Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT Audit :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: empanelment :: ACCOUNTING STANDARDS :: TDS :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: ACCOUNTING STANDARD :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd
« Service Tax »
 Service tax officials transferred for favouring realtor
 GST, a challenge and opportunity for accounting professionals’
 Service Tax On Hotels And Restaurants – Recent Delhi High Court Judgment
 GST Council discusses 4-tier tax rate, cess on demerit goods
 Why you shouldn’t miss these three simple tax saving options beyond Section 80C
 Determination of value for transactions between the Related parties under GST Laws.
 Higher collections can offset GST losses
 GST to subsume over a dozen Central, State taxes
 Incidence of indirect taxes won't go up under GST
 Advanced Budget date: Absence of a GST rate may present estimation challenges
  Tax queries answered by Dilip Lakhani, Senior Chartered Accountant

CST: Centres deadlock with states continues
December, 12th 2012

The deadlock over central sales tax (CST) compensation continued, with the Centre and states unable to reach an agreement at their meeting last week. The meeting, held on 5-6 December, was aimed at ensuring a faster rollout of the goods and services tax (GST) by resolving the concerns of the states over CST payouts and the design of this indirect tax reform.

While state governments insisted on higher payouts of CST compensation, the central government said that the payout should reflect the increased revenue accruing to states on account of an increase in tax rates and a wider base, according to two government officials.

The two sides will meet again on 18-20 December to look for a mutually acceptable formula. The meeting will also take forward discussions over the design of GST, including issues such as having state GST rates in a band, decision-making powers to be vested with the GST council and the need for a veto power for the Centre.

The central government has offered to pay 75%, 50% and 25% of the compensation figure arrived at as per the guidelines of 2008 in 2010-11, 2011-12 and 2012-13, respectively. States, on the other hand, are demanding that they be paid 100%, 75% and 75%, respectively.

States are demanding a full payout for 2010-11, but the Centre wants to pay only 75% of the amount (Rs.15,000 crore). Of this, around Rs.6,400 crore has already been released to the states, said a government official who didnt want to be identified.

As part of the transition to GST and the gradual phase-out of central sales tax, states had cut CST to 2% from 4% with the central government compensating states for the revenue forgone. But the Centre, in January, had refused further payouts on account of lack of progress on GST.

For 2011-12, states want around Rs.13,500 (75% of Rs.18,000 crore), while the Centre is willing to pay only Rs.9,000 crore, said the official cited above. In the next meeting, for a consensus, the Centre may have to revise its offer upwards while states may have to climb down from their stance.

States do not want CST payouts reduced because some of them increased value-added tax (VAT) to 5% from 4%. They also do not want the Centre to take into account the additional revenue accruing to states because of taxes on items such as sugar, tobacco and textiles.

Another government official said the finance ministry will see how the meetings on design goes before deciding on compensation.

This time, the meeting of GST design is before the meeting on CST compensation unlike last time. This will give the central government more leverage in getting its way in some design issues, he said.

GST is potentially one of Indias most far-reaching tax reforms. It aims to unite the country into a single market by removing all barriers between states. But its implementation has been held up because of issues between the Centre and states about the final architecture of GST. But with P. Chidambaram being made finance minister on 31 July, the government has adopted a flexible stance and is likely to accede to states demands to have rates in a band and doing away with the dispute resolution panel.

There is at least a keenness on the part of the Centre to try and create a consensus with states on key issues like CST payouts and design, said Harishankar Subramanian, partner and national leader, indirect tax services, at audit and consultancy firm Ernst and Young.

The two committees on GST design and CST compensation, set up by Chidambaram last month after his meeting with the empowered committee of state finance ministers, are expected to submit their reports by 31 December.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions