CST slashed to 2% from 1st June

The central government on Friday notified reduction in central sales tax (CST) to 2% with effect from June 1, 2008 compared to the current 3%. Elimination of CST is crucial to implementation of unified goods and service tax (GST) from April 1, 2010. CST was to be reduced from 4% to 3% on April 1, 2007. Reduction was not carried out then as Centre and state governments failed to agree on the compensation package. States are estimated to lose Rs. 12,000-13,000 crore in revenue due to the reduction in CST rate from 3% to 2%