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Rate of Central Sales Tax

Rate of Central Sales Tax

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Published by: Gaurav on Nov 26, 2009
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02/18/2013

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Rate of Central Sales Tax
 The position w.e.f. 1-6-2008 is as follows , in case of both declared goodsand other goods [section 8(1) of CST Act in respect of sale to registereddealer and section 8(2) of CST Act in respect of sale to unregistereddealer -
1.
In case where local sales tax rate is 4%, CST applicable in case of sale tounregistered dealer will be only 4% as against 10% as was applicable upto 31-3-2007. In case of sale to registered dealers, the CST rate will be 2% w.e.f. 1-6-2008[The rate was 3% during 1-4-2007 to 31-5-2008 and 4% prior upto 31-3-2007].
2.
In case where local sales tax rate is 12.5%, CST applicable in case of sale tounregistered dealer will be 12.5%. This position is same as was applicable upto 31-3-2007. In case of sale to registered dealers, the CST rate will be 2% w.e.f. 1-6-2008 [The CST rate was 3% during 1-4-2007 to 31-5-2008 and 4% prior upto 31-3-2007].
3.
In case where local sales tax rate is 1 or 2%, CST applicable in case of sale tounregistered dealer will also be 1 or 2%, as against 10% as was applicable upto 31-3-2007. The rate will be 1% even when sale to unregistered dealer is by transfer of documents. In case of sale to registered dealers, the CST rate will be 1 or 2% asapplicable to the goods within the State. This position is w.e.f. 1-4-2007.
4.
In case where local sales tax is Nil, CST applicable in case of sale to unregistereddealer will also be Nil. In case of sale to registered dealers, the CST rate will be Nil.This position is same as was applicable upto 31-3-2007 and also during the period1-4-2007 to 31-5-2008.
Power to Central Government to further reduce rate of CST 
- CST has beenreduced from 4% to 3% w.e.f. 1-4-2007. CST rate has been reduced to 2% w.e.f. 1-6-2008, vide Notification No. 1277(E) dated 30-5-2008.Reduction in CST rate can be made by Central Government by issue of anotification under 
 proviso
to section 8(1) of CST Act. Thus, it will not be necessary toamend CST Act for this purpose.CST was expected to be reduced to 1% w.e.f. 1-4-2009. However, no notificationwas issued. Hence, CST rate continues to be 2% at least till July 2009.It seems GST (Goods and Service Tax) is proposed to be introduced w.e.f. 1-4-2010
 
and hence CST may be directly withdrawn w.e.f. 1-4-2010.It is expected that when CST rate is reduced to Nil, i.e. inter-state sales anddispatches will be ‘zero rated’ and not ‘exempt’.
CST rate at a glance
- The CST rates at a glance as applicable w.e.f. 1-6-2008 areas follows, in case of both declared goods and other goods –
Sales tax ratefor sale withinthe StateCST ratein case of sale toregistereddealers(applicable todeclaredgoods aswell asother goods)CST rate in case of sale to unregistereddealers (applicable todeclared goods aswell as other goods)
NilNilNil1%1%1%2%2%2%3%2%3%4%2%4%8%2%8%10%2%10%12.5%2%12.5%20%2%20%
 
Note
– Usually, State Vat rates of 2%, 3%, 8% and 10% do not exist.However, these rates are given only to explain the principle, particularlybecause Uttaranchal have not introduced Vat.
CST rate during 1-4-2007 to 31-5-2008 
- The CST rates at a glance as applicableduring 1-4-2007 to 31-5-2008 are as follows, in case of both declared goods andother goods –
 
Sales tax ratefor sale withinthe StateCST ratein case of sale toregistereddealers(applicable todeclaredgoods aswell asother goods)CST rate in case of sale to unregistereddealers (applicable todeclared goods aswell as other goods)
NilNilNil1%1%1%2%2%2%3%3%3%4%3%4%8%3%8%10%3%10%12.5%3%12.5%20%3%20%
Goods eligible for registration by Dealer 
All goods purchased by ‘Registered Dealer’ are not eligible for concessional rate.Only those goods for which
he is eligible
and which are
contained in his RegistrationCertificate
are eligible for concessional rate. Section 8(3) of CST Act indicates thegoods which a registered dealer can obtain at concessional rate. Only those itemscan be incorporated in Registration certificate issued to him. As per this section,goods (
a
) for resale, (
b
) for use in manufacture or processing for sale (
) intelecommunications network (
) in mining
(e)
in power generation/distribution, or 
(f)
containers and packing materials are only eligible for concessional rate. [The words‘telecommunications network’ have been inserted w.e.f. May, 2002]MEANING OF ‘FOR USE’ - ‘For use’ means ‘intended for use’. If the intention of legislature was to limit the exemption only to goods actually used, the phraseology

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