their views on the proposed GST Rate
Structure. The Hon’ble Deputy Chief Minister of Delhi stated that the weight of items under CPI
was very important as in GST, there should be no increase in the price of basic necessities of
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food, shelter and clothing. The Hon’ble Minister from Tamil Nadu expressed that it might not be
necessary that the taxpayer would pass the reduced incidence of tax under GST to the consumers
by reducing the price. He also pointed out that rates of tax were different for branded and
unbranded items of food such as biscuits. He emphasized that the impact of tax on items under
CPI was at the heart of the GST Rate Structure. The Hon’ble Minister from West Bengal
requested for more clarity as to how inflation impact was calculated and requested for the
calculation sheets to be sent. This would enable States to carry out their own analyses which
would enrich the overall quality of data analysis. (In accordance with this request, in the evening
of 18 October 2016, the GST Council Secretariat circulated the data sheets as obtained from the
Department of Revenue to the nodal officers of the States).
40. The Hon’ble Minister from Kerala enquired about the estimate of the present tax collection
of Central Excise and VAT at the proposed GST rate structure. The Joint Secretary, Department
of Revenue clarified that for the calculation of tax rates, the tax base was taken on the basis of
reports of the National Institute of Public Finance and Policy (NIPFP) and the Chief Economic
Advisor to the Government of India. The Joint Secretary, Department of Revenue further
clarified that the tax base for 2015-16 was taken as Rs. 51.76 lakh crores. He further stated that
the calculation of NIPFP’s tax base was for the year 2013-14 and that the tax base calculation in
the CEA’s report was Rs. 44.24 lakh crores after excluding the efficiency gains calculation and
that they have revised this base to Rs. 51.76 lakh crores on the basis of certain detailed
calculations. He also pointed out that Service Tax base was common in the report of NIPFP and
CEA. The Hon’ble Minister from Tamil Nadu enquired whether the tax base had also taken into
account the collection efficiency. The Chief Economic Advisor clarified that the tax collection
figure was based on actual collection efficiency of States. The Secretary to the Council stated
that if one considered an efficiency gain of 2% in GST, this would lead to an additional gain of
taxable base of Rs. one lakh crores. The Hon’ble Minister from Tamil Nadu enquired whether
the projected revenue of Rs. 8.8 lakh crores could be collected by having 40% band of rate. The
Secretary to the Council stated that as the base for 40% band rate would be small (only about Rs.
1.8 lakh crores), the collection might not reach the targeted figure of Rs. 8.8 lakh crores as the
gain would be only about Rs. 25000 crores. He added that if this higher rate was adopted, then
there would be no room to impose cess for compensation.
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41. The Hon’ble Minister from Tamil Nadu raised a question whether collection of cess would
be constitutionally permitted after introduction of GST. The Hon’ble Minister from Gujarat
stated that if the Central Government was to collect cess, the State Governments should also be
allowed to collect cess. The Hon’ble Minister from Tamil Nadu stated that 42% of all taxes
collected by the Central Government should come to States by way of devolution. The Secretary
to the Council stated that cess was a better mechanism for compensation instead of additional
tax. He explained that for raising additional Rs. 50,000 crores for compensation through tax
route, the amount of CGST required to be raised would be around Rs. 86,000 crores as 42% of
CGST collection would be devolved to the States. As corresponding SGST rate would also go
up, the total additional tax burden on the citizens would come to Rs. 1.72 lakh crores. This would
also lead to additional gain to all States, whereas only few States would need compensation. He
further stated that whatever balance of the collected cess was left in the Compensation Fund at
the end of the five years would be devolved to the States.
42. The Hon’ble Minister from Odisha stated that GST was meant to reduce multiple taxes and
therefore, he did not support the proposal to introduce cess and to continue with Clean
Environment Cess, NCCD, etc. He also raised a doubt whether the Constitution permitted
imposition of cess under GST. He also stated that in GST, the aim of one nation-one tax should
be realized. He further suggested to restore a demerit and sin rate of tax to minimize the amount
of compensation. He suggested to impose cess on direct tax which would not be regressive in
nature and would not cast burden on the poor. In the alternative, he suggested to impose a cess
on import but not on GST.
43. The Hon’ble Minister from Punjab supported an independent mechanism of cess for
compensation and stated that the fund meant for compensation should not go to the Consolidated
Fund of India (CFI). He further observed that after five years, whatever amount was collected
from cess could be shared between Central Government and State Governments. The Hon’ble
Minister from Karnataka stated that the cesses should continue for luxury goods and demerit
goods after five years and these should be shared between Centre and States. The Hon’ble
Chairperson suggested the possibility to have a tax on luxury and demerit goods after five years.
The Hon’ble Minister from Karnataka stated that in such a case, there should be a super slab rate
of tax for such goods.
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44. The Hon’ble Minister from Tamil Nadu observed that if there was an increase by 1% of tax
in the 26% slab, then extra revenue collection would be roughly about Rs. 12.84 thousand crores
and thus if a higher tax rate of 40% was kept, an extra revenue of Rs. 1.79 lakh crores could be
collected. The Hon’ble Chairperson stated that all items presently taxed at 26% could not be
taxed at the rate of 40% as many of them were consumed by the middle class. The Hon’ble
Minister from Puducherry suggested to examine whether cess was legally allowed to be imposed
and if so, States should also be allowed to levy cess. The Hon’ble Minister from Rajasthan
suggested that the demerit category of goods should have a slab rate of more than 50%; this
would reduce the compensation requirement and would not have inflationary impact. The
Hon’ble Minister from Gujarat supported this view and observed that States should not lose taxes
from demerit goods like tobacco, luxury cars and other luxury goods. He suggested to impose
differential rates of taxes on goods like refrigerator for lower and higher priced models. He also
suggested to allow imposition of cess by States on Pan Masala, etc. which would reduce
compensation requirement. The Hon’ble Chairperson observed that efficiency gain of GST
would need to be ascertained. He expressed that the States might impose cess in anticipation of
revenue loss which might not actually occur. Cess for Compensation Fund was different and the
Council would have the power to decide the mode of disposal of the unspent amount in the Fund.
45. The Hon’ble Minister from U.P. stated that if cess was collected by the Central Government,
citizens of his State would have to pay cess whereas his State might not require compensation.
He stated that in principle, cess be allowed to be collected by all States especially in case of
natural disasters. He also suggested to impose higher tax on luxury goods. The Hon’ble
Chairperson clarified that the Constitution permitted States to impose additional tax in case of
natural disasters on the recommendation of the GST Council. The Hon’ble Minister from Punjab
observed that the States losing revenue after GST implementation would need to be compensated
from a common kitty and all States should also bear this burden. He observed that mechanism
for compensation should not be dependent upon the CFI as the manner of devolution could
change. He stated that the broad principle to be followed was that no State should stand to lose in
GST regime.
46. The Hon’ble Minister from Kerala wondered why compensation for GST must be raised
from GST. He recalled that compensation for VAT was paid from the CFI. He pointed out that
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the Central Government could fund compensation from Corporate tax, Customs duty, sale of
spectrum or increasing tax on Petroleum products. He also objected to the principle of keeping
the higher band of tax rate low to raise fund for compensation. He expressed his opposition to
reducing taxes on luxuries, consumer durables, cigarettes, aerated drinks etc. from current rate of
almost 30% to a lower rate, particularly so if tax on goods presently attracting 1% to 5% was to
be increased to 6%. He also stated that there was no guarantee that lower taxes would be passed
on to consumers. He observed that the representatives of FICCI, CII and ASSOCHAM during
the interaction with the Empowered Committee of State Finance Ministers had given no
assurance to reduce prices and had only stated that the market forces would take care of this
issue.
47. The Hon’ble Minister from Andhra Pradesh also stated that the VAT compensation should
come from the CFI and that in GST, earlier there was no proposal for levying cess. He did not
support the suggestion of levying cess and creation of Compensation Fund. He suggested that
compensation for GST should come from the CFI.
48. The Hon’ble Minister from Haryana stated that the idea of levying additional cess by States
was a good idea as it provided for assured compensation. He stated that imposition of cess could
be reviewed in the light of yearly revenue collection and if compensation was not needed, cess
could be subsumed in tax. He supported the idea of a higher slab of tax rate for super luxury
items and observed that goods for the consumption for lower middle classes should be kept in the
lower rate. The Hon’ble Minister from Uttarakhand also supported the demand that States should
have the power to levy cess and the demerit/luxury goods should be charged to a higher rate of
tax. The officials from Uttarakhand further stated that his State was a disaster prone area and,
they needed power to suo moto levy cess in a disaster situation and put it before the Council later
on. He suggested that a sub-committee of the Council could approve this cess instead of it being
brought before the full Council. The Chairperson observed that this suggestion was against the
relevant provisions of the Constitution.
49. The Hon’ble Minister from Bihar stated that a new taxation system was introduced in India
after 70 years and a holistic view needed to be taken on how to run the country’s indirect tax
administration. He observed that neither Centre had unlimited resources nor States were
completely devoid of resources. He further observed that as 70% to 80% of revenue of States
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came from indirect taxes, States should not suffer on account of GST reform and they should
continue to have resources for their welfare schemes. At the same time, consumers should not be
made to pay very high taxes. He suggested to keep taxes on luxury goods at the current levels.
He also supported the idea of raising resources for compensation by imposing a surcharge on
Income tax and Corporate tax.
50. The Hon’ble Minister from Chhattisgarh observed that there was no Constitutional provision
to levy cess after the amendment of Article 271 of the Constitution and imposition of cess could
become unconstitutional leading to uncertainty in regard to compensation. He also observed that
the general expectation of the public was that GST rate would not be more than 18% and a tax
rate of 26% could dampen the general enthusiasm for GST. He also observed that goods like
ceiling fan, soap, bulb were not luxury items and therefore should not be kept in the 26% rate
bracket. He suggested to remove the 26% rate, keep the highest rate at 18% and to introduce a
rate of 40% only for some items as proposed by the Chief Economic Advisor. For raising
compensation amount, he suggested to levy a surcharge on direct tax and to keep the CGST rate
higher in the 40% rate slab to enable raising fund for compensation.
51. The Hon’ble Minister from Jammu & Kashmir observed that levying cess for compensation
to States amounted to self-compensation whereas this should come from the Central
Government. He also suggested to bring compensation within the mandate of the Finance
Commission. The Hon’ble Chairperson observed that the need of compensation would be over
by the time the new Finance Commission looked into this aspect. The Hon’ble Minister of
Jammu & Kashmir emphasized that States needed elbow room for policy making and they
should not be reduced to the status of the twelfth man in a cricket team! He stated that the States
had responsibilities far greater than their resources and they needed to raise resources to meet
their expenditure obligations on education, health, etc. He also suggested that Compensation
Fund should not affect the rates of taxes in GST. The Hon’ble Minister from Tamil Nadu
supported the suggestion of the Hon’ble Minister of Kerala to impose cess on direct taxes to raise
resources for compensation as the Corporates stood to gain from introduction of GST. The
Hon’ble Chairperson observed that reduction in rate of direct tax was a major part of 1991
reform process. He observed that Corporate tax in India should be competitive within the Asian
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region (such as China, Thailand, Malaysia and Indonesia) so that investment and jobs in India
were protected.
52. The Hon’ble Minister from West Bengal stated that the sense of the House was that cess
must not have a place in GST. He observed that to collect cess from some States and to give it to
some other States was a form of cross-subsidy which had several distortions. He suggested
certain alternatives to raise money for GST compensation like increasing the tax base of income
tax by redeploying officers from indirect tax to Income tax or to levy additional CGST. The
Hon’ble Chairperson observed that the Direct tax base was of about five crore people and this
base was unlikely to rise radically because large segments of population like those in agriculture
and those falling below the poverty line would remain out of income tax net. He also reminded
that in the Indian scenario, normally only one member of a family was an Income tax payer.
Some other suggestions of the Hon’ble Minister of West Bengal to raise more revenue was to
rationalize multiple deductions in Corporate tax, address the problem of inverted duty structure
in Customs, expedite the process of anti-dumping investigations and review the Free Trade
Agreements. He also suggested that the tax levels on luxuries should remain at the current level.
53. The Hon’ble Chairperson reminded the House that the Council was to discuss policy issues
relating to GST and not of Direct tax. He further observed that GST was designed to benefit all
States in the long run and therefore, it would not be fair for the beneficiaries to state that their
taxpayers should not be touched at all. He also reminded that not only 42% of the Centre’s
collection went to the States but from the balance 58% also, a large part of money went to States
through Central Government sponsored schemes. He also reminded the House of the Centre’s
larger responsibilities like maintaining the army, funding the functioning of the Central
Government, etc. He mentioned that CFI was already getting reduced by Rs. 5 lakh crores every
year and borrowing from outside at high rate of interest was not a viable option. He also pointed
out that compensation was only for a few years and therefore, it was a smaller issue and the
bigger issue was the rate structure in GST. He observed that the main stakeholder of the tax
reform was the tax payers and one had to be cautious as to how much of tax burden should be put
on them. The Hon’ble Minister from Kerala observed that States were in the danger of becoming
glorified municipalities and they needed a degree of comfort to operate. The Hon’ble
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Chairperson reminded the House that GST involved a collective surrender of power by the
Centre and the States.
54. The Hon’ble Minister from Assam observed that it was unfair to advise the Central
Government on matters relating to Direct tax. He suggested that one option for States to raise
revenue could be to raise the amount of Professional tax. The Chief Economic Advisor observed
that cess was also an indirect tax and if after two years, no compensation was needed, cess could
be rolled into tax, but, according to him, the general rate of tax should come down. He added that
if GST compensation had to come out of the structure of GST, the general rate of tax would need
to be lower.
55. The Hon’ble Deputy Chief Minister of Delhi observed that GST had both cost and benefit.
He observed that his State was likely to lose revenue on goods due to elimination of tax
arbitrage. The cost for the reform should come from the Central Government’s share, whether
from Direct taxes or from some other source. The Commissioner of Commercial Tax, Gujarat
pointed out that if States were not allowed to levy higher tax on tobacco, pan masala, etc. they
would annually lose revenue to the tune of Rs. 2500 crores. The Hon’ble Chairperson observed
that if tax rate was kept very high, it led to increased smuggling and in India the two most
smuggled items were gold and cigarettes due to high tax rates on them. The Chairman CBEC
affirmed the large incidence of smuggling of cigarettes and informed that about 100 containers of
cigarettes were seized last year. The Hon’ble Minister from U.P. reminded that rate of tax on
gold was also being doubled to 4%. The Chairperson observed that the rate of VAT on gold in
most States and that of Central Excise was 1% and Kerala was the only exception with a rate of
5%. He expressed the hope that in GST regime there would be less unaccounted transactions in
gold.
56. The Hon’ble Chief Minister of Delhi suggested keeping a rate of 40% tax on cinemas and
Centre’s rate could be higher and this could be earmarked for GST compensation. The Hon’ble
Minister from Assam suggested that cess collection could also be divided between the Centre
and the States and this would bring down the compensation requirement of the States. The
Hon’ble Deputy Chief Minister of Delhi supported this proposal. The Hon’ble Chairperson
recognized the historical allergy to cess. He observed that when the present Central Government
assumed office, the fiscal deficit was 4.6% without counting several other items like CST
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compensation to States. He also reminded that the Central Government’s assistance to States had
gone up, the share of revenue devolved to States had gone up and the Centre’s expenditure had
also increased. If instead of cess, a higher rate of tax was applied, the GST would become
unpopular. Further, the States which were gainers in the GST would stand to gain even more and
the Centre would additionally lose 42% through devolution. At the same time, Centre would
have to compensate the losing States while the States gaining additional revenue will keep it with
them.
57. The Hon’ble Minister from Punjab stated that due to lower GST rates, States would suffer
double loss: one foregoing revenue and second a lower devolution from the Finance
Commission. The Hon’ble Minister from Kerala emphasized that he had not accepted the
suggested GST rate of 26% as it was too low. The Chairperson stated that the 26% slab would
cover those goods that were presently attracting a combined Central and State tax rate of 27%
which would come to about 30% after adding certain other additional State taxes like octroi,
entry tax, etc. He stated that tax on luxury and sin product could possibly be higher as suggested
by Gujarat. He reminded the House that during the Parliamentary debate relating to the passage
of GST Amendment Bill, there was a demand to put a cap of 18% on the GST rate in the
Constitution; while this was not conceded, the general expectation was that the tax would not be
very high. He stated that these considerations were kept in mind while suggesting the rates. The
Secretary to the Council stated that after five years, one policy option could be to keep the same
level of tax and add another super slab rate for luxuries and sin goods and second could be to
continue with cess and different commodities could be levied cess at different rates. The cess so
collected could be divided equally between the Centre and the States. The Hon’ble Minister from
Karnataka observed that one super slab rate might not fully solve the problem as aerated
beverages might not be taxed at the highest rate. He, therefore, supported the idea of levying a
range of cess on different products.
58. The Hon’ble Minister from West Bengal echoed the view of many others as to whether cess
could be Constitutionally levied. The Hon’ble Chairperson stated that one interpretation could be
that the Central Government shall have power to levy cess under Article 246 read with Entry 97
of List I of Schedule 7 of the Constitution, as this was being levied before Constitution (One
hundred and first Amendment) Act. He added that under Article 271 of the Constitution, power
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to levy surcharge on GST was restricted after the aforesaid Constitutional amendment but not the
power to levy cess. He stated that this view would need to be confirmed from the Law Ministry.
The Hon’ble Minister from West Bengal cautioned that this could be challenged in a Court of
Law. He further added that under Article 270 of the Constitution, cess could be levied for a
specific purpose and he wondered how the purpose of cess would be justified. The Hon’ble
Chairperson clarified that the Clean Environment Cess was a carbon tax to discourage use of
coal and the money so collected was going to the CFI and not to the Ministry of Environment.
He added that GST law could provide for imposition of cess and could also provide that it would
be kept in the separate fund to be used for GST compensation and to be distributed in a manner
provided by law.
59. The Hon’ble Minister from Odisha raised an issue as to what compensation would accrue to
the coal bearing States. The Hon’ble Chairperson clarified that the coal bearing States got benefit
of the auction amount, royalty and District Development Fund. He mentioned that last year, Rs.
1300 crores went to Chhattisgarh as District Development Fund. The Hon’ble Finance Minister
from West Bengal stated that as money was generated from States, 60% of the cess amount
should be retained by the States. The Hon’ble Chairperson stated that such an arrangement
would mean collection of additional resources for compensation which would put higher burden
of tax on people. The Hon’ble Minister from Assam stated that Clean Environment Cess was
Centre’s fund which it was surrendering in favour of States and it would not be proper to ask for
50% of its share for the States. The Hon’ble Minister from Kerala stated that other than
environment and tobacco cess which was collected by the Centre, levy of no other Central cess
was acceptable. He also suggested first agreeing upon the GST tax rate and then examining the
rate structure for cess. He stated that additional Rs. 7000 crores should be mobilized by Centre
from its own resources. The Hon’ble Minister from Punjab suggested that this amount could be
split between Centre and States, and Centre could raise additional amount of Rs. 3500 crore for
GST compensation.
60. The Hon’ble Chairperson stated that the amount collected by way of Clean Environment
Cess (approximately Rs. 26000 crores) and cess on tobacco (approximately Rs. 12000 crores)
were presently being collected by Union of India and therefore, this could be used for funding
GST compensation. He however sounded a note of caution that if global prices of coal went up,
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continuation of this cess would make the thermal sector unviable. So if market conditions
altered, then alternative ways of raising Rs. 7000 crores would need to be looked into. The
Hon’ble Minister of West Bengal assured that in such a case, GST Council could meet and make
minor adjustments. As regards the proposal to raise additional amount of cess of approximately
Rs. 13000 crores from pan masala, aerated waters and luxury motor vehicles, approximately Rs.
6500 crores was being presently collected by the Centre through Central Excise and the balance
was presently being collected by States through VAT. He observed that the issue to be examined
was that if this component of tax was kept for States, then how it would structurally fit into GST
as this would imply that States’ share of Rs. 6500 crores would be added to SGST whereas the
Centre’s share of Rs. 6500 crores shall go towards cess. He stated that this issue would need to
be examined at the officers’ level before a final decision was taken on the subject.
61. In view of the above, it was agreed to defer a decision regarding the method of compensating
States for GST losses for the next meeting to permit the officers to examine this issue further. It
was also agreed to defer further discussion on the proposed bands of GST rates for the next
Council meeting.
62. In respect of Agenda item 4, the Council decided as follows –
(i) to defer a decision regarding the method of compensating States for losses due to
implementation of GST for the next meeting and to allow further examination of the same at
officers’ level;
(ii) to defer further discussion on the proposed bands of GST rates for the next Council meeting.
Agenda item: 3 Provision for Cross-Empowerment to ensure Single Interface under GST
(outstanding issue from 1st and 2nd GSTC Meeting)
63. Under this agenda item, the following issues were discussed;
(i) Distribution of taxpayers between States and Centre under GST regime
(ii) Modalities for exercising information based enforcement action
(iii) Periodicity of review of the distribution
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64. On this agenda item, two presentations were made. The first one was made by Shri Shashank
Priya, Commissioner, GST Council highlighting the salient points covered in the Agenda Note
for this Agenda Item. This was followed by a presentation by Shri Ritvik Pandey, Commissioner
of Commercial Taxes, Karnataka where he highlighted the issues discussed with respect to cross-
empowerment and single interface in the group of State and Central officers dealing with the
drafting of the Model GST Law and Rules.
65. In the first presentation, it was mentioned that though GST was a dual levy, there was a
consensus that the taxpayers, to the extent possible, should have a single interface with the tax
administration. It was also recalled that in the 1st meeting of the Council on 22-23 September
2016, this issue was discussed and a broad framework was arrived at but in the 2nd Council
meeting on 30 September 2016, differences emerged on the interpretation of the details of this
framework. As these differences were persistent, the Council directed that a team of officers
should discuss this issue to suggest possible solutions. These issues were discussed in a meeting
of officers on 8 October 2016 in New Delhi chaired by the Revenue Secretary. In this meeting
five options were discussed to achieve single interface and these were presented before the
Council. These five options were as follows:
Option I- Pure turnover based division where taxpayers below Rs. 1.5 crore turnover should be
administered only by States and taxpayers above Rs. 1.5 crore turnover should be administered
only by the Centre. However, this was not acceptable to States as bulk of revenue comes from
taxpayers with turnover above Rs. 1.5 crore
Option II- Turnover-based decision with overlap where taxpayers below Rs. 1.5 crore turnover
should be administered only by States and taxpayers above Rs. 1.5 crore turnover should be
administered by the Centre and States with cross-empowerment. This was not acceptable to
Centre as 93% of the service tax payers and 85% of VAT payers have turnover below Rs. 1.5
crore and thus it led to highly skewed distribution.
Option III- Division based on turnover and the nature of business which was considered in the
Council meeting held on 22-23 September 2016 but discussions had remained inconclusive.
Under this option, it was proposed that taxpayers dealing in goods below the turnover of Rs. 1.5
crore shall be dealt only by States, taxpayers dealing in goods with turnover above Rs. 1.5 crore
shall be dealt by both States and Centre and taxpayers dealing in services shall, to begin with, be
only dealt by the Centre, till State officers were trained on service tax. However, it was later
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recognised that this arrangement causes a divide between goods and services and also created
jurisdictional problems for those suppliers who had a substantial mix of supply of both goods
and services.
Option IV- Cross-empowerment with division for specific functions in which it was envisaged to
divide taxpayers only where human interface was required like audit, return scrutiny etc. as most
of the other functions would be automated. It envisaged to cap audit to 5% of the total number of
taxpayers. Under this option, every year, both the Central and the State officials in each State
shall prepare a list of taxpayers for audit on the basis of risk parameters and then distribute such
taxpayers between the two administrations either through a Protocol or on random basis. It also
proposed stability in division for the purposes of audit for three years. It also envisaged that if
required for other administrative purposes, the taxpayers could be allocated between Central and
State administrations through State Level Committees.
Option V- Complete vertical division where the entire taxpayer base to be divided between
Central and State tax administrations in a particular ratio for a period of 3 years for all purposes,
including audit. The possible ratios for distribution of taxpayers between Centre and State above
and below Rs. 1.5 crore turnover could be 50%:50% or 40%:60%. It was proposed that if
percentage distribution was asymmetric, then a mirror image approach shall be adopted in favour
of the Centre for turnover above Rs. 1.5 crores. This implied that if 60% of taxpayers below the
threshold of Rs. 1.5 crore turnover were allocated to States, then 60% of taxpayers above the
threshold of Rs. 1.5 crores would be allocated to the Centre. The arrangement could be switched
every three years. It was also proposed that while assigning taxpayers to Centre or State, account
shall be taken of the factors like geographical consideration, size of taxpayer and available
competencies of the Central and State tax administrations. It was pointed out that this
arrangement lent greater clarity in respect to jurisdiction.

66. The first presentation also dwelt on the issue of administration of Integrated Goods and
Services Tax (IGST) and information based enforcement action. In respect of IGST, it was
pointed out that it was a Central levy and that Article 269A of the Constitution provided that
IGST shall be levied and collected by the Government of India. However, in order to achieve
single interface, it was proposed that States should conduct audit or enforcement action for
interstate supplies but subsequent legal action like issue of show cause
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notice/adjudication/appeal, etc. shall remain with the officers of the Centre. It was stated that this
arrangement would avoid any potential conflict of interest between two States. On the subject of
information based enforcement action, it was proposed that officers of the Centre and States shall
act independently on the basis of intelligence. Initiation of action by one authority shall be
intimated to the other authority and the other authority would not normally initiate any
enforcement action for a given period of time except in cases where concrete information was
available and action was authorized by an officer at a higher level. It was also proposed that the
administrative arrangement could be reviewed after every three years except for the arrangement
for enforcement related activities.

67. In the second presentation made by Shri Ritvik Pandey, Commissioner of Commercial Tax,
Karnataka, the five options as mentioned above were touched upon. It was informed that a group
of officers of the States and Centre who were part of the sub-committee for drafting the Model
GST Law and Rules looked into various aspects of cross-empowerment and single interface from
the implementation view point and found the pros and cons overall in favour of Option IV,
keeping in view the fact that GST would have highly computerized processes and minimal
human interface. It was highlighted that in a year, not more than 10% taxpayers interacted with
the tax departments and that interaction was restricted by the administrative capacity of the tax
department. It was also suggested that for seeking any administrative assistance, choice could be
left to the taxpayer to visit the jurisdictional office of the State or Centre as per his convenience.
It was explained that as GST systems stabilized, the requirement for visiting a tax officer would
steadily decline. Some of the difficulties related to operation of Option V were also discussed. It
was pointed out that it was difficult to arrive at an ideal and mutually acceptable ratio. In
addition, the division itself could lead to inefficiencies and inconvenience, for example,
taxpayers in areas where offices of a tax administration did not exist might get assigned to that
tax administration. Further, certain nature of businesses that could be better administered by a tax
administration might get assigned to the other tax administration. It was emphasized that for
smooth implementation of GST, co-operation between Central and State tax departments was
extremely essential, especially at the field level and it would be better if strengths of each
department complement the other rather than compete. It was also pointed out that the suggestion
for vertical division overlooked the fact that the human interface in GST would be minimal as
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most processes would be automated and there would hardly be any need to obtain any
permission from the tax department for any procedural requirements.

68. On the subject of administration of IGST, the second presentation acknowledged the fact that
Place of Supply would be a major issue in administration of IGST and due to potential conflicts
of interest between the States, this could be handled only by the Central Government. It was
further pointed out that many other issues would come up with respect to IGST like wrong rate
of tax, suppression of turnover, supplies without issuance of invoices, wrong availment of input
tax credit, etc. where the issues would be exactly same as that in SGST/CGST and these could be
brought under the cross-empowerment framework to prevent dual control in such cases and also
to avoid the situation of divergent orders getting passed if handled by two separate officers. It
was suggested that a small group of officers could look into the issues relating to administration
of IGST. On the subject of information based enforcement action, it was suggested that both
Centre and States be allowed to act independently irrespective of the model adopted. However,
initiation of action by one authority should be intimated to the other authority through GSTN and
the other authority should not initiate any enforcement action for a given period of time except
for cases where concrete information was available and the action was authorised at a higher
level.

69. The Hon’ble Minister from UP expressed that there was no merit in keeping IGST under the
exclusive jurisdiction of the Central authorities as the State authorities had considerable
experience in dealing with CST and in inter-state co-ordination. He further expressed that
decision on place of supply would be on the basis of the extant provisions of law and therefore,
no conflict of interest might arise. The Hon’ble Chairperson pointed out that there could be
situations of conflict of interest where a tax authority might rule the tax payable to be intra-state
rather than inter-state.

70. The Hon’ble Chief Minister of Puducherry enquired as to what was the Central
Government’s view on this subject. The Chairperson stated that it would be desirable to first
have an open discussion before taking stand on a particular view. The Hon’ble Minister from
West Bengal observed that all the Options discussed in the presentations had their own merits
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and shortcomings. He pointed out that the total number of taxpayers in goods segment was 67
lakh and dealers below the turnover threshold of Rs. 1.5 crore was 56 lakh. After the decision of
Rs. 20 lakh taxable threshold, 33 lakh taxpayers would go out of the tax net and that left 23 lakh
taxpayers below the turnover of Rs. 1.5 crore. Out of this 23 lakh dealers, about 50% dealers
carried out inter-State trade and would be registered both with the State and the Central tax
authorities, which would be a figure of about 11 lakh taxpayers. He further added that above Rs.
1.5 crores threshold, there were 1 lakh taxpayers who were only retailers and thus Centre would
have a net gain of 12 lakh new assessees in goods segment. He added that in the Service Tax, out
of total tax base of 11 lakh, 92% were below 1.5 crores turnover which meant about 10.1 lakh
assessees. After the agreement on taxable threshold limit of Rs. 20 lakhs, 9.2 lakh assessees
would be out of the tax net and that left only 90 thousand assessees below the turnover threshold
of Rs. 1.5 crores. He added that this effectively left a taxpayer base of 2 lakhs in Service Tax, 1
lakh each below and above Rs. 1.5 crores turnover. He observed that as the number of assessees
going to States in Service Tax was no longer 92% of the taxpayer base, the Council should go
back to the original decision of the Empowered Committee that the State tax administration shall
exclusively handle all taxpayers whose turnover was below Rs. 1.5 crore, including the audit and
enforcement functions. He suggested that for taxpayers above the threshold of Rs. 1.5 crore,
cross-empowerment model could be applied with an audit cap of 5%. The Hon’ble Minister from
Tamil Nadu suggested to have a relook at the Service Tax threshold if the data presented was
correct. The Hon’ble Minister from West Bengal stated that numbers would be dynamic and
slowly the number of Service Tax taxpayers above the threshold of Rs. 20 lakhs would grow in
the next two to three years.

71. The Hon’ble Chairperson stated that the figures mentioned above would need to be relooked
as now revised figures have been received from Goods and Services Tax Network (GSTN). The
Chairperson, CBEC informed that according to the latest data available with the GSTN received
by them in course of PAN validation, the total number of registered VAT dealers, as on 31
December, 2015, was 81.38 lakhs. Shri Prakash Kumar, CEO GSTN explained that in many
States, there was a difference in the number of registered dealers and active dealers. The total
registered VAT dealers were 81.38 lakhs but total active dealers were 66.53 lakhs and the
number of PAN verified dealers was even less (59 lakhs). Shri Upender Gupta, Commissioner
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GST, CBEC, further clarified that in Service Tax, total taxpayer base was 38 lakhs, and out of
this 26 lakhs were active taxpayers and PAN verified taxpayers were 21 lakhs. He stated that
likely taxpayer base in GST would be 107 lakhs, and out of this States accounted for 67% of the
taxpayer base and the Centre 33%. He stated that the same percentage remained if calculation
was done on the basis of number of active dealers. He also clarified that taxpayers below the
threshold of Rs. 20 lakhs had paid Service Tax of Rs. 3600 crores in cash which implied that
even if the taxable threshold had gone up, not all Service Tax assessees would surrender their
registration. The Hon’ble Minister from Uttar Pradesh observed that this number would be less
than 2%. The Chairperson observed that the figure for VAT dealers was not much different but
there was considerable difference in the number of Service Tax taxpayers. The Hon’ble Minister
from West Bengal enquired regarding the number of taxpayers registered under Central Excise,
VAT and Service Tax as per the latest data. He also requested for similar data for taxpayers
below the turnover of Rs. 1.5 crore. He further wanted to know the number of taxpayers below
the threshold of Rs. 20 lakhs. The Hon’ble Minister from U.P. requested for the number of non-
filers of service tax return. He requested that the latest data be circulated to all Members for a
proper analysis. The Hon’ble Chairperson directed that the available data should be shared with
the States immediately and that the latest data regarding the taxpayer base should be sent to all
States, at least two days before the next meeting of the Council so that no decisions were taken
on erroneous premises. He further advised that the States which had not furnished the latest data
to the GSTN, should furnish the same to the GSTN at the earliest.

72. In respect of agenda item 3, the Council decided the following:
(i) The issue of cross-empowerment for single interface be taken up for further discussion in the
Council’s next meeting.
(ii) The latest available data of the taxpayer base under VAT, Central Excise and Service Tax
above and below the turnover of Rs. 1.5 crore and other relevant latest data may be shared with
all the States.
Agenda Item 5: Delegation of powers to the Chairman, GST Council to constitute
Technical Committees of officers
73. Introducing this agenda item, the Secretary to the Council stated that there were many
technical issues of taxation which would come before the Council for decision and it might not
Agenda for 4th GSTCM
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be possible for the Council to invest its valuable time in analyzing such issues in detail. He also
observed that such issues would require technical inputs from the officers having domain
knowledge in taxation. In such situations, Technical Committee of officers would be required to
be constituted to explore all policy options and present the same before the Council. It was
proposed that the Council may authorize the Chairperson of the Council to constitute such
Technical Committee of officers. It would be open for any State to join such Committee by
volunteering for the same and that the Council would be kept duly informed regarding formation
of such Technical Committees. He further informed that the Empowered Committee had
constituted a committee of officers that was looking into GST Laws and Rules. He proposed that
the same committee could be redesignated as the Technical Committee to look into GST Laws
and Rules and to carry out other technical discussions. The Hon’ble Minister from U.P. stated
that membership of the committee should be opened again so that if more States wanted to join,
they could do so. The Hon’ble Chairperson observed that the existing committee should continue
and if more States wanted a representation in this committee, they could register their request
with the GST Council Secretariat. The Council approved this proposal. The Hon’ble Ministers of
UP and Telangana requested to join the membership of this Committee.
74. In respect of Agenda Item 5, the Council decided the following:
The existing committee of officers constituted by the Empowered Committee to look into GST
Laws and Rules shall be redesignated as the Technical Committee of officers of the Council to
look into GST Laws and Rules and to carry out other technical discussions. If more States
wanted to join this Committee, it would be allowed and the interested States could register their
request with the GST Council Secretariat.
Agenda Item 6: Date of the next meeting of the GST Council
75. After some discussion, the Chairperson proposed that the next two meetings of the Council
could be held on 3-4 November 2016 and on 9-10 November 2016. For the meeting of 3-4
November 2016, the Chairperson informed that the outstanding Agenda items of the 3rd Council
meeting could be taken up and for 9-10 November 2016 meeting of the Council, draft GST
legislations could be taken up.
76. The meeting ended with a vote of thanks to the Chair.
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Annexure 1 (List of the Hon’ble Members of the GST Council who attended the Meeting)

Sl.No. Centre/State/UT Name of Minister Designation
1 Government of India Shri Arun Jaitley Union Minister of Finance and Corporate
Affairs
2 Government of India Shri Santosh Kumar
Gangwar
Union Minister of State for Finance
3 Puducherry Shri V Narayanasamy Chief Minister
4 Arunachal Pradesh Shri Chowna Mein Deputy Chief Minister
5 Goa Shri Francis D’Souza Deputy Chief Minister
6 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
7 Delhi Shri Manish Sisodia Deputy Chief Minister
8 Andhra Pradesh Shri Yanamala
Ramakrishnudu
Minister of Finance and Planning,
Commercial taxes and Legislative Affairs
9 Assam Shri Himanta Biswa Sarma Minister of Finance
10 Bihar Shri Bijendra Prasad Yadav Minister for Commercial Taxes
11 Chhattisgarh Shri Amar Agrawal Minister of Commercial Taxes
12 Haryana Captain Abhimanyu Singh Minister for Excise and Taxation
13 Himachal Pradesh Shri Prakash Chaudhary Minister for Excise and Taxation
14 Jammu and Kashmir Dr Haseeb A Drabu Minister of Finance
15 Jharkhand Shri C.P. Singh Minister, Urban Development, Housing &
Transport
16 Karnataka Shri Krishna Byregowda Minister for Agriculture
17 Kerala Dr. T M. Thomas Isaac Minister of Finance
18 Madhya Pradesh Shri Jayant Malviya Minister for Finance and Commercial Tax
19 Maharashtra Shri Sudhir Mungantiwar Minister of Finance
20 Meghalaya Shri Zenith M. Sangma Minister of Taxation
21 Mizoram Shri Lalsawta Minister of Finance
22 Odisha Shri Pradip Kumar Amat Minister of Finance
23 Punjab Shri Parminder Singh
Dhindsa
Minister of Finance
24 Rajasthan Shri Rajpal Singh Minister for Local Self Government, Urban
Agenda for 4th GSTCM
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Sl.No. Centre/State/UT Name of Minister Designation
Shekhawat Development and Housing
25 Sikkim Shri R.B. Subba Minister for HRD, Law & Parliamentary
Affairs
26 Tamil Nadu Shri K.Pandiarajan Minister for School Education & Sports and
Youth Welfare
27 Telangana Shri Etela Rajendar Minister for Finance
28 Uttar Pradesh Shri Abhishek Mishra
Minister for Vocational Education and Skill
Development
29 Uttarakhand Dr. Indira Hridayesh Minister of Finance
30 West Bengal Dr. Amit Mitra Minister for Finance and Excise

Agenda for 4th GSTCM
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Annexure 2 (List of officers from the Centre and States)
Sl. No. Organization Name of Officer Designation
1 Govt. of India Shri Hasmukh Adhia Revenue Secretary and ex-officio Secretary to
GST Council
2 Govt. of India Shri Arvind Subramanian Chief Economic Advisor
3 Govt. of India Shri Najib Shah Chairman, CBEC
4 Govt. of India Shri Ram Tirath Member (GST), CBEC
5 Govt. of India Shri PK Mohanty Advisor (GST), CBEC
6 Govt. of India Shri B.N. Sharma Additional Secretary, Department of Revenue
7 Govt. of India Shri Vivek Johri Principal Commissioner, Customs, Delhi, CBEC
8 Govt. of India Shri Upender Gupta Commissioner (GST), CBEC
9 Govt. of India Shri Alok Shukla Joint Secretary (TRU), CBEC
10 Govt. of India Shri Amitabh Kumar Joint Secretary (TRU), CBEC
11 Govt. of India Shri Udai Singh Kumawat Joint Secretary, Department of Revenue
12 Govt. of India Ms. Aarti Saxena Deputy Secretary, Department of Revenue
13 GST Council Shri Arun Goyal Additional Secretary
14 GST Council Shri Shashank Priya Commissioner
15 GST Council Shri Manish K Sinha Commissioner
16 GST Council Ms. Himani Bhayana Joint Commissioner
17 GST Council Shri G.S. Sinha Joint Commissioner
18 GST Council Shri Santosh Kumar Mishra Deputy Commissioner
19 GST Council Ms. Thari Sitkil Deputy Commissioner
20 GST Council Shri Kaushik TG Assistant Commissioner
21 Andhra Pradesh Shri J. Syamala Rao Commissioner, Commercial Tax
22 Andhra Pradesh Shri T. Ramesh Babu Additional Commissioner, Commercial Tax
23 Arunachal
Pradesh
Dr. Brij Mohan Mishra Secretary-cum-Commissioner, Tax & Excise
24 Arunachal
Pradesh
Ms. Ruchika Katyal Special Secretary, Tax & Excise
25 Assam Shri Anurag Goel Commissioner, Tax
26 Bihar Ms. Sujata Chaturvedi Principal Secretary-cum-Commissioner,
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Sl. No. Organization Name of Officer Designation
Commercial Taxes
27 Bihar Shri Arun Kumar Mishra Additional Secretary, Commercial Taxes
28 Chattisgarh Shri Amit Agrawal Secretary, Finance & Commercial Tax
29 Chattisgarh Ms. Sangeetha P Commissioner, Commercial Tax
30 Chattisgarh Shri Khemraj Jhariya Additional Commissioner, Commercial Tax
31 Delhi Shri H. Rajesh Prasad Commissioner, VAT
32 Delhi Shri C. Arvind OSD to Deputy Chief Minister
33 Goa Shri Dipak Bandekar Commissioner, Commercial Tax
34 Gujarat Shri P.D. Vaghela Commissioner, Commercial Tax
35 Gujarat Ms. Mona Khandhar Secretary (Economic Affairs)
36 Haryana Shri Shyamal Misra Commissioner, Excise & Taxation
37 Haryana Shri Hanuman Singh Additional Commissioner, Excise & Taxation
38 Haryana Shri Vidya Sagar Joint Commissioner, Excise & Taxation
39 Himachal
Pradesh
Shri Pushpendra Rajput Commissioner, Excise & Taxation
40 Himachal
Pradesh
Shri Sanjay Bhardwaj Additional Commissioner, Excise & Taxation
41 Jammu &
Kashmir
Shri Navin K. Choudhary Finance Secretary
42 Jammu &
Kashmir
Shri P.I. Khateeb Commissioner, Commercial Taxes
43 Jammu &
Kashmir
Shri P.K. Bhat Additional Commissioner, Commercial Taxes
(Tax Planning)
44 Jharkhand Shri Ranjan Kumar Sinha Joint Commissioner, Commercial Taxes
45 Jharkhand Shri Sanjay Kumar Prasad Deputy Commissioner, Commercial Taxes
46 Karnataka Shri Ritvik Pandey Commissioner, Commercial Taxes
47 Kerala Shri P. Marapandiyan Additional Chief Secretary, Taxes
48 Kerala Shri Mansur Assistant Commissioner, Commercial Taxes
49 Madhya Pradesh Shri Manoj Shrivastav Principal Secretary, Commercial Taxes
50 Madhya Pradesh Shri Raghwendra Kumar
Singh
Commissioner, Commercial Taxes
51 Madhya Pradesh Shri Sudip Gupta Deputy Commissioner, Commercial Taxes
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Sl. No. Organization Name of Officer Designation
52 Maharashtra Shri D.K. Jain Additional Chief Secretary (Finance)
53 Maharashtra Shri Rajendra Bhagat Deputy Secretary (Finance)
54 Maharashtra Shri Praveen Kulkarni Deputy Commissioner, Commercial Taxes
55 Manipur Shri R.K. Khurkishor Assistant Commissioner, Taxes
56 Meghalaya Shri Abhishek Bhagotia Commissioner, Taxes
57 Meghalaya Shri L. Khongsit Assistant Commissioner, Taxes
58 Mizoram Shri K Sanglawma Commissioner, Taxes
59 Mizoram Shri L.H. Rosanga Joint Commissioner, Taxes
60 Nagaland Shri Y. Mhathung Murry Additional Commissioner, Taxes
61 Nagaland Shri Wochamo Odyuo Joint Commissioner, Taxes
62 Odisha Shri Ashok K.K. Meena Special Secretary (Finance)
63 Odisha Shri Saswat Mishra Commissioner, Commercial Taxes
64 Odisha Shri Sahadev Sahoo Joint Commissioner, Commercial Taxes
65 Puducherry Dr. V. Candavelou Secretary (Finance)
66 Puducherry Shri G. Srinivas Commissioner, Commercial Taxes
67 Punjab Shri D.P. Reddy Additional Chief Secretary (Taxation)
68 Punjab Shri Rajat Agarwal Excise & Taxation Commissioner
69 Punjab Shri Supreet Singh Gulati Additional Excise & Taxation Commissioner
(GST)
70 Rajasthan Shri Praveen Gupta Secretary (Finance)
71 Rajasthan Shri Alok Gupta Commissioner, Commercial Taxes
72 Rajasthan Shri Vinod Sharma Additional Commissioner (GST), Commercial
Taxes
73 Rajasthan Shri Dinesh Rakhecha Assistant Commissioner (GST), Commercial
Taxes
74 Sikkim Shri Manoj Rai Joint Commissioner, Commercial Tax
75 Tamil Nadu Shri C. Chandramouli Additional Chief Secretary, Commercial Taxes
76 Tamil Nadu Shri D. Soundararajapandian Joint Commissioner, Taxation
77 Telangana Shri Ajay Mishra Special Chief Secretary
78 Telangana Shri Anil Kumar Commissioner, Commercial Taxes
79 Telangana Shri Laxminarayan Jannu Joint Commissioner, Policy
80 Tripura Shri D. Bardhan Commissioner, Taxes
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Sl. No. Organization Name of Officer Designation
81 Uttar Pradesh Shri Biresh Kumar Principal Secretary (Commercial Tax)
82 Uttar Pradesh Shri Mukesh Kumar
Meshram
Commissioner, Commercial Taxes
83 Uttar Pradesh Shri S.C. Dwivedi Special Secretary
84 Uttar Pradesh Shri Vivek Kumar Additional Commissioner, Law
85 Uttarakhand Shri Amit Singh Negi Secretary (Finance)
86 Uttarakhand Shri Ranveer Singh Chauhan Commissioner, Taxes
87 Uttarakhand Shri Piyush Kumar Additional Commissioner, Commercial Tax
88 Uttarakhand Shri Kamal Kishore Kafaltiya PA to Finance Minister
89 West Bengal Shri H K Dwivedi Principal Secretary, Finance
90 West Bengal Ms. Smaraki Mahapatra Commissioner, Commercial Tax
91 West Bengal Shri Khalid A Anwar Senior Joint Commissioner, Commercial Tax
92 GSTN Shri Prakash Kumar Chief Executive Officer




Agenda for 4th GSTCM
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Agenda Item 2: Presentation by GSTN on status of development of GST Portal, Data
migration/Enrolment plan, Risk factors and mitigation plan

Agenda Item 3: Finalisation of the bands of tax rates under GST regime (Outstanding
agenda item from the 3rd GST Council Meeting)
(Agenda Note same as for the 3rd GST Council Meeting held on 18-19 Oct 2016)

Agenda Item 4: Provision for Cross-Empowerment to ensure Single Interface under
GST (Outstanding agenda item from the 3rd GST Council Meeting) (Agenda Note same as for the 3rd GST Council Meeting held on 18-19 Oct 2016)

Agenda Item 5: Date of the next meeting of the GST Council

Agenda Item 6: Any other Agenda item with the permission of the Chairperson
Agenda for 4th GSTCM