The government today notified reduction in the Central Sales Tax (CST) to 3 per cent from 4 per cent with effect from April 1.

Following the notification, CST will be charged on inter-state sales at 3 per cent or the rate of VAT/Sales Tax of the states concerned, an official release said.

The notification will also enable states to levy VAT on tobacco without losing their share from the divisible pool of central taxes, it said.

This follows Amendment to the CST Act, which was approved by Parliament during the Budget session to abolish CST in a phased manner to pave way for introduction of Goods and Services Tax (GST) by 2010.