Govt releases Rs 6,394 cr CST compensation for 2010-11

A committee with state representatives was et up to resolve the issues pertaining to Goods and Services Tax

The government today said it has released Rs 6,394 crore towards compensation for losses incurred by states due to reduction in Central Sales Tax (CST) revenue in 2010-11 in view of a new indirect taxes regime that is to be implemented.

The compensation has been released to 13 states.

The government had set up a committee with state representatives to resolve the issues pertaining to Goods and Services Tax (GST).

"The Committee proposed for the payment of 100% CST compensation for the years 2010-11, 75% for 2011-12 and 50% for 2012-13 to be worked out," Minister of State for Finance S S Palanimanickam said in a written reply to the Lok Sabha.

Besides, the committee has recommended that all unsettled CST compensation cases of individual states of earlier years should be decided on case to case basis, the Minister said.

The 13 states to which compensation has been released include Andhra Pradesh, Assam, Chhattisgarh, Delhi, Haryana, Jharkhand, Karnataka, Orissa, Puducherry, Rajasthan, Tamil Nadu, West Bengal and Uttarakhand.

States had agreed to a lower payment of Rs 34,000 crore for phasing out the Central Sales Tax (CST), a pre-condition for rollout of the GST.

CST, a tax imposed on the inter-state movement of goods, was reduced from 4% to 3% in 2007-08 and further to 2% in 2008-09 after the introduction of Value-Added Tax (VAT).