Sales Tax

Sales Tax in India is that form of tax which is imposed by the government on sale/purchase of a particular commodity within the country. It is imposed under Central Government (Central Sales Tax) and the State Government (Sales Tax) Legislation. Normally, each state has its own sales tax act and levies the tax at various rates.

Under the sales tax which is an indirect form of tax, it is the responsibility of seller of the commodity to collect or recover the tax from the purchaser. Generally, the sale of imported items as well as sale by way of export is not included in the range of commodities that require payment of sales tax. Moreover, luxury items (such as cosmetics) are levied higher sales tax rates. The Central Sales Tax (CST) Act that comes under the direction of Central Government takes into consideration all the interstate sales of commodities.

Who Pays Sales Tax In India?

Sales Tax is recovered from the buyers/consumers as a part of the consideration for the sale of goods. However, for the purpose of CST, the actual payment of the Sales Tax is made by every dealer on the goods sold by him in the course of inter-state trade or commerce. This tax is payable even though there may be no liability to pay the tax on the sale of goods according to the tax laws of that particular state.

To Whom Central Sales Tax is Payable

Sales Tax is paid to the Sales Tax Authority in the state from where the goods are moved, i.e. the state from where the movement of goods begin. The dealer would pay the tax to the state authority from where he makes the sale, even though there may be no liability of tax on sale of goods according to the tax laws of that state itself.