Mumbai: The Union finance ministry and the empowered committee of state finance ministers on value added tax (VAT) will try to iron out their differences over a compensation package in a week''s time. This will enable states to implement a phased reduction of central sales tax beginning October 1.

The finance ministry and the state finance ministers panel on VAT have differences over the compensation package and both sides will try to iron them out, VAT panel chairman Asim Dasgupta said after meeting finance minister P Chidambaram.

"We are trying hard from both sides to converge to an agreed compensation package. Our meeting in that sense is fruitful. There were some difference of opinion. We are trying to iron out those differences," he said.

Finance minister''s advisor Parthasarthi Shome and VAT panel secretary Satish Chandra are working on an agreed compensation package, he said, adding, "In seven days'' time, we will meet again with an objective to attain covergence to agreed compensation package."

While the finance minister merely said there would be another meeting, Dasgupta said he was confident that the CST phase-out would start from October 1.