Full Form of CST

The full form of CST is Central Sales Tax. CST can be defined as a tax levied by the Central Government of India upon the inter-state sale of goods and services, this type of tax is not applicable on imports or export, or sales that are made within one state, and it is required to be paid in the state where the goods or services are sold.

CST is applied only when there is a sale or purchase occurring between two or more states. The purchase or sale that occurs under CST regulations requires the parties to transfer the document of title to the products and services during the transportation of goods from one state to another.

Table of contents

• Full Form of CST - Central Sales Tax
  • Full Form of CST Explained
  • Features
  • Objectives
  • Rules
  • Central Sales Tax Rate
  • Recommended Articles
  • CST stands for Central Sales Tax. It is a tax imposed by the Central Government of India on the sale of goods and services between different states. This tax does not apply to imports, exports, or sales within one state. It must be paid in the form where the goods or services are sold.
  • According to the CST Act, goods are classified into two categories: declared goods and others. Taxes on declared goods are lower than taxes on other goods.
  • Central Sales Tax is an indirect tax collected by the sales tax officer throughout India.

  Full Form of CST Explained

  CSTis a tax levied by the Central Government of the country upon the sale of goods. CST is concerned only with interstate trade or commerce and does not cover trade within the state or the export or import of goods. It is regulated by the Sales Tax department of each state. Central Sales Tax must be paid in the state where the trade takes place. Form C, Form D, Form E1, Form E2, Form F, Form H, and Form I are used in a CST.

  The type of transaction forms issued by the dealers to their buyers and sellers are:

  

  • Form C: The buyer in an interstate trade can receive goods at a concessional rate if they submit Form C to the seller.
  • Form D: The government at the purchasing front in an interstate trade can receive goods at a concessional rate if it submits Form D to the seller.
  • Form E1: A dealer participating in an interstate transaction for the first time is responsible for the issuance of Form E1.
  • Form E2: A dealer participating in an interstate transaction for the second time is responsible for the issuance of Form E2.
  • Form H: Form H is issued by the exporter against purchasing goods.
  • Form I: Form a dealer issues me in SEZ or Special Economic Zone.

  Features

  Features of Central Sales Tax are as follows:

  

  • Central Sales Tax is the tax levied on the sales of goods and services. The Central Government of India levied the CST.
  • Central Sales Tax does not apply to sales that are made within a particular state, and it does not apply to the import or export of goods.
  • It applies to inter-state trade only. It is monitored by the sales tax department of each state.
  • Central Sales Tax must be paid in the state where the trade occurs.
  • The state that collects the Central Sales Tax on inter-state trade will get to retain the same.
  • Central Sales Tax is assessed and collected by the sales tax officer. They can be regarded as an indirect tax levied on the customers. It is applicable all over India.
  • Dealers must be registered dealers for executing interstate trade transactions, and it is required for them to present their certificate of registration at every place of their business.
  • They do not provide any exemption limit.
  • CST Act classifies goods as declared goods and other goods. The taxes on declared goods are lower than those on other goods.
  • The Central Government of India has developed the CST Act, but it also gives the State Governments the right to reframe rules wherever they deem fit.

  Objectives

  The objectives of a Central Sales Tax are as follows:

  • Construct and provide principles in order to determine if the sales taking place are:
    • Inter-state trade, or
    • Import or export of goods from India, or
    • Outside a particular state trade.

    Rules

    An individual must abide by the following rules of CST if they are executing an inter-state trade:

    • They must be a registered dealer.
    • A dealer must submit Form A to apply and get registered under Sec. 7 of the CST Act. The proprietor must authorize the Form, and the concerned authority must verify it.
    • If an applicant has more than one place of business in a particular state, just one form must be submitted.
    • A dealer must keep his registration certificate at their principal place of business and must necessarily produce copies of the same at other business venues.
    • The applicant will be required to make payments via court fee stamps if he loses his registration certificate and seeks to receive a copy.

    Central Sales Tax Rate

    The following are the rates of CST:

    • Form C: The rate of Central Sales Tax for an interstate trade to a registered dealer would be the lower of the two:
      1. 4 percent, or
      2. The local sales tax rate
    • If the trade is covered under local sales tax laws, then the same is exempted from being taxed for CST.
    • Form D: The rate of Central Sales Tax for interstate trade with the government would be the lower of the two:
      1. 4 percent, or
      2. The local sales tax rate
    • Declared Goods: The rate of central sales tax for an interstate sale of goods of special importance or declared goods in the absence of Form C or Form D will be twice the tax rates applicable in the local trade of goods.
    • Other or Non-Declared Goods: The rate of Central Sales Tax for an interstate sale of other or non-declared goods would be the higher of the two:
      1. 10 percent, or
      2. The local sales tax rate is applicable

    Frequently Asked Questions (FAQs)

    What are the exemptions of Central Sales Tax?

    If the cost of outward freight is billed separately and the buyer is responsible for the insurance of goods during shipment, then Central Sales Tax will not be applied. Additionally, returning goods within 180 days exempts the payment of CST. CST is also waived if the sale occurs within a state allowing exemptions.

    Is CST still applicable after GST?

    CST stands for Central Sales Tax and is applied to the sale of goods when the Sale Invoice is prepared or when the goods are moved for sale. In contrast, GST is charged on goods and services at the final distribution stage. With the introduction of GST, various indirect taxes, including CST, have been merged and eliminated.

    What is the difference between VAT and CST?

    As a manufacturer or trader, you may wonder about the difference between Value Added Tax (VAT) and Central Sales Tax (CST) and when to use them. VAT is for trade within the state, while CST is for trade between states.

    Recommended Articles

    This has been a guide to Full Form of CST i.e. (Central Sales Tax) & its meaning. Here we discuss CST rules and forms of the transaction along with its rates, characteristics, and objectives. You may refer to the following articles to learn more about finance –

    • Full Form of HRD
    • Net of Taxes
    • Template of Sales Invoice
    • What is Value Added Tax?
    • Examples of Regressive Tax
    Learn the foundation of Investment banking, financial modeling, valuations and more.

    

    Join Wallstreetmojo Youtube