CST may be reduced to 2% by early next year
The central sales tax rate could be reduced to 2% early next year in the phased removal of the levy. Addressing a seminar organised by the All-India Management Association on implementation issues of (VAT), member secretary of the empowered committee of state finance minister Ramesh Chandra, reduction of CST from 4% to the proposed 2% could come through a central government notification.
He said there was considerable resistance from the states, particularly those with large manufacturing sector, to the proposed reduction as they were beneficiaries of the CST receipts. All the states together get about Rs 20,000 crore as their share in CST collection. The amount could be reduced to half when the CST rate is cut to 2%.
Mr Chandra also said that the committee has asked the finance ministry to consider empowering the states to tax imports and bring it under 4% VAT. The proposal would, however, require a constitutional amendment as the import can be taxed only by the Centre.