NEW DELHI: India’s lower house of parliament on Monday passed a bill which will cut central sales tax (CST) by 1% annually, beginning in April.
India aims to eventually phase out the tax and will merge some federal and state levies into a single goods and services tax (GST) by 2010 to reduce the tax burden on consumers and businesses.
“CST phase out is a pre-requisite for GST roll out by 2010,” Finance Minister Palaniappan Chidambaram said in parliament.
The bill has to be passed by the upper house and then receive the president’s approval before it becomes law.
CST is levied by the federal government but the proceeds are passed on to states, which have been demanding the end of the CST ever since introducing a value-added tax two years ago.