Full form of CST
"Central Sales Tax" is the full form of CST. It is a form of indirect tax imposed on goods sold from one state to another. CST is put by a seller of one state on products sold to a buyer from another state. The Central State Income Tax Act of 1956 covers CST. The act decides on inter-state trade, the situations in which CST is applicable, sanctions and trade restrictions are outlined, etc. The central government of India charges CST, but its applicability is state-specific.
CST is an indirect tax based on origin as it is regulated by the state where the transaction originates and is payable in the state where the product is sold. It is intended for interstate transactions only. It does not apply to products sold within the state or products manufactured or exported.
Exemptions from CST
- In some instances, CST is excluded from few of that are mentioned below-
- If the outward freight is paid separately & outward, product coverage is passed on to the purchaser during dispatch. It is excluded.
- It is excluded if, within 180 days, the goods are returned.
- For SEZs & international missions, CST is exempted.
Characteristics of CST
Central sales tax applies only to inter-state trade. The collection of taxes is monitored by the tax department of the respective state. This sales tax levied on the sale of services and goods, CST, is levied by the central government of India. Central sales tax is levied more on declared goods while less is levied on other goods.
Central Sales Tax does not provide any exemption limit. Central sales tax is never applicable only to intra-state trade in goods and services. The Central Sales Tax is developed and regulated by the Central Government of India under the CST Act, but the State Government can amend the rules as and when it deems fit.
Objectives of CST ACT
The basic premise behind the implementation of CST is-
- Draw principles for determining the purchase and sale of goods during interstate trade or import/export from India
- Provide for the levy, collection, and also distribution of taxes during interstate trade
- Collection of taxes during the company liquidation
- Settling disputes during interstate trade or commerce
- Declaring certain types of items as especially important for trade
Documents Required for CST Registration
You would require-
- PAN Card
- Address Proof
- Purchase Invoice
- Bank Statement
- Address Proof of establishment
- Security reference
- Photograph