As Telangana becomes a separate state in June, sales and purchase transactions between dealers located in Andhra Pradesh and the new state would be subjected to Central Sales Tax (CST). Fearing an increase in their cost of doing business, industry has approached the state government to press the Centre to defer the levy of CST or reduce the rate on movement of goods within the two states.CST is a tax on inter-state movement of goods levied by the Centre but collected by the states. While states retain the proceeds from the tax, only the Centre has the power to increase or decrease the CST rate which is now two per cent.

Source - http://www.business-standard.com