FICCI calls for abolition of Central Sales Tax

New Delhi, May 23: Stating that the continuation of Central Sales Tax (CST) is defeating the main purpose of introducing the Value Added Tax (VAT) system to make India one common market, FICCI today urged the Ministry of Finance and the Empowered Committee of State Finance Ministers on VAT to do away with the tax at the earliest.

With a view to bring down prices of petrol and petroleum products, the the Federation of Indian Chambers of Commerce and Industry (FICCI) suggested that the sales tax rates, which vary from 20 per cent to 32 per cent, should be reduced and rationalised.

FICCI said that these products be covered under VAT, with the maximum rate not exceeding 12.5 per cent, to enable prices of these products in India comparable with those in other countries.

Stating that natural gas is the fuel for the future since it is clean, abundantly available and cost competitive the Chamber said the gas should be granted the 'Declared Goods Status'.

Pointing out that natural gas competes with coal, which enjoys the 'Declared Goods Status' under Section 14 of the Central Sales Tax Act, 1956, thereby attracting sales tax at only 4 per cent, FICCI said sales tax on natural gas is up to 20 per cent in some states, making it economically unviable and uncompetitive.

To compensate states for loss of revenue, the service tax base should be widened and all services barring basic essentials and public utilities, should be brought under its ambit.

The government could also announce a negative list on which the service tax would not be applicable and state governments be empowered to impose the tax on select services, it said.

UNI