Venue: Parliament House Annexe, New Delhi

Summary of Points Finalized in the Meeting

Formation of Committee of Officers for Key Clarifications

The Council constituted a Committee of Officers to examine and report on the following issues:

Definition of the term “Revenue” for determining compensation to States.

Whether Input Tax Credit (ITC) reversals by a State should be included in the definition of revenue.

Modalities for allocating jurisdiction between the Central and State administrations for:

Taxpayers covered under deemed sales (e.g., works contracts, restaurant services).

Taxpayers simultaneously registered under both VAT and Service Tax.

Modalities for information-based enforcement to avoid dual investigations.
2nd GST Council Meeting Minutes, page 6

Approval of Draft GST Rules

The Council approved the Draft GST Rules relating to:

Registration, Payment, Return, Refund, and Invoice, Debit/Credit Notes.

Minor changes based on stakeholder feedback were permitted with approval from the Chairperson.
2nd GST Council Meeting Minutes, page 6–7

PAN-based Registration Concerns from North Eastern States

Arunachal Pradesh expressed concern that since no income tax was payable in certain North Eastern States, PAN-based GST registration could be difficult to implement.

The Chairperson agreed that the issue would be reviewed in the next meeting for a practical solution.
2nd GST Council Meeting Minutes, page 6–7

Treatment of Existing Central and State Tax Incentive Schemes

The Council discussed the continuation of area-based and industrial tax incentives.

It was decided that under the GST regime:

All entities currently exempted under any tax incentive scheme shall pay tax in GST.

The decision to continue any existing industrial or area-based incentive shall rest with the respective government (Centre or State).

If continued, such incentives shall be administered through a reimbursement mechanism from the budget, not through GST exemptions.

This effectively ended direct tax exemptions under GST but allowed budgetary reimbursement by the State or Centre to maintain industrial support.
2nd GST Council Meeting Minutes, page 7–8

Support for Special Category States

States like Uttarakhand and Jammu & Kashmir sought assurance that existing exemptions up to 2020 (under Central schemes) would be honoured.

The Chairperson clarified that the Centre would reimburse such units only from its non-devolved 58% revenue share, while States could reimburse from their own 42% share.
2nd GST Council Meeting Minutes, page 8

Next GST Council Meeting Schedule

It was decided that the 3rd GST Council Meeting would be held on 18–20 October 2016.

The key agenda would be to finalise the GST rate structure and other pending items.
2nd GST Council Meeting Minutes, page 8