THE EMPOWERED COMMITTEE OF STATE FINANCE MINISTERS
    DELHI SECRETARIAT, IP ESTATE, NEW DELHI ­ 110 002

                                            Tel. No. 2339 2431, Fax: 2339 2432
                          e-mail: vatcouncil@yahoo.com, empcom@hotmail.com


No. 15/45/EC/GST/2007/190
                                                    Dated:            May, 2007


      JOINT WORKING GROUP ON GOODS AND SERVICES TAX


      Hon'ble Union Finance Minister during his Budget Speech, 2007-2008
announced that at his request, the Empowered Committee of State Finance
Ministers has agreed to work with the Central Government to prepare a
roadmap for the introduction of the Goods and Services Tax (GST) with effect
from 1st April, 2010. In view of above, it has been decided by the Empowered
Committee of State Finance Ministers, in consultation with the Central
Government, to constitute a joint Working Group.







2.   The Working Group would consist of the following:

     (1)   Dr. Parthasarathi Shome,                          Convener
           Adviser to Hon'ble Union Finance Minister.
           Permanent Invitee, Empowered Committee.

     (2)   Shri Satish Chandra,                              Convener
           Member Secretary,
           Empowered Committee of
           State Finance Ministers

     (3)   Shri L.K. Gupta.                                  Member
           Joint Secretary (ST)
           Department of Revenue

     (4)   Shri Gautam Ray,                                  Member
           Joint Secretary (TRU-I)
            Department of Revenue

      (5)   Shri R. Sekar,                                      Member
            Joint Secretary (TRU-II)
            Department of Revenue.

      (6)   Shri P.K. Mohanty,                                  Member
            Joint Secretary (DBK)
            Department of Revenue

      (7)   Secretaries/Principal Secretaries of                Members
            Finance/Taxation from all the States
            and Union Territories

3.     The Working Group would study the various models of GST existing
globally and any other relevant material available on the subject. It would also
identify the possible alternative models for introduction of GST in India and
examine their various characteristics and assess their suitability in India's fiscal
federal context. After these studies, the Working Group should present its findings
before the Empowered Committee for decision on the most appropriate model for
introduction of GST in India.

4.    The Working Group would identify the Central Taxes and State Taxes which
possess properties to be appropriately subsumed under GST.

5.    While suggesting a model for the base and rate structure of GST, the
following should be kept in mind by the Working Group:

   a) GST should be so designed that it should be revenue fair with sufficient
      growth of revenue to the Centre and every State. Interests of the Special
      Category, North-Eastern States and Union Territories have to be especially
      kept in mind.
   b) The Group will examine different models and see the manner in which the
      power of levy, collection and appropriation of revenue should be vested in
      the Centre and the States by looking at the pros and cons of various models.
   c) The various models suggested by the Working Group should ensure that
      double taxation is avoided.
   d) The Working Group would ensure that the suggested models take into
      account the problems faced during Inter-State transactions and any revenue
      loss.
   e) The Working Group should consider how exempted goods and services and
      Non-VAT items such as petroleum goods and alcohol might be treated under
      the new regime.
   f) The models developed should reflect the interests of the Trade, Industry,
      Agriculture and Consumers, with due concern to the Centre-State relations.







6.   The Working Group would be free to constitute sub-Working Groups and
would also be competent to co-opt experts.

7.    Commissioners of Trade Taxes of the States could join                  their
Secretaries/Principal Secretaries of Finance/Taxation during the meetings.

8.  All Secretarial assistance to the Working Group would be provided by the
Empowered Committee Secretariat.

9.    The Working Group would submit its report to the Empowered Committee
within a period of four months.



                                                                 (Satish Chandra)
                                                               Member Secretary
                                                          Empowered Committee
                                                       of State Finance Ministers