CST rate may drop to 3% from Oct

NEW DELHI: The Central Sales Tax rate may come down to 3% from October 1, 2006, as compared to the current level of 4%. The lower rate would come into effect from October 1 — the scheduled ‘phaseout date’ — if all goes well between states and the Centre on the compensation package meant to cushion implementation of value added tax (VAT).

“The phaseout date is October 1. We may reduce it from 4 % to 3% to begin with followed by further reduction... But this was contingent to compensation package agreed upon by the finance ministry.

The committee of chief commissioners of sales tax will look at the package prepared by the finance ministry,” Asim Das Gupta, finance minister of West Bengal, and chairman, empowered committee of state finance ministers said here.

He, however, declined to divulge details of the package, saying there was convergence and the next meeting on August 19 in Kochi in Kerala will take up the issue in greater detail.

Giving away VAT figures for the fiscal, he said collection in the first quarter(April-June, 2006) had witnessed a growth of 26 % compared to 14% in same period last year.

Asked about states like Kerala levying a higher rate of VAT on luxury items, he said there were 703 such items and these deviations were limited to 3% of the total items.

About cash memo being issued to traders, he said a public campaign would be launched for this and the empowered committee would hold discussions with the traders.