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The Centre has agreed to fully compensate the States for the losses they would suffer in 2010-11 on account of an earlier move to reduce central sales tax (CST) rate to 2 per cent.
The Empowered Committee of State Finance Ministers estimates the total loss on this count to be about Rs 14,000 crore in 2010-11.
Adhoc relief
“He (Mr Pranab Mukherjee) said that he is willing to make full compensation for CST loss this fiscal.
“To begin with, it would be an adhoc relief to be followed by subsequent measures,” Dr Asim Dasgupta, Chairman of the Empowered Committee, told reporters here.
Dr Dasgupta met the Union Finance Minister, Mr Pranab Mukherjee, here today to discuss the GST rollout.
The Centre had on Thursday approved Rs 7,029 crore compensation to States for CST loss in 2010-11.
Of this, Rs 3,000 crore would be released this fiscal as an ad-hoc amount and the balance in the subsequent year in accordance with guidelines, the Information and Broadcasting Minister, Ms Ambika Soni, had said.
Indications are also that CST would not be abolished in 2011-12 and would continue to be pegged at 2 per cent, official sources said.
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