Empowered Committee of State Finance Ministers decided to set up a Joint Working Group, with the then Adviser to the Union Finance Minister and the Member-Secretary, Empowered Committee as Co-convenors and the concerned Joint Secretaries of the Department of Revenue of Union Finance Ministry and all Finance Secretaries of the States as its members.

Further on 12 September 2007, three working groups were formed under the Joint Working group:

Sub-Group I – To identify Central and State taxes which possess properties to be appropriately subsumed under GST.

Sub-Group II –  To identify the possible alternatives models for introduction of GST in India and examine their various characteristics and their suitability in India’s federal fiscal context.

Sub-Group III – To suggest the base and rate structure of GST, problem faced during inter-state transactions, How exempted goods and services and Non- VAT items such as petroleum goods and alcohol might be treated under the new regime.