CST to be phased out from April
New Delhi: The Central Sales Tax (CST) may be cut to three per cent next fiscal as the finance ministry and finance ministers of different states have reached a "broad consensus" on a compensation package to be given to states for revenue loss due to CST reduction.

The CST, which is currently at four per cent, acts as a distortion to the uniform tax structure at state level as it is imposed on inter-state sale of goods, whereas the purpose of the VAT is to create a common market.

Government officials indicated however that CST phase-out will be periodically reviewed to ensure that package of compensation remains in full. A broad agreement has also been reached to cut CST by one per cent each beginning of the next financial year so that it is eliminated by 2010-11.

The states have agreed upon a financial package that includes transfer of entire tax revenue from certain services, budgetary support from the central government to states if necessary.

An agreement has also been reached to make legislative changes, if required, to start CST phase-out and give compensation to states. These legislative changes were in the domain of both Central and states, but mainly with the former.
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Maharashtra to start buying land for SEZs
Mumbai: Maharashtra cabinet minister and chairman of a cabinet sub-committee to decide upon rehabilitation package, Patangrao Kadam's recent proposal to stop land acquisition proceedings for the Reliance-promoted Mahamumbai SEZ and other SEZs has been dismissed by the committee.

The state government had appointed a sub committee to formulate a policy and decide upon the compensation package for SEZs in the state under chairmanship of Kadam.

The committee members include finance minister Jayant Patil, water resource minister Ajit Pawar, industry minister Ashok Chavan, revenue minister Naryan Rane, exise minister Ganesh Naik and civil supplies minister Sunil Tatkare. Out of seven members of the committee, only three were present at the meeting today.

Tatkare, Naik and some senior secretaries of the state government shot down Kadam's idea of stopping land acquisitions.
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Tourism projects may get 10-year tax exemption
New Delhi: The tourism ministry has proposed to declare a conditional 10-year tax holiday for all tourism projects in the country.

While companies would enjoy tax exemption up to 50 per cent of the profit, for enjoying tax benefits for the balance amount they would be required to re-invest that part of the profit in tourism projects.

The tax concession period will however, be computed from the date of commencement of commercial operations. The proposal move is aimed at encouraging existing tourism industry to re-invest in the sector.

The ministry has also stressed upon the need to encourage investments from non-tourism sector into hospitality and tourism projects. In order to attract foreign tourists, it is proposed that tax exemptions should be allowed to tourism establishments for their expenditure on overseas promotional and publicity activities.

Exemptions are also sought for the money spent on training hospitality and tourism staff in recognised institutes.
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