India: Recommendations Of The Rajya Sabha Select Committee

Last Updated: 17 November 2015
Article by Shammi Kapoor and Shilpa Sharma

The Constitution (One Hundred and Twenty Second Amendment) Bill, 2014 (the 'GST Bill') as passed by the Lok Sabha and introduced in the Rajya Sabha was referred to the Select Committee (the "Committee") for its recommendations. The Committee has tabled its report on July 22, 2015 with recommendations on modifications required in specific clauses in the GST Bill based on inputs received from various stakeholders. The Committee has endorsed most existing clauses in the GST Bill as is with specific recommendations on amendments required in a few instances. The Committee has further provided certain overall recommendations on the GST framework and the manner of its implementation. The key recommendations of the Select Committee are captured hereunder:

GST rate

With respect to the GST rates, the Select Committee has observed that the standard rate should be within 20%, while the lower rate should not be lower than 14%. The Committee has recommended for a definition of the term "band" to be incorporated to define the range of GST rates that may be levied on specific categories of goods or services. The Committee has strongly recommended that State Government stake adequate measures to ensure that adequate revenues flow to the local bodies. The Committee has further called upon the GST Council to opt for a broad base and a moderate rate and as far as possible to avoid multiplicity of tax rates.

Levy of additional tax of 1% on inter-state supply of goods

The proposal to levy a non-creditable additional tax of 1% on inter-state supply of goods has been the centre stage of controversy and vehemently opposed inter alia on grounds of its cascading effect. While the Committee has not recommended for its omission per se, it has recommended that the term "supply" for purposes of additional tax levy in clause 18 of the GST Bill be explained as "all forms of supply made for a consideration". While this should mitigate additional tax levy on stock transfer of goods, its cascading effect could continue on successive interstate sales (other than branch transfers) of the same goods.

GST coverage - alcoholic liquor for human consumption, petroleum and tobacco

While several recommendations were made with respect to GST coverage of the items above, no changes have been proposed by the Select Committee. Accordingly, alcoholic liquor for human consumption would be outside the purview of GST; petroleum (crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel) would be subsumed under GST at a later date and tobacco would attract GST as well as an additional levy.

GST related compensation to States

Addressing concerns expressed by States on potential discretion in the disbursement of compensation for loss of revenue caused by GST, the Committee has recommended that the Parliament may, by law, on the recommendation of the GST Council, provide for compensation to the States for the loss of revenue arising on account of implementation of GST for a period of five years. The Committee has however declined the demand of States to replace the term 'may' with 'shall' with regard to provision of compensation to States for loss of revenue.

Voting pattern of the GST Council

No changes have been proposed in the voting pattern of the GST Council which remains, voting by three fourths with weightage of 2/3 for States and 1/3 for the Centre.

GST dispute resolution

The Committee has declined to accept recommendations for reinstatement of the GST Dispute Resolution proposed under the Constitution (115th Amendment) Bill, 2011. The Committee is of the view that if any Dispute Settlement Authority is separately created it will hamper the functioning of the GST Council in general and Legislatures (Parliament and States) in particular. The Committee has further observed that the GST Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.

The term 'supply' not to be defined in the GST Bill

A key industry concern was for the term "supply" to be defined in the GST Bill to ensure uniformity across GST laws including unintended taxation of non-commercial supplies including all forms of intra-company supplies. The Committee has recommended that it would be more appropriate for the term "supply" to be defined in the Central GST and State laws.

Definition of 'Goods', 'Services' and 'Goods and Services Tax'

The Committee has recommended for adoption of all definitions without any change despite several representations made for specific inclusions and illustrations to be included in the definitions. Accordingly, the definition of service as currently adopted poses specific concerns.

Other recommendations

Endorsing the view of the Fourteen Finance Commission, the Committee has recommended that it would be best to keep the GST Compensation Fund out of the purview of the GST Bill given it is temporary in nature and limited to a period of five years.

The Committee has recommended that if possible banking services may be kept outside the GST altogether; or at least interest, trading in securities and foreign currency and services to retail consumers should not be liable to GST. The Committee has also recommended for a lower GST rate for banking sector including specific provisions providing for single registration mechanism coupled with input credit to customers.


After obtaining inputs/suggestions from Industry at large, the Select Committee of Rajya Sabha has restricted the rate of GST to be between 14% to 20%, whereas the States are insisting upon a higher rate of GST. In our view, the lower rate of RNR will reduce cascading effect on supply of goods and services. However, in our view, supply of goods for a consideration shall also have a cascading effect of 1% as the same is not creditable. Further, with petroleum products remaining out of GST ambit, the same shall also result in cascading effect of taxes on the final product.

© 2015, Vaish Associates, Advocates,
All rights reserved with Vaish Associates, Advocates, 10, Hailey Road, Flat No. 5-7, New Delhi-110001, India.

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Shammi Kapoor
Shilpa Sharma
Similar Articles
Relevancy Powered by MondaqAI
SKP Business Consulting LLP
Bhasin Sethi & Associates
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
SKP Business Consulting LLP
Bhasin Sethi & Associates
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions