The bill has to be passed by the Rajya Sabha and then receive the President's approval before becoming law.
CST is levied by the central government, but the collections are passed on to states. State governments have been demanding the abolition of the CST, as it has led to a distortion in tax administration after the value-added tax (VAT) was introduced two years ago.
CST being an origin-based tax is inconsistent with VAT which is a destination-based tax. It results in cascading of tax, since it is not rebatable against VAT.
The agreed package for compensation to states for revenue loss due to CST phase out would consist of non-monetary as well as monetary measures.
