Full Form of CST

Full Form of CST – Central Sales Tax

The full form of CST is Central Sales Tax. CST can be defined as a tax levied by the Central Government of India upon the inter-state sale of goods and services, and this type of tax is not applicable on import or export or sales that are made within one state, and it is required to be paid in the state where the goods or services are sold.

Features

Features of Central Sales Tax are as follows:

CST Features

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Source: Full Form of CST (wallstreetmojo.com)

Objectives

The objectives of a Central Sales Tax are as follows:

Rules of CST

An individual must abide by the following rules of CST if he or she is executing an inter-state trade:

  • He or she must be a registered dealer.
  • A dealer must submit Form A in order to apply and get registered under Sec. 7 of the CST Act. The proprietor must authorize the Form, and the concerned authority must also verify it.
  • If an applicant has more than one place of business in a particular state, just one form must be submitted.
  • A dealer must keep his registration certificate at his or her chief place of business and must necessarily produce copies of the same at other business venues.
  • The applicant will be required to make payments via court fee stamps if he loses his registration certificate and is seeking to receive a copy of the same.

CST Transaction Forms

The type of transaction forms issued by the dealers to their buyers and sellers are:

CST Transaction Forms

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Source: Full Form of CST (wallstreetmojo.com)

  • Form C: The buyer in an interstate trade is eligible to receive goods at a concessional rate if he or she submits Form C to the seller.
  • Form D: The government that is at the purchasing front in an interstate trade is eligible to receive goods at a concessional rate if it submits Form D to the seller.
  • Form E1: A dealer who is participating in an interstate transaction for the first time is responsible for the issuance of Form E1.
  • Form E2: A dealer who is participating in an interstate transaction for the second time is responsible for the issuance of Form E2.
  • Form H: Form H is issued by the exported against the purchase of goods.
  • Form I: Form I is issued by a dealer who is located in SEZ or Special Economic Zone.

Central Sales Tax Rate

The following are the rates of CST:

  • Form C: The rate of Central Sales Tax for an interstate trade to a registered dealer would be the lower of the two:
    1. 4 percent, or
    2. The local sales tax rate
  • If the trade is covered under the purview of local sales tax laws, then the same exempted to be taxed for CST.
  • Form D: The rate of Central Sales Tax for an interstate trade to the government would be the lower of the two:
    1. 4 percent, or
    2. The local sales tax rate
  • Declared Goods: The rate of central sales tax for an interstate sale of goods that are of special importance or declared goods in the absence of Form C or Form D will be twice the tax rates applicable in the local trade of goods.
  • Other or Non-Declared Goods: The rate of Central Sales Tax for an interstate sale of other or non-declared goods would be the higher of the two:
    1. 10 percent, or
    2. The local sales tax rate applicable.

Conclusion

CST stands for Central State Tax. It is a tax levied by the Central Government of the country upon the sale of goods. CST is concerned only with interstate trade or commerce and does not cover trade within the state or export or import of goods. It is regulated by the Sales Tax department of each state. Central Sales Tax must be paid in the state where the trade actually takes place. Form C, Form D, Form E1, Form E2, Form F, Form H, and Form I are the forms used in a CST.

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This has been a guide to the Full Form of CST, i.e. (Central Sales Tax) and it’s meaning. Here we discuss CST rules and forms of the transaction along with its rates, characteristics, and objectives. You may refer to the following articles to learn more about finance –

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