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As an origin-based tax,
India Inc is keen that CST be abolished at the earliest, especially when a
destination-based value added tax (VAT) regime is in place.
Earlier, the Government had indicated that CST will be abolished along with the
introduction of GST. The CST rate was last reduced to 2 per cent in June 2008.
It is likely that the CST levy will continue for non-GST items, official sources
said. This implies that CST may go only for those items that will come under the
proposed GST system. The Centre and the States have agreed that crude, ATF,
motor spirit and high speed diesel will continue to be outside GST net.
So, inter-state sales of these products will continue to attract CST. Both the
centre and the States are yet to take a call on the treatment of inter-state
branch transfer and consignment sale in a GST regime.
Even though VAT was introduced across the country, certain items such as crude,
petroleum products, aviation turbine fuel, are all outside the VAT net. These
items are still subjected to sales tax.
Meanwhile, Finance Ministry sources said the Centre was keen that all States
implement GST from one common date. “It has to be all States. We don't want a
system where only some do it. It is also not that there is too much of
disagreement among States. It's just that April 1, 2010, is too near and there
are apprehensions on loss of revenue”, a CBEC official said.
Source:
TheHinduBusinessLine, India, dated
19/01/2010
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