States ask Centre to make good CST revenue losses

They want that the Centre completely wave CST and adequately compensate them on CST losses before the introduction of Goods and Services Tax (GST).

“We have still not received CST compensation for the year 2010-11. All most all the states have incurred heavy losses,” GST panel head and Bihar’s Finance Minister Sushil Kumar Modi told reporters, adding this should not become the bone of contention between the Cenrtre and the states before introduction of GST.

The Centre has released only Rs 900 crore to the states as CST compensation as against the provision of Rs 12,000 crore in the budget for 2011-12.

 “It is centre which is delaying the process when the states are ready to cooperate on GST,” he said adding CST was one of the main issues before introduction of GST. The government had reduced CST from 4 per cent in 2006-07 to 3 per cent in 2007-08 and to 2 per cent in 2008-09, and also informed the states that it would compensate them against the loss of tax collection.

The rate was to be reduced further to 1 per cent from April 1, 2009, and to zero from April 1, 2010, coinciding with the proposed rollout of GST. It was, however, put on hold. Modi also said that the Empowered Committee has rejected the proposal of Central government to keep domestic natural gas and re-gassified LNG in declared goods category.