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K. R. Srivats

New Delhi, June 15

The Centre is unlikely to bring down the ceiling rate on the central sales tax (CST) from the existing two per cent to one per cent, it is reliably learnt.

The current thinking in the Finance Ministry is that the CST should be wholly phased out at the time of introduction of the goods and services tax (GST) system from April 1, 2010.

The CST ceiling rate was reduced to two per cent from June 1, 2008 as part of the roadmap for the phase out of the levy by March 31, 2010.

Industry was hoping that the next round of ceiling rate cut — from two per cent to one per cent — would happen in June.

The Centre had already announced its intent to introduce GST from April 1, 2010.

In the recent weeks, India Inc had in a pre-Budget meeting with the Finance Ministry been making a case for reduction of the CST ceiling rate to one per cent in line with the earlier announced roadmap.

The CST is an origin-based tax on inter-State sale of goods.

Since the tax — levied by the State from where the goods originate — is not provided refund credit by the consuming State, it militates against the principle of value-added tax where set-offs are given against taxes paid on inputs and other previous purchases.

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