Venue: Vigyan Bhawan, New Delhi

Summary of Points Finalized in the Meeting

1. Adoption of Rules of Procedure and Conduct of Business in the GST Council

The Council approved the Draft Rules of Procedure with the following amendments:

The term “Chairman” replaced with “Chairperson” to align with Article 279A of the Constitution.

Provision added for representation of a State under President’s Rule — Governor’s nominee to act as Member.

Notice period: Meeting notice to be issued 7 days in advance, and agenda notes to be circulated 3 working days prior.

Option for video conferencing to be explored later for meetings with limited agenda.

Rule on seating order deleted.

Alternate representation allowed: A nominated officer can attend and speak in absence of Minister but cannot vote.

Term “Vice-Chairman” replaced with “Vice-Chairperson”.

Provision added for withdrawal of nominations for the post of Vice-Chairperson.

All States to have equal voting rights within their two-thirds share; proposal for weighted votes based on population or GDP was rejected to maintain equality among States.

2. Timetable for Implementation of GST

The Council approved the implementation roadmap to launch GST from 1st April 2017.

Key milestones:

By November 2016: Finalise draft IGST, CGST, SGST laws and rate structure.

By December 2016: Parliament and State Legislatures to pass GST laws.

By January 2017: Development of front-end and back-end IT systems to be completed by GSTN.

By February–March 2017: Testing and integration of IT systems.

By December 2016: Completion of GST training for Central and State tax officials (via NACEN).

By March 2017: Awareness and sensitisation campaigns for trade and industry.

The Council agreed to meet the 1 April 2017 deadline and address special challenges of North Eastern States separately.

3. Thresholds for Exemption and Composition under GST

After detailed deliberations, the following thresholds were finalised:

General Exemption Threshold: ₹ 20 lakhs for all States.

Special Category States: ₹ 10 lakhs (for North Eastern and hill States under Article 279A).

Composition Scheme Threshold: ₹ 50 lakhs turnover.

Exclusions: Manufacturers and service providers not eligible for composition scheme.

The Council decided to review the exemption threshold after five years, in light of compensation guarantees.

4. Modalities for GST Compensation

The Council approved key principles for compensating States for revenue loss due to GST transition:

Base Year: 2015–16.

Revenue to be Compensated: All taxes and cesses subsumed into GST, including CST, Octroi, purchase tax, etc.

Compensation Release: Quarterly, based on provisional figures, with final adjustment post audit.

Unresolved Issue: Method of determining the projected growth rate — discussions left open for further deliberation.

Options discussed included:

A uniform (“secular”) growth rate (12%–14%).

The average of best 3 years out of the previous 5–6 years.

Decision deferred to the next meeting for finalisation.

5. Provisions for Cross-Empowerment and Single Interface

The Council discussed the cross-empowerment model to ensure a single taxpayer interface under GST.

Key proposals and agreements:

Officers of the Centre and States to be cross-empowered for audit, scrutiny, and enforcement.

Taxpayers below ₹1.5 crore turnover to be administered by States exclusively.

Taxpayers above ₹1.5 crore turnover to be jointly administered by both Centre and States under a defined protocol.

Existing Service Tax registrants to continue under Central administration until States’ officers are trained.

Audit cap: Only 5% of total taxpayers to be subject to audit annually.

Both Centre and States may take enforcement action in information-based cases.

The Council decided to constitute a Committee of officers to refine the operational protocol.

In summary:
The 1st GST Council Meeting (22–23 September 2016) marked the formal beginning of India’s GST framework. The Council finalised its Rules of Procedure, agreed on GST implementation by 1 April 2017, and approved threshold limits (₹20L / ₹10L) and composition scheme (₹50L). It also adopted guiding principles for State compensation (base year 2015–16) and initiated the cross-empowerment framework to achieve a single interface for taxpayers. Key decisions on growth rate for compensation and administrative jurisdiction were deferred for the next meeting.