Interstate purchase
This query is : Resolved
13 September 2015
I purchased interstate and in dat dey added excise duty and CST and again do I need to pay vat 14.5% in karnataka? pls let me know
15 September 2015
No you not need to pay it again as you already paid it once
21 February 2016
I paid only CST and excise duty as I bought goods directly from manufacturer . I haven't paid local tax I, e 14.5 % so I need to pay dat or not ? if not why?
01 August 2024
Under the Goods and Services Tax (GST) regime, the tax structure for interstate purchases has changed compared to the pre-GST system. Here's a detailed explanation based on the transition from the previous system and the current GST framework:
### **Pre-GST Scenario**
Before the introduction of GST, the taxation of interstate purchases involved:
1. **Central Sales Tax (CST):** Applicable on interstate sales, which was levied by the central government.
2. **Excise Duty:** Applicable on the manufacture of goods, primarily for goods manufactured in factories.
3. **VAT/Sales Tax:** Applicable on local sales within a state, and the rate varied from state to state.
In your case, if you purchased goods interstate and paid CST and excise duty, you were not required to pay local VAT on those interstate purchases because the CST was meant to cover the tax liability for interstate transactions. However, this was under the old tax regime before GST.
### **Post-GST Scenario**
With the introduction of GST, the tax structure has been streamlined. Here's how it works under GST:
1. **Integrated GST (IGST):** For interstate purchases, IGST is applicable instead of CST. The IGST rate is based on the combined central and state tax rates applicable to the goods or services. IGST replaces both CST and the state VAT/Sales Tax on interstate transactions.
2. **Input Tax Credit (ITC):** GST allows for the seamless transfer of input tax credits across states. If you pay IGST on interstate purchases, you can claim it as input tax credit against your output tax liability.
3. **Excise Duty on Goods:** Under GST, excise duty is only applicable to the manufacture of products in certain sectors like tobacco and petroleum products. For most goods, the GST system has replaced excise duty with a combination of CGST (Central GST) and SGST (State GST) for intrastate sales and IGST for interstate sales.
### **Your Situation:**
Given your description of paying CST and excise duty:
- **If you are operating under the old tax regime (pre-GST):** You would not need to pay local VAT in Karnataka on interstate purchases if you have already paid CST. The CST was meant to cover interstate transactions, and VAT was typically not levied on interstate purchases.
- **If you are operating under the GST regime (post-July 1, 2017):** You should be paying IGST on interstate purchases, not CST. In this case, you would not be paying VAT separately in Karnataka, as the IGST paid would cover both the central and state tax components.
Since the transition to GST has eliminated CST and local VAT for interstate transactions, it’s important to ensure compliance with the current GST requirements:
- **Verify the GST Compliance:** Make sure you are following the GST guidelines, and you should have paid IGST on the interstate purchase.
- **Check Input Tax Credit:** Ensure that you have correctly claimed the input tax credit on your GST returns if applicable.
**Recommendation:**
Review your tax payments and compliance with the GST regime. If you are still under the pre-GST system, ensure that your tax payments align with the old regulations. If you have transitioned to GST, make sure you’re adhering to the current GST requirements and not paying VAT for interstate transactions that should be covered under IGST. Consulting with a tax advisor or professional could provide specific guidance tailored to your situation.
### **Pre-GST Scenario**
Before the introduction of GST, the taxation of interstate purchases involved:
1. **Central Sales Tax (CST):** Applicable on interstate sales, which was levied by the central government.
2. **Excise Duty:** Applicable on the manufacture of goods, primarily for goods manufactured in factories.
3. **VAT/Sales Tax:** Applicable on local sales within a state, and the rate varied from state to state.
In your case, if you purchased goods interstate and paid CST and excise duty, you were not required to pay local VAT on those interstate purchases because the CST was meant to cover the tax liability for interstate transactions. However, this was under the old tax regime before GST.
### **Post-GST Scenario**
With the introduction of GST, the tax structure has been streamlined. Here's how it works under GST:
1. **Integrated GST (IGST):** For interstate purchases, IGST is applicable instead of CST. The IGST rate is based on the combined central and state tax rates applicable to the goods or services. IGST replaces both CST and the state VAT/Sales Tax on interstate transactions.
2. **Input Tax Credit (ITC):** GST allows for the seamless transfer of input tax credits across states. If you pay IGST on interstate purchases, you can claim it as input tax credit against your output tax liability.
3. **Excise Duty on Goods:** Under GST, excise duty is only applicable to the manufacture of products in certain sectors like tobacco and petroleum products. For most goods, the GST system has replaced excise duty with a combination of CGST (Central GST) and SGST (State GST) for intrastate sales and IGST for interstate sales.
### **Your Situation:**
Given your description of paying CST and excise duty:
- **If you are operating under the old tax regime (pre-GST):** You would not need to pay local VAT in Karnataka on interstate purchases if you have already paid CST. The CST was meant to cover interstate transactions, and VAT was typically not levied on interstate purchases.
- **If you are operating under the GST regime (post-July 1, 2017):** You should be paying IGST on interstate purchases, not CST. In this case, you would not be paying VAT separately in Karnataka, as the IGST paid would cover both the central and state tax components.
Since the transition to GST has eliminated CST and local VAT for interstate transactions, it’s important to ensure compliance with the current GST requirements:
- **Verify the GST Compliance:** Make sure you are following the GST guidelines, and you should have paid IGST on the interstate purchase.
- **Check Input Tax Credit:** Ensure that you have correctly claimed the input tax credit on your GST returns if applicable.
**Recommendation:**
Review your tax payments and compliance with the GST regime. If you are still under the pre-GST system, ensure that your tax payments align with the old regulations. If you have transitioned to GST, make sure you’re adhering to the current GST requirements and not paying VAT for interstate transactions that should be covered under IGST. Consulting with a tax advisor or professional could provide specific guidance tailored to your situation.
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