Monday, June 2, 2008

CST Finally reduced to 2% w.e.f. 1st June'08

CENTRAL SALES TAX REDUCED TO 2% FROM 1 ST JUNE, 2008
Jyaistha 9, 1930
New Delhi: May 30, 2008
Ministry of Finance issued a notification today, bringing into effect from 1 st June, 2008 the new reduced rate of CST of 2 per cent on inter-State sales of goods. The notification of new CST rate of 2 per cent in place of earlier 3 per cent is in accordance with the announcement made by the Union Finance Minister in his budget speech to Parliament in February 2008 that the rate of Central Sales Tax would be reduced.
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 a part of the roadmap for phasing out CST completely by 31 st March, 2010.
The Central Government and the Empowered Committee of State Finance Ministers have further agreed that the compensation for revenue loss to the States in any year arising from the lowering of CST will be limited to the proportionate loss based on the actual collection of CST in the relevant year. The Empowered Committee will also make every effort to prevail upon the State Governments to impose VAT on textiles as also to increase the general VAT rate from 4 per cent to 5 per cent within the financial year 2008-09 as per agreement reached earlier.

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