Term Central Sales Tax under Indian Tax
CST:
This post explained about Central Sales Tax
Central Sales Tax (CST) is a tax on sales of goods levied by the Central Government of India. CST is applicable only in the case of inter-state sales and not on sales made within the state or import/export of sales.
Inter-state sale is when a sale or purchase constitutes movement of goods from one state to another. Accordingly, consignments to agents or transfers of goods to branch or other offices is not a sale as per the CST Act
CST is payable in the state where the goods are sold and movement commences. The tax collected is retained by the state in which the tax is collected. CST is administered by Sales Tax authorities of each state. Thus, the State Government Sales Tax officer who assesses and collects local (state) sales tax also assesses and collects CST.
Sales Tax is a tax, levied on the sale or purchase of goods. There are two kinds of Sales Tax i.e. Central Sales Tax, imposed by the Centre and Sales Tax, imposed by each state
Central Sales Tax or CST is imposed on sale or purchase of goods occurring the course of inter-state trade or commerce. Value Added Tax (VAT) is applicable on purchase or sale of goods within a state, whereas CST is levied on interstate purchase or sale of goods.
Applicability
CST is applicable when there is inter-state sale or purchase of goods including work contract. Newspapers are exempt from CST. However, mere transfer of goods to a branch or another unit of the same entity would not attract CST. CST applicable only when there is sale or purchase. For a sale or purchase to have occurred under CST regulations, there must be transfer of document of title to the goods during the movement of goods from one state to another.
CST Payment
CST tax is collected and retained by the State from where the transfer or sale takes place. Hence CST payment would be due monthly or quarterly and varies from state to state.
CST – Form C
Under CST regulations, tax liability on inter-state sales is 2% or the rate of tax for sale within State, whichever is lower, provided the sale is effected between a registered dealer and a registered purchasing dealer.
CST Rate of 2% can be claimed if:
Sale is made by a registered dealer and goods sold are covered in the registration certificate of the buying dealer.
Hence, concessional rate of tax is applicable if selling dealer provides proof that purchasing dealer is eligible to get these goods at concessional rate. Form C is thus evidence provided by buying dealer to the selling dealer to avail concessional CST tax rate of 2%.
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