VAT-INTERSTATE AND INTRASTATE

Vat stands for Value added tax, it is the tax on value addition.

Inter state sale means sale of goods from one state to another.CST is charged as tax.

Intra state sale means sale of goods within the state.Vat is charged as tax.

Input credit for vat available when  final goods sold  within the state.

CST credit availabe on the goods which are sold from one state to another,and it can be used for final goods sold within the state on which vat is levied.

However when goods are purchased from outside the state the input credit of CST will not be allowed for set off with the final products sold within the state.

The logic behind is that, when goods are sold from one state to another CST  goes in the pocket of the state from where good commences i.e sold.So that state allows the credit but when goods are bought from outside the state CST is paid to the outside government and if the government allows this( the govt from where final goods will be sold) it will be at a loss.

Interstate - sales happen between two states here you cannot claim Tax input Credit

Intrastate - is within the state sales where you can claim the ITC