CST cut 1% from April 1

NEW DELHI: Central sales tax (CST), a levy on inter-state transaction of goods, will be slashed to 3% with effect from April 1, 2007 from the current 4%.  The levy will be completely abolished in two more steps by March 31, 2009.

In a move to bring about a “national common market”, the Union Cabinet on Thursday approved steps to amend the Central Sales Tax Act, 1956, and the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

Marking the beginning of a process of significant tax reforms, critical for the success of value-added tax (VAT) and for the introduction of a common goods and services tax (GST) by April 1, 2010, the Centre will introduce the Taxation Laws (Amendment) Bill, 2007, in the budget session of Parliament, parliamentary affairs minister Priya Ranjan Dasmunsi said after the Cabinet meeting.

The Cabinet approval follows the “grand bargain” stuck by the Centre with the states in January, arriving at a consensus package on phasing out the CST. That was the first major step towards the introduction of a national-level GST from April 1, 2010.