Sales Tax Registration India – Article 366 (29A) of Indian Constitution provides for tax on sale or purchase of goods. The Central Sales Tax applies, when the sale or purchase has been made in the course of inter-state Trade. While Local Sales Tax was converted to VAT (Vale Added Tax) since 2005.
Section 2 (g) of CST Act defines sale as… “sale, with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire-purchase or other system of payment by installments, but does not include a mortgage or hypothecation of or a charge or pledge on goods”.
Every dealer who effects inter-state sale, is required to register with Central Sales Tax authority. On registration, a Sales Tax ID is provided under which dealer/ seller can collect Sales Tax from the buyer. Sales tax is the percentage of revenue imposed on the retail sale of goods.
Unlike VAT, sales tax is levied on the total value of goods and services purchased. While VAT (Value Added Tax) is a form of indirect tax that is imposed at different stages of production on goods and services. The purpose of VAT is to provide relief to the ultimate consumer from price hike, as only value added at different stages of production is Taxable.