Online Copyright Registration in India

Protect your creative work
Books, Songs, film, websites, Software, painting, fashion Design etc
Call now: 09891244487

Ask Our legal Experts, on issues related to Divorce

File Mutual Consent divorce right away

Call at ph no: 9650499965
  Search On:Laws in IndiaLawyers Search

To Appeal before CIC - Central Information Commission
For Filing and Hearing contact: Choudhury's law Office
Ph no: 9873628941

Author Topic: Sales Tax  (Read 668 times)

0 Members and 1 Guest are viewing this topic.

Offline Munim

  • Newlaw
  • *
  • Posts: 1
  • Karma: +0/-0
  • Welcome to legal Service India - law forum for free legal Information
    • View Profile
Sales Tax
« on: June 09, 2015, 11:27:02 PM »
Sales tax is the tax paid to the government for the sale of goods. This is generally a fixed percentage and varies from place to place as well as product to product. Sales tax is levied on each transaction whether it is from Manufacturer to Wholesaler, Wholesaler to Retailer or Retailer to Customer.

Sales Tax are of two types:

 State Sales Tax (VAT, Value Added Tax) - Collected by State Government
Central Sales Tax (CST) - Collected by Central Government

When the trading is done in the same state i.e. both the parties, buyer and seller are from the same state then the tax applied is VAT but when the parties are from different states then the tax applied is CST

Intrastate Trading – VAT
Interstate Trading – CST

Let us understand this in more detail with certain scenarios:

Scenario 1:

Suppose the Manufacturer of certain goods has manufacturing unit in state A and selling his product to the wholesaler in State A itself.

Suppose Cost + Margin for the product at Manufacturer’s end is Rs 100. If the VAT for state A is 10 % then the total VAT amount for this transaction will be Rs 10, the responsibility to pay this amount to the authority will rest with the manufacturer.

Now if the retailer also belongs to State A, keeping Rs 10 as margin for himself, the wholesaler will sell the product to retailer at Rs 110 so the tax for the wholesaler will be Rs 11 but he has to pay only Rs 1 as tax because the Manufacturer has already paid Rs 10 as tax to the Government. Now the wholesaler will provide tax certificate of Rs 10 and Rs 1 to the retailer.

If the retailer again keeps a margin of Rs 10 then the cost of the product for the customer will be Rs 120. So the VAT amount for this will be Rs 12. Now again as tax of Rs 11 has already been paid to the Government and retailer carries tax certificate of Rs 10 and Rs 1 both he has to pay only Rs 1 as VAT.

This is termed as the Input Credit Scheme where the amount of tax is not continuously added for each end user. The final amount of tax levied for this product is Rs 12 only. 



Scenario 2:

Suppose the Manufacturer of certain goods has manufacturing in State A and selling his product to the wholesaler in State B where there is a branch of manufacturer i.e. Manufacturer has a branch in State B.

In this scenario, the manufacturer in State A may stock transfer the goods to its branch in State B to cater to the wholesaler in Sate B i.e. Tax invoice made in State B. Now, this would be considered as intrastate trading and the tax applied will be VAT of State B. The Calculation of the VAT would be similar to that in Scenario 1.

Applicability of VAT and CST would be determined by the State of Tax invoice. If, in this scenario, the tax invoice is being raised by the manufacturer in State A, then CST would be applicable.

Scenario 3:

Suppose the Manufacturer of certain goods has manufacturing in state A and selling his product to the wholesaler in State B. Manufacturer does not have any branch in State B.

In this scenario, when manufacturer doesn’t have any facility to raise tax invoice from the wholesaler invoice, CST would be applicable.

If the Cost + Margin at the Manufacturer’s end is Rs 100 and the CST is 8 % then the amount of tax is Rs 8. It is important to note here that the input credit on CST cannot be claimed. Thus effectively (or practically) the value of product for the Wholesaler will be Rs 108 as input credit would not be available.

If the Wholesaler keeps margin of Rs 2 with himself then Cost + Margin at Wholesaler’s end will be Rs 110 and selling to the Retailer in State B. Adding 10 % VAT for the transaction the amount of tax for the Wholesaler will be Rs 11. Again if the Retailer keeps a margin of Rs 10 then Cost + Margin at Customer end will be Rs 120. VAT for this transaction @10% will be Rs 12 but as the Wholesaler has already paid Rs 11 as tax to the Government, Retailer will have to pay only Re 1 as tax.


For VAT/CST registration, please visit Munim.in.

In case of any query, please feel free to contact us at www.munim.in

« Last Edit: June 09, 2015, 11:28:48 PM by Munim »

 

File a Consumer Complaint
Property verification
Call: 9873628941
 

Lawyers in India - Listed city wise Mumbai
Bangalore
Pune
Pondicherry
Jaipur
lawyers in London
lawyers in Birmingham
Chennai
Allahabad
Ahmedabad
Jodhpur
Indore
lawyers in Toronto
lawyers in Sydney

Cochin
Lucknow
Ranchi
Thane
Janjgir
lawyers in Milan
Johannesburg

Delhi - New Delhi
Chandigarh
Surat
Nashik
lawyers in New York
los Angeles
Kolkata
Hyderabad
Rajkot
Nagpur
lawyers in Dhaka
lawyers in Dubai

Copyright Registration

Ph no: 9891244487

For Mutual consent Divorce in Delhi - Ph no: 9650499965

Home | Bare Acts | Law Forms | Supreme Court Judgments | Legal Advice | Lawyers | Submit article | Sitemap | Contact Us

legal Service India.com is Copyrighted under the Registrar of Copyright Act ( Govt of India) © 2000-2016
Get Free legal Advice here from top notch lawyers in India