What is the difference between Sales Tax and VAT?

VAT is levied on all goods & services while sales tax is only levied on goods. Thus, a lower tax rate is needed to collect the same amount as sales tax. VAT has no cascading effect. The VAT mechanism of auto-control reduces tax evasion, therefore enhancing income tax collection. VAT is levied at import. What is input tax? Input generally mean goods purchased by a dealer in the course of his business for re-sale or for use in the manufacture, processing, packing/storing of other goods or any other business use. The tax paid on inputs is known as Input Tax. It has been defined in Section 2(xvii) of the Model VAT Bill, 2003 thus: "Input tax means the tax paid or payable under this Act by a registered dealer to another registered dealer on the purchase of goods in the course of business for resale or for manufacture of taxable goods or for use as containers or packing material or for the execution of works contract." What is input tax credit? It is the credit for tax paid on inputs. Every dealer has to pay output tax on the taxable sale effected by him. The basic formula of VAT is that every dealer pays tax only on the value addition in his hands. In simple words input tax credit is the mechanism by which the dealer is enabled to set off against his output tax, the input tax. Dealers are not eligible for input tax credit on all inputs. There are certain restrictions and conditions on the eligibility of input tax credit as it is stipulated in the respective State legislation. What are the `sales' not liable to tax under the VAT Act? Since the VAT Act applies only to sales within a State, the following sales shall not be governed by the VAT Act: a) sale in the course of inter-State trade or commerce which shall continue to be liable to tax under the Central Sales Tax Act, 1956; b) sale which takes place outside the State; and c) sales in the course of export or import. Who is a retail dealer? Retail dealer is not specifically defined in most of the draft VAT legislation of States. To some extent, a dealer will be considered to be engaged in the business of selling at retail if 9/10ths of his turnover of sales consists of sales made to persons who are not dealers and if any question arises as to whether any particular dealer is a retailer, then the officer in charge shall be refered for. In the VAT regime, will stock transfer be more beneficial than inter-State sale? In so far as a decision as to whether goods should be stock transferred and then sold to customers by the branch or should direct inter-State sales be effected, there can be no generalisation. The decision has to be taken on a VAT impact analysis of each individual business. The tax implications to be considered are:

In the case of inter-State sale, the buying dealer has to pay a non-VATable CST while the selling dealer will get the benefit of input tax credit.

In the case of stock transfer, though there is no tax on the inter-State movement, the input tax credit will be restricted to the tax paid on inputs in excess of 4 per cent.

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What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India.

Question Submitted By :: Anirban I also faced this Question!! Rank Answer Posted By

Answer #1

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 3 Sudhansu There are two type of sales tax Sekhar Dash one is paid to center that

is 2% and says CST and other one is VAT it differ satae to state in Karnataka it is 4, 12.5, 1% for different items.
Is This Answer Correct ?

166 Yes

32 No

Answer #2

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 4 B Central Sales Tax , 2% Srinivasarao In their respective State VAT

Rates are following like 4%, 12.5% and 1% on TOT apart from this may be tax on petrol and gold may higher percentage may be imposed
Is This Answer Correct ?

80 Yes

31 No

Answer #3

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 4 Sourabh THERE IS TWO TYPE OF CENTRAL SALE

TAX FULL RATE OF CENTRAL

TAX IS 12.5% IF PARTY GIVE US FORM C THEN IT WOULD BE CST2% MAXIUM SALE TAX IS 20% ON ALKOL & MINIUM IS 1% ON GOLD
Is This Answer Correct ?

55 Yes

17 No

Answer #4

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 5 Kulpreet If we trensfer goods from one Singh state to another CST

applicable @ 2% against form "C" If the second party unable to provede C form then the CST would be charges @ 4%
Is This Answer Correct ?

65 Yes

25 No

Answer #5

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 0 Santanu 1) If we trensfer or sale goods

from one state to another, CST applicable @ 2% against form "C". If the second party unable to provede C form then the CST would be charges @ 4%. 2) other sales tax is vat which are 4%, 12.5% and 1 %.it's depend on state.
Is This Answer Correct ?

44 Yes

12 No

Answer #6

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 4 Raghendra the present central sale tax in Pratap Singh india 4% without form c.

with form 2%.

Is This Answer Correct ?

30 Yes

23 No

Answer #7

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 2 Dhiraj Singh, There are two types of Sales Tax Unique in India, Namely, Central Infoways and Local Sale Tax. Central Sale

Tax is 2% with Form C and 3% without form C. Local Sale Tax is differentiate according to Item Description i.e. 1%, 4%, 12.5% & 20%. Regards, Dhiraj Singh
Is This Answer Correct ?

20 Yes

18 No

Answer #8

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 0 N.shankar There are two types of sales

taxes 1)Local Sales tax & 2) Central sales Tax With Form "C" - 2% applicable for CST Without form "C" - 4% applicable for CST Sales Tax rates are - 1%, 4% % 14.5% are going. Regards N.Shankar 9493105361
Is This Answer Correct ?

30 Yes

14 No

Answer #9

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. 0 Koushik the present Central sales tax Biswas rate in India 4% without

cform,with cform 2% Sales Tax rates are - 1%, 4% % 12.5% .

Is This Answer Correct ?

20 Yes

12 No

Re: What is the present Central sales tax rate in India? Also let me know the maxium and minium sales tax rate in India. Answer # 10

there are two types of sales tax in india 1.central 2. local sales tax locl sales tax 1%, 14.5%,4% (14.5%with effect from jan 15 2010) central sales tax 2% with c form , with out c form 4%