The Centre on Monday managed to cross a major hurdle in the way of implementing the proposed Goods & Services Tax (GST), when states agreed to a compensation formula for the Central Sales Tax (CST).

However, the implementation of the new indirect tax regime in 2013-14 still seems unlikely.

Sushil Modi, chairman of the empowered committee of state finance ministers, said the committee had given the nod the report, but he was still doubtful over the implementation of the new tax regime from next financial year.

Speaking on the topic, Modi said, "GST implementation from the coming financial year seems difficult. It is unlikely to happen, as the government is yet to fulfill certain statutory prerequisites for that."

The sub-panel on GST plan tabled its recommendations, but no final decision could be made on Monday. The sub-panel's recommendations would be discussed on Tuesday.

Earlier On Monday, a sub-panel of central and state government officials suggested a cut in CST from 4 per cent to 2 per cent; and that states should be given 100 per cent compensation for 2010-11, and 75 per cent and 50 per cent compensation for 2011-12 and 2012-13. The Centre would have to make payment of Rs 34,000 crore in CST arrears.

Previously some states were concerned the Centre would not give full compensation for losses that they would suffer on account of a cut in CST. But, after the Centre citing fiscal constraints for its inability to provide full compensation, the states agreed, though with some conditions.