Regarding cst

This query is : Resolved

P. Shah (Querist)
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11 May 2016 So it means CST is like sales tax which was practiced earlier. There will be cascading effect and not like vat because we can't claim CST on purchases as against on CST sales.
Plz Mr Rupesh can u explain me in details . coz I have lot of confusion in CSt. Or can I claim CST paid on purchases against output vat

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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11 May 2016 Most of the VAT legislations in India do not allow the set off of CST Paid against their output tax. But at the same time, these legislations allow set off of Input Tax credit against the CST due. As a common man, a question may arise why this is not allowed vice-versa. The reason is as follows :-

Sales tax is a source of revenue for each state. CST is collected by the appropriate state, which is the state in which the selling dealer’s place of business is located.

Thus, if a dealer in Tamilnadu makes inter-state sale to a dealer of Maharashtra, the CST on such sale will be collected by the state of Tamilnadu.

If the credit on such CST is allowed to the dealer of Maharashtra again VAT payable to the state of Maharashtra, then the revenue of the state of Maharashtra will get reduced. HENCE THE CREDIT IS NOT ALLOWED.

However the Dealer of Tamilnadu can very well use the VAT credit of purchases made from the state of Tamlinadu against the payment of CST on inter-state sales, as the VAT was paid to the state of Tamilnadu only and CST against which is set-off is also payable to the state of Tamilnadu.

There will be no loss of any revenue to the state of Tamlinadu.

Moreover, the Collection and Assessment CST is administered by the State Governments for which a share of CST collected is passed on to the States. If the set off is allowed, it will be a revenue loss to the State Government without a benefit to the state for doing the work on behalf of the Central Government.

Rupesh Jain

Rupesh Jain (Expert)
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12 May 2016 CST charge by the party on purchase made by you from out of state, rate of CST is diff-2 in many state it is not 2% in every state purchase. in many it is 0% or in some one 0.25% due to some state govt have no industries in there state for promoting industries, employment in their state, most of state get the permission form central govt . and charge lower than 2% of cst sale against C form.
in many year ago central govt. start to reduce CST rate 1% every year its start from 4% after 2 years it not reduce by central govt. due to state govt. claim from central govt that their revenue reduce and central compensate the same. when its start then central govt. want to cst will come 0%. for soomth business in interstate and want to apply equal rate of tax on same item. for that govt try to implement new act GST. but due to some state govt not agree on that.
from that period to till date cst rate most of state stood at @2% and cst in not claim against the CST laibility from earlier years.
it continue till GST act not implemented in india. CST is the Central govt act not the state govt act. its admin given by the central to state. there is no separate office or officer in central govt..

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