Rs 32,800 cr paid to states to compensate for CST loss: Sinha

The Centre today said it has paid Rs 32,800 crore to states as compensation for phasing out of Central Sales Tax in the run-up to roll-out of Goods and Services Tax.
As per the the estimates of Empowered Committee of State Finance Ministers, there is an outstanding of Rs 10,797 crore towards Central Sales Tax (CST) compensation for 2010-11 which is yet to the be paid to states.
"A total of Rs 32,800.93 crore has been paid to the states towards CST compensation for the year 2007-08 to 2010-11," Minister of State for Finance Jayant Sinha said in a written reply to a question in the Lok Sabha.

The GST (Goods and Services Tax) is proposed to be rolled out from April 2016. As part of the proposed GST regime, the CST is being phased out and its rate has been reduced to two per cent from four per cent. The Centre collects CST and distributes it among states.
The Centre has agreed to compensate states for losses they have incurred due to CST phase out. As per the agreement, 100 per cent compensation is to be paid for 2010-11 fiscal, 75 per cent for 2011-12 and 50 per cent for 2012-13.
Between 2007-08 and 2009-10, Rs 26,407 crore has been released by the Centre to states on this account.

As regards 2010-11, the Centre has released Rs 6,394 crore to the states.

However, the outstanding CST compensation for 2010-11 as per the recommendation of the Empowered Committee stands at Rs 10,797 crore, Sinha said.
In December 2014, government introduced the long-pending GST Bill in the Lok Sabha for roll-out of GST which would subsume various levies like entry tax and octroi.
The CST, a tax imposed on the inter-state movement of goods, was reduced from 4 per cent to 3 per cent in 2007-08 and further to 2 per cent in 2008-09 after the introduction of value-added tax (VAT).

Earlier this week, Government has sought Parliament approval to release about Rs 11,000 crore to states and union territories to compensate them for revenue loss on account of phasing out of CST.