<h1>Central and State Governments to Phase Out Central Sales Tax by 2010 with Compensation Measures for States.</h1> The Central and State governments agreed to phase out the Central Sales Tax (CST) in four steps, reducing it from 4% to 3% starting April 1, 2007, and eventually abolishing it by March 31, 2010. To compensate states for revenue losses, a package combining monetary and non-monetary measures was established. For 2007-08, compensation measures included abolishing Form-D, levying VAT on tobacco at 12.5%, and transferring tax proceeds from certain services to states. If these measures fall short, budgetary support will be provided. The Taxation Laws (Amendment) Act, 2007, was enacted to implement these changes, with a provision of Rs. 2,500 crores for CST compensation.