CST lowered to 2 per cent with effect from 1st June 2008

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CST lowered to 2 per cent with effect from 1^st June 2008

AIT News Network

NEW DELHI. The Government has lowered CST (Central Sales Tax) from 3 per cent to 2 per cent with effect from 1^st June 2008.

Ministry of Finance, Department of Revenue has issued a notification dated 30th May, 2008 to bring into effect from 1st June, 2008 the new reduced rate of CST of 2 per cent on inter-State sales of goods.
The rate of CST on inter-State sale of goods to registered dealers (against Form-C) shall now be the lower of 2 per cent and the rate of VAT or State Sales Tax applicable.
The notification of new CST rate of 2 per cent in place of earlier 3 per cent is in tune with the announcement made by the Finance Minister Mr Palaniappam Chidambaram in his Budget Speech in Parliament in February 2008 that the rate of Central Sales Tax would be reduced.
The Central Government and the Empowered Committee of State Finance Ministers have also agreed that the compensation for revenue loss to the States in any year arising from the lowering of CST will be limited to the proportionate loss based on the actual collection of CST.

NOTIFICATION No. 1/2008-CST

New Delhi, Dated: May 30, 2008

S.O…(E) In exercise of the powers conferred by the proviso to sub-section (1) of section (8) of the Central Sales Tax Act, 1956 (74 of 1956), the Central Government hereby reduces the rate of tax as specified in sub-section (1) of section 8 of the said Act from three per cent to two per cent with effect from 1st June, 2008.

[No. 1/2008-CST-F.No.28/1 1/2007-ST]

(R.G. Chhabra)
Under Secretary to Government of India