Karnataka VAT and CST
This query is : Resolved
02 April 2010
As per Section 5 of the Karnataka VAT act VAT is exempt for goods falling under schedule 1 of the
Karnataka VAT rules.
Schedule I exempts Books, Periodicals and journals including maps, charts
and globe (point 11)
If books are billed outside Karnataka will CST be levied or will it be exempt?
Sec 6 of CST act says that 'a dealer shall be liable to pay tax under this act in the course of inter state sale notwithstanding the fact that no tax would have been leviable under the sales tax law of the approprate state if that sale had taken place inside that state'. This looks like we have to levy CST...
Nithya
Karnataka VAT rules.
Schedule I exempts Books, Periodicals and journals including maps, charts
and globe (point 11)
If books are billed outside Karnataka will CST be levied or will it be exempt?
Sec 6 of CST act says that 'a dealer shall be liable to pay tax under this act in the course of inter state sale notwithstanding the fact that no tax would have been leviable under the sales tax law of the approprate state if that sale had taken place inside that state'. This looks like we have to levy CST...
Nithya
20 April 2010
Exempted.
19 October 2010
Sec 6 of CST act says that 'a dealer shall be liable to pay tax under this act in the course of inter state sale notwithstanding the fact that no tax would have been leviable under the sales tax law of the approprate state if that sale had taken place inside that state'. This looks like we have to levy CST...
20 October 2010
Kindly reply
02 August 2024
Yes, Section 6 of the Central Sales Tax (CST) Act pertains to inter-state sales and has specific implications for how CST should be handled. Let’s break it down:
### **Understanding Section 6 of the CST Act**
**Section 6(1) of the CST Act** states:
- **"A dealer shall be liable to pay tax under this Act in the course of inter-state sale notwithstanding the fact that no tax would have been leviable under the sales tax law of the appropriate State if that sale had taken place inside that State."**
This means that even if a sale would not be taxed under the VAT laws of your state (Karnataka, in this case), CST still applies to inter-state sales.
### **Key Points to Note:**
1. **Inter-State Sales**: When you make a sale to a buyer located in another state, that sale is considered an inter-state sale and is subject to CST.
2. **Levying CST**:
- **Rate**: CST is typically levied at a rate of 2% or the rate applicable under the VAT laws of the state where the sale takes place, whichever is lower.
- **Form C**: To benefit from CST at a lower rate (usually 2%), you need to obtain a Form C from the purchaser. This form is a declaration that the goods are being purchased for resale or for use in manufacturing.
3. **VAT Exemption**: In Karnataka, you are liable to pay VAT at 5% on your sales. However, for inter-state sales, CST is applicable and generally takes precedence over the VAT rate for such transactions.
4. **Documentation**:
- **CST Invoices**: Ensure that your invoices for inter-state sales clearly mention CST and provide Form C to avail of the lower CST rate.
- **Record-Keeping**: Maintain proper records and documentation to support your CST claims and comply with tax regulations.
### **Action Steps:**
1. **Determine Applicability**: For any sale that qualifies as an inter-state sale, CST should be levied, regardless of the VAT rate in Karnataka.
2. **Issue CST-Compliant Invoices**: Make sure that your invoices for inter-state sales are compliant with CST regulations.
3. **Obtain Form C**: If the purchaser provides Form C, you can charge CST at the concessional rate (usually 2%).
4. **Consult a Tax Professional**: Given the complexity of tax laws and the potential for changes in regulations, consulting with a tax professional or accountant is highly advisable to ensure compliance and proper handling of CST.
By adhering to these guidelines, you can ensure proper taxation and compliance with both CST and VAT laws.
### **Understanding Section 6 of the CST Act**
**Section 6(1) of the CST Act** states:
- **"A dealer shall be liable to pay tax under this Act in the course of inter-state sale notwithstanding the fact that no tax would have been leviable under the sales tax law of the appropriate State if that sale had taken place inside that State."**
This means that even if a sale would not be taxed under the VAT laws of your state (Karnataka, in this case), CST still applies to inter-state sales.
### **Key Points to Note:**
1. **Inter-State Sales**: When you make a sale to a buyer located in another state, that sale is considered an inter-state sale and is subject to CST.
2. **Levying CST**:
- **Rate**: CST is typically levied at a rate of 2% or the rate applicable under the VAT laws of the state where the sale takes place, whichever is lower.
- **Form C**: To benefit from CST at a lower rate (usually 2%), you need to obtain a Form C from the purchaser. This form is a declaration that the goods are being purchased for resale or for use in manufacturing.
3. **VAT Exemption**: In Karnataka, you are liable to pay VAT at 5% on your sales. However, for inter-state sales, CST is applicable and generally takes precedence over the VAT rate for such transactions.
4. **Documentation**:
- **CST Invoices**: Ensure that your invoices for inter-state sales clearly mention CST and provide Form C to avail of the lower CST rate.
- **Record-Keeping**: Maintain proper records and documentation to support your CST claims and comply with tax regulations.
### **Action Steps:**
1. **Determine Applicability**: For any sale that qualifies as an inter-state sale, CST should be levied, regardless of the VAT rate in Karnataka.
2. **Issue CST-Compliant Invoices**: Make sure that your invoices for inter-state sales are compliant with CST regulations.
3. **Obtain Form C**: If the purchaser provides Form C, you can charge CST at the concessional rate (usually 2%).
4. **Consult a Tax Professional**: Given the complexity of tax laws and the potential for changes in regulations, consulting with a tax professional or accountant is highly advisable to ensure compliance and proper handling of CST.
By adhering to these guidelines, you can ensure proper taxation and compliance with both CST and VAT laws.
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