Objectives of Central Sales Tax

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CENTRAL SALES TAX

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CONTENTS

• Central Sales Tax Introduction
• Inter state Sale
• Features of Central Sales Tax
• CST Rate
• Objectives of CST
• Exemptions

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SALES TAX INTRODUCTION

• The Central Sales Tax shortly CST is a tax which
  is imposed on sale or purchase of goods during
  the inter-state trade or commerce.
• However, VAT is applicable on purchase or sale of
  goods within a state, whereas Central Sales Tax
  is levied on interstate trading of goods. 
• Central Sales Tax aka CST is a tax on sales or
  purchase of goods levied by the Central
  Government of India. 

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CENTRAL SALES TAX

• The Central Sales Tax is applicable only for
  inter-state sales and not on sales made within
  the  State or Intra state trading or
  import/export of sales.
• The Central Sales Tax-CST is payable in the state
  where the products are sold and movement
  commences.
• The Sales tax collected is retained by the state
  in which the tax is collected.
• CST (Central Sales Tax) is controlled by the
  Sales Tax authorities of each state.

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INTER STATE SALE

• The CST Tax is applicable only in the case of
  Inter-State Sales made within the state or
  import/ export of sales.
• Inter-state sale means Movement of goods from one
  state to another or
• Transfer of documents of title to the goods
  during their movement from one State to another.
• There are 2 kinds of sales tax
• Central Sales Tax This CST Tax is the tax that
  is imposed by Central Government.
• Sales Tax Each State levies this tax.

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FEATURES OF CST

• The Features of CST Tax are listed below.
• It extends to the whole of India.
• Every dealer who makes inter-sate sale must be
  registered dealer and a certificate of
  registration has to be displayed at all places of
  his business.
• There is no exemption limit of turnover for the
  levy of Central Sale Tax.

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CST RATE IN INDIA

• Originally, the rate of Central Sales Tax was 1,
  which was increased first to 2, then to 3 and
  w.e.f (with effect from) 1st July 1975 to 4.
  These CST Rates varies for different categories. 
• To a registered dealer against C form state in
  an inter-state sale, the CST Rate is 4 or local
  sales tax rate whichever is lower.
• If under the local sales tax rules the sale or
  purchase is exempt from Central Sales Tax the CST
  Tax is Nil.
• In an inter-state sale to the government against
  D Form, the rate of CST is 4 or local sales
  tax rate whichever is lower.

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OBJECTIVES OF CENTRAL SALES TAX

• To formulate principles for determining when a
  sale /purchase of goods takes place
• In the course of inter-state trade or commerce
  under Section 3.
• Outside the state under Section 4.
• In the course of import/ export from/outside
  India under Section 5.
• To provide for
• Levy of tax under Section 9(1).
• The Collection of tax under Section 9(3).
• Distribution of tax under Section 9(5) on the
  sale of goods in the course of inter-state trade
  or commerce.

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CENTRAL SALES TAX EXEMPTIONS

• Central Sales Tax is exempted on these
  conditions. 
• CST Tax is excluded if outward freight is charged
  separately and if the outward insurance of goods
  are passed on to a buyer during dispatch.
• Exempted from Central Sale Tax in the cases when
  a sale within a particular state.
• No Central Sales Tax is to be paid if goods are
  returned within 180 days.
• Any sale to a unit in SEZs and foreign missions
  are exempt from Central Sales Tax.

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