Crucial meeting between Finance Minister P Chidambaram and committee of state Finance Ministers on compensation packages took place yesterday.
The compensation package to states includes the total revenue from 33 services taxed by the Centre and 44 new services of an intra-state nature to be passed on to states.
The revenue generated is expected to range from Rs5,000 crore to Rs10,000 crore for the states.
States had also requested to place textiles under value added tax (VAT) at 12.5 percent instead of additional excise duty (AED).
The major challenge for the states would be to effectively tax these services because it would prove difficult to keep a record of some of them.
With one percent deduction in CST, states are expected to have loss of Rs6,250 crore in next fiscal.
For compensating revenue losses, states are permitted to keep an extra one percent AED and North block also has decided to ask Government to pay normal tax rate on inter-state trade.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
