The GST Council met as part of a three-day meeting where it agreed on a number of issues on the implementation of Good and Services Tax in India.
Finance Minister Arun Jaitley-headed GST Council agreed on a formula on to compensate states in case of a revenue loss after moving to the new system.
On compensation to states, 2015-16 will be taken as the base year for calculating revenue assuming a secular or long-term growth rate of 14 percent.
States will be fully compensated till five years for potential revenue loss.
The GST Council has also finalised area-based exemptions and how 11 states—the eight north-eastern states and the three hilly states, will be treated under the new tax regime.
The tax exemptions given by these states as incentives to industry will be counted in the definition of revenue for calculation of revenue loss.
The council will now discuss the tax rates, the most contentious issue.
