In democracy and country like India, government and top leaders of the country decide and operate the policy of this country and to make this better and take reference from apex court of India along with constitution of this country. Motive of democracy is quite easy that based on concept of by the people for the people. As we know and understand that tax is one of the basic approaches to collect revenue for the welfare of the country. To manage and maintain the infrastructure of this country government imposes various types of taxes on different product and services as per criteria approved by the policy makers.
Central sales tax is quite integral part of Indian tax system that play vital role in revenue generation. Government brings this law as sixth Constitutional Amendment to transform the structure of entire tax system. This is quite important tax as far as Indian commerce and trade is concern because this is one of the biggest ways to collect revenue from this department.
Tax imposed on sales and goods during commerce or interstate trade in entire country is called central sales tax. Anything that will be sold under interstate business and on basis of sales tax must be paid accordingly. Customers need to pay tax as imposed by that state government on customer on purchase of any product. This is one of the best examples of indirect tax that government imposes on various products. Any transaction that will occur within particular state then that transaction will not be part of CST, on the other hand any transaction between two state will comes under CST.
In the year 1956, a special regulating act introduced by the government to handle the sales of commodities and tax related regulating sale. As we know that India is union of states that handles the burden of entire CST collectively as per their policy. This will resolve all confusion among all interstate state business related transactions. This is integral part of seventh schedule of central government and all state government bodies handles all the burden of this tax as per sale of products. In case of interstate trade payment of both state and central tax is mandatory if you are dealer of maximum products that deals in taxable products.
To define the rules and regulation regarding sales tax government brings central sales act 1956 into effect that will allow them to handle all these issues quite comfortably. This tax is combination of various rules and regulations to control CST related issues. This act came into full effect in 1957 and is Sixth Constitutional Amendment that will resolve all interstate trading or buy or sale of products.
To simplify and aerodynamic tax collection in country central government introduces central sales tax. Points outlined below are main objective of CST.
a. Establish which relevant authority will handle interstate trade disputes.
b. Introduce Policies as per sales of goods as per interstate trade and budget.
c. Provide provisions for distributing and levying, collecting taxes via interstate sale of goods and products.
d. Classifying certain goods as being essential and important for trade and commerce.
Government holds the rights to change the rate of tax as per market demand and trading needs. Initial rate of CST was 1%, letter it changes time to time and reach to 4% in 1975 July. Government also understands the importance of necessary products and do not impose tax on those products in case of interstate travel. In 2007, government introduced amendment act to bring down tax into 3% from previous 4% tax rate.
One year later bring major change in CST rate and bring this rate in 2%, main reason behind this transformation was GST to make tax related policies and tax payment system much integrated as robust.
1. First of all under section 7 of the Act, fill the registration form (Form A) along with all valid details including sign and from must be verified by the authorize persons.
2. Whether you are holding single or multiple businesses, just submit single application form.
3. Always keep your original certificate at main office and distribute Xerox in sub offices.
4. To get duplicate copy, in case of certificate loss, honor need to pay fees for duplicate certificate.
Tax payers identification number or TIN registration number in basic steps towards paying CST and to do so it is quite important to enroll with this facility to avoid any future financial or tax related issues. To complete the process following documents are required:
a. Bank statement
b. PAN card
c. Purchase invoice
d. Address proof
e. Security references
g. Business establishment proof.
In case of below specified condition, exemption will be effective
a. Any sale to SEZs and foreign missions are exempt from CST.
b. If outward freight is charged separately then CST exemption is possible.
c. If the outward insurance of goods is passed on to a buyer during dispatch the exemption in CST will be effective.
d. When a sale within a particular state is exempt then CST.
e. If goods are returned within 180 day then no need of CST.