LEVY AND COMPUTATION OF TAX

CHAPTER-6

INTRODUCTION

1.LEVIED BY CENTRAL GOVERNMENT & COLLECTED BY STATE GOVT.

2.SUBSEQUENT SALE3.ADMINISTRATIVE AUTHORITIES4.VAT RULES APPLICABLE5.PROCEEDS COLLECTED ARE RETAINED BY

THE STATE GOVT.- In case of Union Territories proceeds form part of Consolidated Fund of India.

FEATURES OF RATE OF TAX

SUBJECTIVE RATE OF TAX-• Rate of tax in the seller’s state•The category of goods i.e. declared or undeclared goods•The class of dealers i.e. registered or unregisteredSTAGE OF LEVY BRANCH AND CONSIGNMENT TRANSFER PERIOD OF TURNOVER DECLARATIONPURCHASE OF GOODS FOR CERTAIN PURPOSES

CST RATESS.NO.

LOCAL RATE OF TAX

RATE OF TAX

SALE TO REGISTERED DEALER

SALE TO OTHER THAN REGISTERED DEALER

1 If the goods are generally exempt under local Act

nil Nil

2 1% 1%( C Form not required) 1%

3 2% 2% (C Form not required) 2%

4. More than 2% 2% Against C Form Local Rate

SALE PRICE

The consideration for sale of any goods less sum allowed as cash discount, “freight, insurance and cost of installation, if charged separately” but includes any other sum chargeable for anything done in respect of goods before delivery.

INCLUSIONS IN SALE PRICE

Any sum charged for by dealer Central Sales tax excise duty Packing material & packing charges Cost of Freight Cost of Insurance Incentive paid to supplier when includible Dharmada (Charity) compulsory Warranty Charges

EXCLUSIONS IN SALE PRICE

Goods returned/ rejected Cost of installation Transit insurance Deposits for returnable containers Freight and transport charges for delivery of

goods Subsidy paid by Government Export incentives to seller DiscountsNote: Tax payable to be rounded off to the

nearest rupee.

COMPUTATION OF GROSS TURNOVER The following are included in computing

gross turnover: Sale price of goods outside the State Sale price of the exempted goods Sale price of the goods sold within the State Sale price of goods sold in the course of

import or export.However, the sale price of the following are

not included in computing gross turnover:i) Newspapers, ii) stock and shares and iii)

securities

FORMAT FOR CALCULATION OF TAXABLE TURNOVER (BACKWARD CALCULATIONS)

Less Turnover outside the scope of CST

a) Turnover sold outside the state

b) Sale in the course of import into and export from india

c)Turnover of goods sold inside a state

d) Branch Transfer and consignment Transfer

a) All Exclusions

b) All Exemptions from CST

GROSS TURNOVER

Less Turnover within the scope of CST but exempt or under special category

Less CST

TAXABLE TURNOVER

COMPUTATION OF TAX

If the amount of sales tax is not included in the sale price.

Amount of tax= Rate of CST If the amount of sales tax is included in

the sale price:Amount of tax = Rate of CST* Gross Turnover

100 + Rate of CST

* Taxable Turnover100

ANSWER TO PROBLEM 1

COMPUTATION OF TAXGross Turnover(including of CST) 22,50,000

Less:- a) Trade discount 64,000

b) Freight, insurance etc. 95,000

c)installation charges 36,000

d) Goods returned within 6 months

62,000 2,57,000

Turnover 19,93,000

Central Sales Tax 19,93,000*2/102 39,078

Taxable Turnover 19,53,922

ANSWER TO PROBLEM 8Statement of Taxable Turnover of M/s Arvind

Bros. Ludhianaparticulars Rs. Rs.

1. Subsequent Sale to Govt. exempt(Form C)

2. Sale of undeclared goods to Govt.Less. Sales returnsNet SalesLess: Tax collected from customers(49,400*4/104)

52000 260049,400 1900 47,500

3. Sale of declared Goods to regd. DealerLess: Tax collected from customers( 39000*4/104)

39000 1500 37,500

4. Sale of undeclared goods to regd. DealerLess: Tax collected from customers( 83,200*4/104)

83200 3200 80,000

5. Sale of declared goods to other personsLess: Tax collected from customers( 43680*4/104)

43680 1680 42,000

6. Sale of undeclared goods to other personsLess: Tax collected from customers( 46200*5/105)

46200 2200 44,000

7. Sale of undeclared goods to other personsLess: Tax collected from customers( 53000*6/106)Total

53000 3000 50,000

3,01,000

STATEMENT OF SALES TAX PAYABLE particulars Rs

Tax on sale of undeclared goods to Govt.(2% on Rs 47,500)

950

Tax on sale of declared goods to Regd. Dealer (2% on Rs 37,500)

750

Tax on sale of undeclared goods to Regd. Dealer( 2% on Rs 80,000)

1600

Tax on sale of declared goods to other persons (4% on Rs 42,000)

1680

Tax on sale of undeclared goods to other persons (3% on Rs 44,000)

1320

Tax on sale of undeclared goods to other persons(6% on Rs 50,000)

3000

Total 9,300

SOLUTION TO PROBLEM 6Computation of CST

Basic price @ Rs 50 kg 500000

Less : Trade discount @ 8% 40000

4,60,000

Less :Cash discount @ 2% 9,200

4,50,800

Less : goods rejected 50,000

4,00,800

Add : excise duty @16.32% 65,410.56

Net sales 4,66,210.56

Add : CST @2% 9,324.21

Gross sales 4,75,534.77

SOLUTION CALCULATION OF GROSS TURNOVER

PARTICULARS Rs Rs

1. Sugar 4,00,000

2. Newspapers -----

3. Tobacco(Exempt in M.P.) 50,000

4. Shares and Securities ___

5. Exports to Canada 3,50,000

6. Goods sold in M.P. 10,00,000

7. Inter-State Sale: Tax @ 10% 460,000

8. inter-State sale: Tax @ 2% 204000

Gross Turnover 24,64,000

Less: Sugar(Exempt) 4,00,000

Tobacco(Exempt) 50,000

Exports 3,50,000

Goods sold in M.P. 10,00,000 (--)18,00,000

Gross inter- state sales 6,64,000

Less: Goods returned within 6 months (--) 20,000

Net Inter-State Sales 6,44,000

Less: Tax paid on Sales

1) Sales after return within 6 months(

(4,60,000—20,000)=4,40,000*10/110 40,000

2)2,04,000*2/102 4,000 44,000

Taxable Turnover 6,00,000

THANK YOUMADE BY:-

SANDEEP KAURASSISTANT PROFESSOR GCCBA-42