Finance Minister Mr. P Chidambram has informed the parliament during his budget speech that the CST rate will be reduced with effect from 1-4-2008. The text of speech of FM is reproduced hereinafter:
But, the central government did not issue any notification for reduction of CST from 3% to 2%.
Based on the speech of Finance Minister in Parliament, a majority of businessmen started charging CST at the rate of 2%.
Since there is genuine misunderstanding in the field about the reduced rate of CST, the businessmen who charge 2% might be penalized for less charging of CST in future.
Now, Asim Dasgupta, chairman of the empowered committee of state finance ministers, told reporters after meeting Union finance minister P Chidambaram that, “The Centre and state governments have agreed to carry out a constitutional amendment to facilitate levy of VAT on imports. Both sides will now meet on April 16 to rework the modalities of compensation formula for reduction of central sales tax (CST) from 3% to 2% expected from May 1″ (Source: Economic Times)
We wish that the Central Government should come out with some clarification without any loss of time to remove the confusion and to make the stand clear.