The Hindu Business Line : VAT panel meets on CST cut

NEW DELHI: An official committee on Value- Added Tax (VAT) held a meeting on Wednesday to deliberate on reduction of Central Sales Tax (CST) from next fiscal, compensation to states for losses due to CST cut and reduction in tax on cooking gas to 4 per c ent.

Emerging from the meeting, Empowered Committee on VAT Chairman Asim Dasgupta told reporters that a clear picture on these issues would be known only after the panel interacts with Finance Minister P Chidambaram.

CST, imposed on inter-State trade of goods, is likely to be phased out from next fiscal. It was likely to be reduced to two per cent from the current four per cent, but some States are asking for its reduction by only one per cent next fiscal.

The Central Sales Tax is collected by the Centre, which then distributes it to States. Because of two per cent reduction in CST, States would lose around Rs 9,000 crore.

To seek compensation for this loss, States are demanding that they be allowed to impose tax on some services.

The issue of distribution of taxation on services between the Centre and States was also discussed at the meeting, sources said, but did not reveal the details. - PTI

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