What is the Difference Between Sales Tax and VAT

8/2/2019 What is the Difference Between Sales Tax and VAT

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What is the difference between Sales Tax and VAT?VAT is levied on all goods & services while sales tax is only levied on goods. Thus, a lower taxrate is needed to collect the same amount as sales tax. VAT has no cascading effect. The VAT

mechanism of auto-control reduces tax evasion, therefore enhancing income tax collection. VAT

is levied at import.

What is input tax?Input generally mean goods purchased by a dealer in the course of his business for re-sale or for

use in the manufacture, processing, packing/storing of other goods or any other business use. Thetax paid on inputs is known as Input Tax. It has been defined in Section 2(xvii) of the Model

VAT Bill, 2003 thus: "Input tax means the tax paid or payable under this Act by a registered

dealer to another registered dealer on the purchase of goods in the course of business for resaleor for manufacture of taxable goods or for use as containers or packing material or for the

execution of works contract."

What is input tax credit?

It is the credit for tax paid on inputs. Every dealer has to pay output tax on the taxable saleeffected by him. The basic formula of VAT is that every dealer pays tax only on the value

addition in his hands. In simple words input tax credit is the mechanism by which the dealer isenabled to set off against his output tax, the input tax. Dealers are not eligible for input tax credit

on all inputs. There are certain restrictions and conditions on the eligibility of input tax credit as

it is stipulated in the respective State legislation.

What are the `sales' not liable to tax under the VAT Act?Since the VAT Act applies only to sales within a State, the following sales shall not be governed

by the VAT Act:

a) sale in the course of inter-State trade or commerce which shall continue to be liable to tax

under the Central Sales Tax Act, 1956;

b) sale which takes place outside the State; andc) sales in the course of export or import.

Who is a retail dealer?Retail dealer is not specifically defined in most of the draft VAT legislation of States. To some

extent, a dealer will be considered to be engaged in the business of selling at retail if 9/10ths of

his turnover of sales consists of sales made to persons who are not dealers and if any questionarises as to whether any particular dealer is a retailer, then the officer in charge shall be refered

for.

In the VAT regime, will stock transfer be more beneficial than inter-State sale?In so far as a decision as to whether goods should be stock transferred and then sold to customers

by the branch or should direct inter-State sales be effected, there can be no generalisation. The

decision has to be taken on a VAT impact analysis of each individual business.

The tax implications to be considered are:


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In the case of inter-State sale, the buying dealer has to pay a non-VATable CST while the selling

dealer will get the benefit of input tax credit.

In the case of stock transfer, though there is no tax on the inter-State movement, the inputtax credit will be restricted to the tax paid on inputs in excess of 4 per cent.

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Question

What is the present Central sales tax rate in India? Also

let me know the maxium and minium sales tax rate in India.

Question Submitted By :: Anirban

I also faced this Question!!Rank

AnswerPosted By

Re: What is the present Central sales tax rate in India? Also let me know the

maxium and minium sales tax rate in India.

Answer#1

There are two type of sales tax

one is paid to center that

is 2% and says CST and other one

is VAT it differ satae tostate in Karnataka it is 4, 12.5,

1% for different items.

Is This Answer Correct ? 166 Yes 32 No

3 SudhansuSekhar Dash



Answer

#2

Central Sales Tax , 2%

In their respective State VATRates are following like 4%,

12.5% and 1% on TOT apart from

this may be tax on petrol

and gold may higher percentage

may be imposed


4 B

Srinivasarao



Answer#3

THERE IS TWO TYPE OF CENTRAL SALE

TAX FULL RATE OF CENTRAL

4 Sourabh
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Answer#7

There are two types of Sales Tax

in India, Namely, Central

and Local Sale Tax. Central Sale

Tax is 2% with Form C and

3% without form C. Local Sale Tax

is differentiate

according to Item Description

i.e. 1%, 4%, 12.5% & 20%.

Regards,

Dhiraj Singh


2 Dhiraj Singh,Unique

Infoways

Re: What is the present Central sales tax rate in India? Also let me know themaxium and minium sales tax rate in India.

Answer#8

There are two types of sales

taxes 1)Local Sales tax & 2)

Central sales Tax

With Form "C" - 2% applicable for

CST

Without form "C" - 4% applicable

for CST

Sales Tax rates are - 1%, 4% %

14.5% are going.

Regards

N.Shankar

9493105361


0 N.shankar
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Answer#9

the present Central sales tax

rate in India 4% without

cform,with cform 2%

Sales Tax rates are - 1%, 4% %

12.5% .


0 KoushikBiswas



Answer

#10

there are two types of sales tax

in india 1.central 2.

local sales tax

locl sales tax 1%, 14.5%,4%

(14.5%with effect from jan 15

2010)

central sales tax 2% with c form

,

with out c form 4%
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What is the Difference Between Sales Tax and VAT

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