State FMs to meet Pranab over delay in CST compensation

Perturbed over delay in release of Central Sales Tax (CST) compensation, state finance ministers today decided to meet Union Finance Minister Pranab Mukherjee to press for early disbursal of funds.

"We will meet Finance Minister [Pranab Mukherjee]. We will seek time," Chairman of the Empowered Committee of State Finance Ministers on the Goods and Services Tax (GST) Sushil Modi told reporters after a meeting of the panel here.

"I appeal to the Finance Minister [Mukherjee] that when a congenial atmosphere is being created for GST, this [CST compensation] should not become a bone of contention between the Centre and states," Modi, who is also the Bihar Finance Minister, said.

He said opinion was divided amongst states on the issue of negative list on services and a panel which was set up on the issue has been given further time till December 31 to submit its report.

Finance Ministers of several other states too expressed concerns over delay in release of funds by the Centre to compensate states for revenue losses due to phased withdrawal of CST.

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

CST, a tax on 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).