The Hindu : Front Page : Central Sales Tax to be cut to 2 per cent

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Saturday, May 31, 2008
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Front Page

Central Sales Tax to be cut to 2 per cent

Special Correspondent

NEW DELHI: The government on Friday announced the reduction of the Central Sales Tax on inter-State sale of goods from 3 to 2 per cent with effect from June 1. A notification to this effect was issued by the Department of Revenue.

The notification was in accordance with the announcement made by Finance Minister P. Chidambaram in his budget speech, an official statement said.

Discussions

The downward revision follows discussions between the Empowered Committee of State Finance Ministers and Mr. Chidambaram on compensation package for States, it said.

The government issued a press statement earlier in the day but withdrew it and reissued the same after modifying the reference related to Value Added Tax (VAT) panel making efforts to persuade the States to increase the value added tax from 4 to 5 per cent.

The rate of CST on inter-State sale of goods to registered dealers (against Form-C) shall now be the lower of 2 per cent and the rate of VAT or State Sales Tax applicable.

This reduction forms part of a road map for phasing out CST by March 31, 2010 in preparation for introducing Goods & Services Tax (GST), the statement said.

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