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Central Sales Tax reduced to 2 per cent
June, 03rd 2008

 Finally, the Central Sales Tax (CST) has been reduced from 3 per cent to 2 per cent. The change took effect on June 1 even though earlier the Central Government had announced that the reduction would be in effect from April 1 onwards.

This has led to major confusion among the industrialists, traders and tax payers who unsure whether this extra tax will be reimbursed or if the government will simply pocket the money. Sources said the one percent extra revenue collected in the two months will approximately be Rs 2,000 crore. A part of this share goes to the state government as well.

At the end of May, traders and shopkeepers had reportedly reduced the issual of bills believing that the tax reduction is to be notified from the last week of May. The billing started once again from June 1, revealed sources.

Pertinently, Value Added Tax (VAT) was implemented in April 2005 in which tax slabs vary from 1 per cent to 12.5 per cent. This tax was implemented to replace the existing CST which was 4 per cent at the time and would be reduced by 1 per cent every year.

This change was made effective for the first time in year 2006-07 when the CST was reduced to 3 per cent and this year it was reduced to 2 per cent. By 2010, the CST is expected to reduce to nil.

Commenting on the delay, Mahinder Aggarwal, general secretary of Punjab Pradesh Beopar Mandal, said: It is really condemnable that the government notified the reduction in CST after a delay of two months and levied additional tax. We had even demanded that the tax be notified from April 1 but this way the Central Government has betrayed us. The beopar mandal also plans to take up the matter with the Finance department.

However, the Excise and Taxation department remained mum over the issue. Deputy Excise and Taxation Commissioner Parampal Singh said: CST is a Centre subject and I cannot comment the matter.

Department sources said the delay would not have affected the majority of the industrialists as they do not pay the tax from their own pocket but charged it from the buyers.

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