Summary of Points Finalized in the Meeting

Presentation by GST Network (GSTN)

GSTN reported substantial progress in developing the GST IT systems.

Infosys was confirmed as the Managed Service Provider (MSP); system rollout planned in three phases covering taxpayer registration, returns, payments, and analytics.

Data Centre to be located in Delhi, Disaster Recovery Centre in Bengaluru.

Migration of existing taxpayers to GST to begin in November 2016 using PAN-verified data.

States were asked to issue notifications for taxpayer enrolment.

Helpdesks to be set up in local languages by States with GSTN providing common training materials.

Offline enrolment option and internal software testing planned by end of November 2016.

Connectivity issues of North Eastern States were discussed, and DoT/BSNL were asked to improve infrastructure.

The Council agreed that periodic progress updates would be presented in future meetings.

Finalisation of Tax Rate Bands under GST

The Council finalised a four-rate tax structure plus an exempt category and cess mechanism:

0% (Exempt) – Food grains and essential items.

5% – Goods consumed by vulnerable sections or those with combined pre-GST tax rates between 3%–9%.

12% – Goods with combined current tax between 9%–15%.

18% – Standard rate covering most services and goods currently taxed between 15%–21%.

28% – Higher band for goods currently taxed at or above 21% (including cascading).

Cess to be imposed over and above 28% on luxury cars, aerated drinks, pan masala, and tobacco products to fund State compensation.

Compensation Fund to be created from cess proceeds and Clean Environment Cess on coal, peat, and lignite.

Sunset Clause: Cess to end after five years, subject to annual review by the Council.

Any surplus in the Compensation Fund to be shared 50:50 between Centre and States, with States’ share distributed according to SGST collections.

Services to be taxed at 18% generally.

Committee of officers to conduct fitment exercise to allocate goods into the above slabs, considering inflation and socio-economic realities.

The rate on gold was kept open for future decision after completion of fitment analysis.

The Clean Environment Cess was allowed to continue, and the National Calamity Contingency Duty (NCCD) retained for disaster relief funding.

Cross-Empowerment and Single Interface

The Council discussed administrative control between Centre and States to ensure a single interface for taxpayers.

Two-tier structure proposed:

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

Taxpayers above ₹1.5 crore turnover – to be subject to cross-empowerment between Centre and States, with 5% of cases selected for audit based on risk parameters.

The Council agreed on principles of limited audits, data-based selection, and cross-empowerment, though finer details were deferred for the next meeting.

General and Administrative Decisions

Letters sent to the GST Council to be treated as confidential to avoid public disclosure.

The Council agreed that periodic updates from GSTN and the officer committee on rate fitment and administrative mechanisms would be tabled in upcoming sessions.

In summary:
The 4th GST Council Meeting (3–4 Nov 2016) finalised the GST rate structure with four tax bands (5%, 12%, 18%, 28%) plus exemptions and a cess for compensation. It also approved the compensation mechanism and fund structure, reviewed GSTN’s readiness for taxpayer migration, and made progress toward a single administrative interface through cross-empowerment principles.