In this article, we will try to cover what is CST as well as all the other related information. CST is short for the term called Central State Tax which is an indirect tax. It is ultimately paid by the user of the item. This tax is levied by the aids of the Central Government on the turnover, which is taxable, of those sale of goods done between states and made by the registered dealers in the regular course of business.
What is CST in terms of Inter-State Sale?
Inter-state sale of goods are those sale which involves the trade or selling of goods from one state to another. For example, if a seller living in Pune sells an item to the dealer who lives in Mumbai and sends that item from Pune to Mumbai, then this kind of sale will be called an inter-state sale. So, what is CST in terms of the Inter-state sale?
The relocation of the title of the goods from one of the states to the other can also be termed as an interstate sale, with the condition that the sale gets effected by the transfer of the necessary documents of those title of the goods from one of the states to the other. For example, if the dealer of the product, living in Mumbai, get it sold to the dealer who is residing in Delhi, and after the relocation, the dealer living in Delhi sells the item to, suppose, a dealer residing in Pune. Hence, this can also be stated as a form of inter-state sale and in this case, it is said that there occurs two inter-state sales.
Stock Transfer according to CST
If an item is owned by the enterprise and the stock of the enterprise is relocated from one of the branches in one state to the other branch in the other state, then there occurs no sale. In those cases, the CST is not typically applicable as there is no sale. But while working on the stock transfers from one state to the other state, the VAT laws of the state require reversion of the input tax credit on the sales if those goods are getting transferred. A Form known as F is required in order to establish the transfer of the stock.
Getting the CST Registration Done
Every dealer has to be aware about what is CST and they are mandated to pay the CST. In order to do so, they are required to register with the authorities involved with sales tax and the get the TIN or CST or a VAT registration. It is possible to obtain the voluntary registration of the CST, even though the dealer does not directly affect the sales done between states, if the dealer is deemed to be liable to pay the VAT. Moreover, the dealer will not be required to make the payment of the tax of what is CST mandated. The type of CST registration is not mandatory but can come out to be very useful for the dealer who are normally buying products and items from outside of their respective states and then sell them within their states.
Advantages of the CST registration
A dealer can enjoy the advantages and benefits given below if he volunteers to obtain a CST registration:
- The transfer of the branch or the stock is exempted from the tax by the submission of the Form F.
- The dealer can claim the benefits following the section 5(3) of the Lawful CST Act through the issuing of the Form H.
- The concessional rate of the tax on the inter-state purchases is seen via the using of the Form C.
- Avoid the penalty or the prosecution involving not registering.
- No tax has been imposed on the purchases by a single unit in those special economic zone.
In order to learn more about what is CST and how to obtain the CST number, visit our Company Vakil .