PLANS TO HIKE VAT RATES FOR CST PHASE OUT

The finance ministry is considering reintroduction of an 8% Value Added Tax (VAT) rate. It may remove certain items from declared goods list so that they may be taxed at 12.5%. At present, under CST Act, item in the declared goods list, has to be taxed at 4% by states. Tax experts feel hiking Vat rates will be inconsistent with the phasing out of the CST.