JOIN USAhead of Budget, States, on Tuesday, asked Union Finance Minister Pranab Mukherjee to either fully compensate them for revenue loss due to reduction in the Central Sales Tax (CST) or raise the levy to 4 per cent.
“Due to financial constraints, if the Centre is not in a position to continue to pay CST compensation to the states, then the CST rate may kindly be restored to 4 per cent from April 1, 2012,” Chairmn of Empowered Committee of State Finance Ministers Chairman, Sushil Modi, said in a letter to Mukherjee.
Modi said the Centre should release full CST compensation for the current and previous financial year.
While the states have demanded a compensation of Rs 19,060 crore for 2010-11, Modi said only Rs 6,393 crore has been released and many states like Gujarat, Madhya Pradesh, Nagaland and Uttar Pradesh have not received funds.
The pending claims of CST compensation for the earlier years should also be settled at an early date, he said.
“It would be extremely difficult for states to sustain the losses on account of reduction of CST rate,” Modi said, adding that some states have already made budgetary provisions on this account.