Changes in CST rate
This query is : Resolved
16 July 2008
Hi Irsha,
The CST rate has been reduced to 2% w.e.f. 1st June, 2008. Please go through the following article:
CST rate to be cut to 2% from June 1
May 31, 2008 15:22 IST
After much bickering with states, the finance ministry reduced the central sales tax (CST) rate on inter-state sales from 3 per cent to 2 per cent with effect from June 1.
The ministry notified the rate-cut to the states despite differences on compensating them for losses of about Rs 13,000 crore (Rs 130 billion) in 2008-09 becuase of the cut.
CST was cut from 4 per cent to 3 per cent on April 1, 2007. It was to be reduced to 2 per cent on April 1, 2008, and phased out by March 2010.
However, the reduction to 2 per cent got delayed after states refused to increase the value-added tax (VAT) rate from 4 per cent to 5 per cent and bring textiles under VAT, as proposed by the central government.
While states will get some revenue from certain services that they have been allowed to tax, VAT on tobacco and removal of Form D, there are differences over compensating states for the remaining Rs 9,600 crore (Rs 96 billion).
Apparently, states, while agreeing to phase out CST in 2007, had agreed to raise the VAT rate from 4 per cent to 5 per cent and tax textiles.
Sources said states were now refusing to do so citing high inflation and the coming Assembly elections. States are now demanding cash compensation from the central government.
With no immediate solution in sight, the central government decided to reduce the rate. The Empowered Committee, which will meet in the last week of June, may discuss the issue.
"It is unlikely that states will raise the VAT rate in 2008-09 due to elections. However, an increase may be possible in 2009-10," said a source.
Non-reduction in the CST rate would have embarrassed both the central and state governments, who are working together to introduce a uniform goods and service tax by 2010 by eliminating CST
Rgds/
Vineet
The CST rate has been reduced to 2% w.e.f. 1st June, 2008. Please go through the following article:
CST rate to be cut to 2% from June 1
May 31, 2008 15:22 IST
After much bickering with states, the finance ministry reduced the central sales tax (CST) rate on inter-state sales from 3 per cent to 2 per cent with effect from June 1.
The ministry notified the rate-cut to the states despite differences on compensating them for losses of about Rs 13,000 crore (Rs 130 billion) in 2008-09 becuase of the cut.
CST was cut from 4 per cent to 3 per cent on April 1, 2007. It was to be reduced to 2 per cent on April 1, 2008, and phased out by March 2010.
However, the reduction to 2 per cent got delayed after states refused to increase the value-added tax (VAT) rate from 4 per cent to 5 per cent and bring textiles under VAT, as proposed by the central government.
While states will get some revenue from certain services that they have been allowed to tax, VAT on tobacco and removal of Form D, there are differences over compensating states for the remaining Rs 9,600 crore (Rs 96 billion).
Apparently, states, while agreeing to phase out CST in 2007, had agreed to raise the VAT rate from 4 per cent to 5 per cent and tax textiles.
Sources said states were now refusing to do so citing high inflation and the coming Assembly elections. States are now demanding cash compensation from the central government.
With no immediate solution in sight, the central government decided to reduce the rate. The Empowered Committee, which will meet in the last week of June, may discuss the issue.
"It is unlikely that states will raise the VAT rate in 2008-09 due to elections. However, an increase may be possible in 2009-10," said a source.
Non-reduction in the CST rate would have embarrassed both the central and state governments, who are working together to introduce a uniform goods and service tax by 2010 by eliminating CST
Rgds/
Vineet
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- Stamp Paper for partnership firm change new income tax 2025
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- TDS on Purchase of Immovable Property by NRI from NRI
- Capital gain from sale of house property
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- Value of property in capital gain
- When TDS on GST applied
- Before GSTAT- APL-02 Vs APL-04
- TDS APPLICABILITY......
- Copyright software
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
