Industry & Economy
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Taxation
CST compensation panel to meet on April 24
K.R. Srivats
New Delhi
,
April 17
A clear picture on how States are to be compensated for their losses in revenues from central sales tax (CST) phaseout is likely to emerge only after the first week of May.
The working group set up to work the modalities of compensation for an appropriate phaseout of CST is to hold another meeting on April 24.
The working group had in its first meeting of April 10 not been able to conclusively come to any agreement on how the CST compensation should be carried out.
With a number of States going in for Assembly elections, sources said that the VAT panel is likely to look at the recommendations of the working group only after May 8.
The working group comprises senior officials from the Union Finance Ministry as well as VAT commissioners of States. The States had asked the Centre to compensate them for the expected loss of revenue from CST phaseout. The Centre has proposed that the loss of revenue may be compensated through monetary and non-monetary measures which, taken together, would ensure that the States' revenues remain buoyant.
The annual CST collections during 2005-06 are estimated at Rs 18,000 crore. The entire CST is collected and retained by the States.
One of the proposals weighed by the working group is a one-percentage point cut in the 4 per cent ceiling rate in the next four financial years including the current fiscal.
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