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Need clarification on vat and cst

Harish Desai (Director) (65 Points)

22 August 2016

I intend to start an E-Commerce trading business from Mumbai, Maharashtra.

I would like to know the application of VAT / CST in following cases.

1. Products bought from party in Maharashtra and sold to customer in Maharashtra

2. Product bought from party in Maharashtra and sold to customer outside Maharashtra

3. Product bought from party outside Maharashtra and sold to customer in Maharashtra

4. Product bought from party outside Maharashtra and sold to customer outside Maharashtra.

Thank you in advance.

- Harish

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5 Replies

Amit Kumar (Accountant) (276 Points)
Replied 22 August 2016

Mr. Harish

As u describe the quiry that for which levy you should register yourself you have to register to both VAT and CST for online business portal

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Harish Desai (Director) (65 Points)
Replied 22 August 2016

I know that I have to register for VAT and CST.

I want to know how the taxes will be applicable for the 4 cases. Lets say I sell product worth Rs. 100/- and applicable tax rate is 12.5% then in 4 cases where will be the VAT and CST applicable and how much VAT and CST I will have to pay and to whom. Hope my query will be clearly understood.

CMA Ashutosh Kumar Gupta (Unit Financial Controller) (1015 Points)
Replied 22 August 2016

Simply you need to seggregate transactions as (1) intra-state and (2) inter-state.

In case of inter-state transaction-central govt. authorized to put the levy in terms of CST and in case of intra-state-particular State Govt. is authorized to charge the levy in terms of VAT.

Here, intra-state means within the state transaction and inter-state means any transaction which crosses the boundary of any of two or more states.

Hope this would make the transactions your referred amply clear.

In case of any further Q please revert.

anonymous (student) (750 Points)
Replied 22 August 2016

There are VAT schedules seprately for each state.. In your case, taxes are applicble in all the 4 illustrations which you mentioned in above query...

Now,

1. VAT will be applicable in case of sale in same state i.e; Maharashtra.. Here Input of VAT is also available.. Eg., You purchased a product for rs.100 on which VAT @ 4% is applicable.. Also you sold the same product for Rs. 120 @ 4% VAT... Amount payable by you is Rs.5 but you have input of Rs. 4/-... So net payable is Rs.1.

2. Here, you ill be facing both VAT and CST...On purchase VAT will be applicable and on sale CST... Sooo Input VAT on purchase can be used to set off against option 1.

3. Again both CST and VAT... CST on purchase is not available as Input.Thus, it will form a part of your purchase cost... Here you being purchaser of Goods, need to issue C form to your supplier so that he will deduct tax @ 2%. If C form is not issued then CST will be charged at higher rate i.e.; 6% (i guess... I am not quite sure of the higher %) . VAT liability will be raised which you need to setoff against Inputs if any or else pay it from Cash.

4. Here just CST comes to play.. You need to issue C form and also collect C form from your customers on sale.

Moreover, CST liability can be setoff against Input VAT if any in each month/quarter as per your periodicity of VAT filing. i.e;

Eg: VAT payable 50,000/-, VAT input 80,000/- CST payable 25,000/-

then VAT Input 80,000 (-) CST payable = 55,000/- ----- this is availabe input for VAT payable..

Inputs 55,000 (-) VAT payable 50,000 = 5,000/- ---- excess input to be carried forward for next month/quarter

Hope your query is cleared. Also refer FAQ's on mahavat site for more details/information on VAT

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