Financial Daily from THE HINDU group of publications
Friday, Sep 13, 2002

Port Info

Group Sites

Industry & Economy - Taxation

`Phasing out CST is prerequisite for VAT'

Our Bureau

NEW DELHI, Sept. 12

THE abolition of Central sales tax is a prerequisite for putting in place an effective destination-based value- added tax, according to Dr Govinda Rao, Chairman of the erstwhile Service Tax Committee.

Dr Rao has now been appointed by the Finance Ministry to work out the implications of a gradual phase out of CST.

While favouring the abolition of CST, Dr Rao, however, said today he was not in favour of doling out huge compensation to States to make good the possible revenue losses on account of the phase out of CST. Revenues from CST top Rs 19,000 crore per annum.

"We can always look at other mechanisms for compensating States through re-aligning the existing systems. For example, States can play a larger role in the taxation of three additional excise duty (AED) items - tobacco, sugar and textiles,'' Dr Rao told Business Line on the sidelines at the Eleventh All India Tax Conference organised by Assocham here.

Dr Govind Rao will be submitting his report to the Finance Ministry by the end of this month. Besides analysing the economic efficiency of CST, Dr Rao's study would also assess the implications of a gradual phase out of this levy.

The implications of pruning CST from 4 per cent to 2 per cent would form part of the exercise. Further, the impact of zero rating of CST on income, price and tax revenues will also be analysed.

Send this article to Friends by E-Mail

Stories in this Section
Housing loans to individuals less risky

Industrial growth 6.4 pc in July — CSO data point to revival trend
Bid to improve efficiency — Industries dept to cut costs through rationalisation
Rs 2.5-cr project planned to empower women
Bengal looking for funds to build `Green Corridor' road
Plan panel stress on manganese ore exploration
`Phasing out CST is prerequisite for VAT'
Plan to construct vented dams
KCCI's plea on food labelling
COAI finds `unlimited' competition call jarring
Electronics body office-bearers
PSLV puts Metsat in orbit
INSAT: More room for more profits
`Lack of IPR awareness hampering industry'
Productivity-linked reward scheme — Port, dock workers to press for flat 20 pc payment
Jalan hopes for early decision on FII cap — Sees little impact from crude price spurt
`Growth in IT sector holds prospects for more jobs'
Focus on winning for nation, says Pitroda
Boat show to be held in Kochi
Special legal cell to help investigate scams soon

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line