Central Sales Tax (CST) Transaction Forms

What is Sales Tax?

Sales tax is an indirect tax levied on the sale of goods and services. It is imposed and charged by the government of the nation. The sales tax is included in the price of the product and is collected by the seller on behalf of the government, who later is liable to pay that amount to the government. In the system of sales tax, the tax incidence and tax impact fall on two different persons. In simple words, the actual burden of tax (tax incidence) is born by the consumer of the product, but it is collected from the seller (tax impact). Like any other tax, sales tax is a source of revenue for the government and funds various projects of the government....

Types of Sales Tax

The type of sales taxes imposed vary according to the taxation policy of the government. However, different types of sales taxes include:...

Sales Tax in India

Before 2017, in India sales tax was imposed on the sale and purchase of goods and services at the local, state, and central level under the Central Sales Tax Act, 1956. But, on 1st July 2017, India witnessed the greatest tax reform with the introduction of the Goods and Services Tax (GST). Goods and Services Tax (GST) is an indirect tax levied throughout the nation on the supply of goods and services. It is based on the concept of “One Nation-One tax”. GST aims to eliminate the cascading effect of multiple taxes. Under GST the tax rate varies depending on the category of the good or service....

Central Sales Tax Act, 1956

Central Sales Tax Act of 1956 administers the taxation on the sale of goods, extending to the entire country. It levies the rules and regulations related to sales tax in India. Under the CST Act of 1956, the taxes were collected and distributed by the state government where the sale took place. However, with the introduction of GST, the Central Sales Tax Act, of 1956 became ineffective in 2017. Key Components of Central Sales Tax Act, 1956:...

Central Board of Direct Taxes

The Central Board of Direct Taxes (CBDT) is a government body functioning as a part of the Ministry of Finance in India. It aims to manage the revenue of the government generated through direct taxes like Income Tax, Corporate Tax, Wealth Tax, and Capital Gains Tax. It plays a vital role in ensuring the effective administration and collection of direct taxes and formulating the policy and procedures for tax administrations....

What is Sale Price?

The sale price is the final price of the goods that is paid by the customer. It is the price calculated after applying all the discounts and reductions (except cash discount) and is always lower than the original price of the goods. It includes packaging costs, insurance costs, and sales tax paid by the seller....

What is Inter-State Sales?

Interstate sales refer to a sale where goods or services are transferred from one state to another within the same country. This means that the buyer and the seller are located in different states and goods are moved from one state to another. Interstate sales are subject to specific regulations and taxation policies as they involve the transfer of goods from one state to another. For Example, Rahul a dealer from Bihar sold goods to Ravi from Bengal as an Inter-State Sales....

Central Sales Tax (CST) Transaction Forms

In India, various CST transaction forms are prescribed for interstate sales and transactions. The following table highlights such CST forms along with their purpose:...

State Government Taxes

State governments in India impose sales taxes on different goods to generate revenue for funding public services, infrastructure development, and other governmental expenditures. The rate of sales tax for a particular product may vary from one state to another and so, the price of that product is different in different states within the same country. Some examples of taxes charged by state government are Sales Tax/VAT (Value Added Tax), excise tax, property tax, etc....

Sales Tax Exemptions

Certain goods or services are not subject to sales tax, either partially or entirely under the CST Act. Goods Exempted under sales tax are:...

Calculation of Sales Tax

Calculation of sales tax seems to be complex and complicated, but it can be calculated in a few steps including:...

Violation of Sales Tax Rules

Some common violations of sales tax rules include:...

Conclusion

Sales Tax is an indirect tax that is collected and remitted through the seller but is borne by the customer. However, due to its cascading effects sales tax in India has been replaced by Goods and Services Tax (GST) which eliminates the drawbacks of sales tax. Under the concept of sales tax, each state had its own jurisdiction which created lots of confusion among the taxpayers....

Sales Tax – FAQs

Who is responsible for paying sales tax?...