Sales Tax

This is kind of tax that government imposes on manufacturer on basis of consumption of their products. Basically seller of product collect tax amount from customers when they buy products. When customers pay any tax directly to service provider then that tax is called use tax.

As we know that sale tax is type of indirect tax that customers pay at time of shopping. Amount and criteria of service tax decided by the government as per their policy and economy of the country. It is quite obvious that tax is quite important to handle the economy of country. In other worlds we can say that sales tax is kind of extra money that customers pay while buying something.


Sales Tax in India

As we all know that India is worlds biggest democracy and rapidly growing economy among developing country. Tax is quite important factor that help government in strong economy development. In India, as per constitution, central and state government plans tax as per their requirement to make our country much strong and developed.


Types of Sales Tax

It is obvious that sales tax criteria decided by the government as per their governing policy committee decision to make current economy much stronger and balanced. Apart from this tax there are several tax in across the world, some of them are specified below: -
a. Value Added Tax:This is an additional tax levied on all sales by certain governments as per their need.
b. Retail Sales Tax: This is a tax charged on sale of retail goods and is directly paid by the final consumer.
c. Use Tax: This is a tax imposed on the consumer for goods which are purchased without sales tax (generally from vendors who are not under the tax jurisdiction).
d. Wholesale Sales Tax: This tax is imposed on individuals who deal with wholesale distribution/sale of manufactured goods.
e. Manufacturers Sales Tax: This tax is levied on the manufacturers of certain goods.


Central Sales Tax Act, 1956

Central Sales Tax Act, handles all tax related law of entire country and support government to collect tax from customers quite easily. Sometimes customers need to pay this tax on state government products. Government of India has brought this law to make tax system of our country balanced and simple. Main objective of Central Sales Tax Act, 1956 is specified below: -
a. Be the competent authority to settle interstate trade disputes.
b. Provide provision for imposing, collection and distribution of taxes collected from sale of goods through interstate trade.
c. Make Policies to determine when purchase and sale of goods occurs.
d. Classify certain goods as being of special importance for trade and commerce.


Forms Related to Central Sales Tax

As per strict guideline of government, all deals need to follow the policy and need to submit the forms in prescribed format. Forms are specified below: -
a. Form I This is issued by dealers in Special Economic Zones.
b. Form C This form allows the purchasing dealer to get goods at concessional rates from the seller.
c. Form H This is issued by an exporter for the purchase of goods.
d. Form D This is issued by the government department which purchases the goods.
e. Form F This is issued when the goods are sent to a different state.
f. Form E2 This is issued by the subsequent seller when the goods move from one state to the other.


State Government Taxes

Apart from central government, state governments also impose various types of tax on individual and corporate sectors. Tax percentage criteria may vary as per policy of policy makers of state government. Government imposes tax to boost the economy of state as per income of company and individuals.


Exemptions from Sales Tax

State governments offers facility of exemptions in sales tax in certain cases, some of them are specified below: -
a. There are lists of essential and local commodities which are exempted from sales tax.
b. Sellers with genuine state resale certificates are exempted from tax when they resale products.
c. Products sold to charities or schools are provided tax exemptions.


Sales Tax Calculation

Calculation of sales tax is not so complicate as per perception or mindset of people. If know the basic feature and rules then it is so simple to calculate this tax.
Total Sales Tax = Cost of item x Sales tax rate
If you are going to calculate sales tax then always remember following points: -
a. Add the prices for multiple items before calculating the sales tax.
b. Sales tax might vary from state to state and it pays to be informed of the rate in your particular state and city.
c. Sales tax is calculated as a percentage.


Central Board of Direct Taxes

Central Board of Direct Taxes is central government body that handles and applies all tax related rules and policies in country as per guide line of policymakers. This committee is wing of department of revenue and finance mystery. Central board of direct taxes is group of following members: -
a. Chairman
b. Member (Revenue)
c. Member (Income tax)
d. Member (Legislation and Computerization)
e. Member (Investigation)
f. Member (Personnel and Vigilance)
g. Member (Audit and Judicial)


Task of Central Board of Direct

This committee handles are issues related to implementation of new tax policy and matters related with reforming tax system of our country.
a. Processes and investigates complaints related to tax evasion.
b. It provides necessary inputs to frame policies for direct taxes.
c. It is in charge of the administration of direct tax laws in collaboration with the Income Tax Department.


Penalty for Sales Tax Rules Violation

a. Providing incorrect statements about purchased goods.
b. Providing false and misleading information in the forms.
c. Unregistered dealers collecting sales tax from consumers is a violation.
d. Failing to obtain registration according to the CST Act.
e. Falsely impersonating a dealer or projection oneself as a dealer.
f. Not following the security provisions mentioned in the CST Act.
g. Misappropriation of goods purchased at discounted rates.


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