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K.R. Srivats

New Delhi, July 26

Central Sales Tax (CST) collections recorded a 8.88 per cent increase in fiscal 2006-07 to Rs 19,749.21 crore compared with Rs 18,138.18 crore collected in fiscal 2005-06.

This growth rate is somewhat below expectations and also much lower than the near 20 per cent increase in collections witnessed in fiscal 2005-06. Annual CST collections during 2004-05 was about Rs 15,000 crore.

CST, which is a tax on inter-state sale of goods, is levied by the Centre and collected and entirely retained by the States. A four-step phaseout of CST has already been initiated, with the ceiling rate reduced from 4 to 3 per cent on April 1 this year.

States have estimated the total revenue loss due to the reduction in CST at about Rs 6,350 crore during 2007-08. Given the growth trend in CST collections in 2006-07, sources said that the estimation of revenue loss of Rs 6,350 crore for 2007-08 may be on the higher side.

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