Centre to fully compensate states for CST loss: Dasgupta

New Delhi, Feb 11 (PTI) The Centre has agreed to fullycompensate states for the losses they suffered due toreduction in central sales tax (CST) estimated at Rs 14,000crore in 2010-11, chairman of Empowered Committee of StateFinance Ministers Asim Dasgupta said today.

The state finance ministers met Union Finance MinisterPranab Mukherjee here to discuss the GST rollout.

"He (Mukherjee) said that he is willing to make fullcompensation for CST loss this fiscal. To begin with it wouldbe an hoc relief to be followed by subsequent measures,"Dasgupta told reporters after the meeting.

Yesterday, the Government had approved Rs 7,029 crorecompensation to states for CST loss in 2010-11. Of this Rs3,000 crore is likely to be released this fiscal.

Once the proposed Goods and Services Tax (GST) is rolledout, other existing indirect taxes, including the CST, wouldbe subsumed into it.

CST, a tax on movement of goods from one state toanother, was reduced from 4 per cent to 3 per cent in 2007-08and further to 2 per cent in 2008-09 after the introduction ofVAT, as it was considered distortionary.

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