CST

20. What is central sales tax, and how does it differ from other types of taxes

 Central Sales Tax (CST) is a tax charged by the Indian government on the sale of goods moved from one state to another. The state where the sale starts collects it. [1, 2]

Differences from Other Taxes

CST differs from other taxes in a few key ways:

• Versus VAT (Value Added Tax): VAT taxes the value added at each step of making a product. It lets businesses claim refunds on past taxes (like a 50% off coupon). CST is charged on the total product price and doesn't allow these refunds, making it cost more.
• Versus Local Sales Tax: Local sales tax only applies to buying and selling inside a single state's borders. CST only applies to trade between two different states.
• Versus GST (Goods and Services Tax): India replaced CST and VAT with GST in 2017. GST taxes both goods and services anywhere in the country. It removes the extra "cascading" (tax-on-tax) costs that CST used to cause. [4, 5]

You can read more about CST rules on the Department of Revenue page.

[1] https://www.vedantu.com/full-form/cst-full-form

[2] https://www.wallstreetmojo.com/full-form-of-cst/

[3] https://www.dor.gov.in/introduction-central-sales-taxes

[4] https://www.hlplawfirm.net/show-blog/the-difference-between-central-sales-tax-cst-and-vat

[5] https://www.geeksforgeeks.org/finance/sales-tax-types-cst-calculation-example-exemptions/

[6] https://keydifferences.com/difference-between-sales-tax-and-vat.html

[7] https://comtax.wb.gov.in/GST/GST_Trade_Circulars/Trade%20Circular%20No.%2043-2018_60-2018-CT.pdf