Indian Taxes

2007 dec

CENTRAL SALES TAX

TAXES

DIRECT TAX

INDIRECT TAXES
CENTRAL EXCISE CENTRAL SALES TAX CUSTOMS DUTY SERVICE TAX OCTROI ETC.
2

INCOME TAX WEALTH TAX

2007 dec

CENTRAL SALES TAX

CENTRAL GOVERNMENT
INCOME TAXES(EXCEPT ON AGRICULTURE) CUSTOMS DUTY EXCISE DUTY (EXCEPT ON LIQUOR)

2007 dec

CENTRAL SALES TAX

STATE GOVERNMENT
TAX ON AGRICULTURE EXCISE ON LIQUOR BOTH CST AND LST

2007 dec

CENTRAL SALES TAX

LOCAL AUTORITIES
OCTROI MUNICIPAL TAXES TAXES ON HOUSE PROPERTY

2007 dec

CENTRAL SALES TAX

INDIRECT TAXES
CENTRAL EXCISE CENTRAL SALES TAX CUSTOMS DUTY SERVICE TAX OCTROI ETC.

2007 dec

CENTRAL SALES TAX

CENTRAL SALES TAX ACT-1956

CONDITIONS 1) There Should Be A Dealer 2)he Should Be A Registered Dealer 3)he Must Carry On Any Business 4)sale Should Take Place 5)sale May Be To A Regd Or Unregd Buyer

2007 dec

CENTRAL SALES TAX

6. The Sale Should Be Of Goods. 7. The Sale Can Be Of Also Declared Goods (Goods Of Specific Importance) 8. The Sale Should Take Place In Course Of Inter State 9. The Sales Should Not Be Within The Same State. 10.The Sale Should Not Be Outside India essential ingredients of interstate sale.doc
2007 dec CENTRAL SALES TAX 8

DEFINITIONS

DEALER U/S 2(b). He Is A Person One Who Is Involved In The Activities Of Buying ,Selling ,Distributing The Goods Directly Or Indirectly Either For Cash Or For Deferred Payment ,For Commission ,Brokerage Etc

2007 dec

CENTRAL SALES TAX

continued
Dealer Includes 1)local Authorities ,Co-operative Societies, A Company,HUF, Association Of Persons,firms.. 2)suppliers, Broker, Del Creder Commissioner,etc 3) An Auctioneer(govt ,Agent,etc)
2007 dec CENTRAL SALES TAX 10

REGISTERED DEALER SEC7

A PERSON SHOULD REGISTER HIMSELF U/S7 THE REGISTRATION MAY BE

1)VOLUNTARY REGISTRATION OR 2)COMPULSORY REGISTRATION,

2007 dec

CENTRAL SALES TAX

11

BUSINESS 2(aa)
BIZ INCLUDES 1)TRADE,COMMERCE ,MFG AND ADVENTURE IN NATURE OF TRADE COMMERCE AND MFG ANY INCIDENTAL AND ANCILLIARY ACTIVITIES RELATED TO MAIN BUSINESS SHOULD ALSO BE CONSIDERED AS BUSINESS

2007 dec

CENTRAL SALES TAX

12

POINTS TO BE REMEMBERED

THE PROFIT MOTIVE IS NOT COMPULSORY FOR THE SALES TAX PURPOSE THE TAX IS LEVIED ON SALES NOT ON PROFIT

2007 dec

CENTRAL SALES TAX

13

SALE -2(G)

SALE INCLUDES A TRANSFER OF GOODS FOR MONEY TRANSFER OF GOODS FOR MONEYS WORTH TRANSFER OF GOODS ON AN AGREEMENT TO PAY ON DEFERRED SYSTEM HIRE PURCHASE SYSTEM AND INSTALLMENT SYSTEM .
CENTRAL SALES TAX 14

2007 dec

POINTS TO BE REMEMBERED
SALE MAY BE TO A REGISTERED BUYER OR UNREGISTERED BUYER. ELEMENT OF PRICE IS ESSENTIAL. FREE SUPPLY IS NOT SALE. QUANTITY DISCOUNT IS NOT A SALE. MORTGAGE IS NOT A SALE. DEPOT TRANSFER IS NOT A SALE.

2007 dec CENTRAL SALES TAX 15

GOODS-2(d)
GOODS MEANS ANY ARTICLE ,THING, COMMODITY,AND WHICH IS MOVABLE ,HOWEVER GOODS DOES NOT INCLUDE NEWSPAPERS,ACTIONABLE CLAIMS,STOCKS, SHARES, SECURITIES.

2007 dec

CENTRAL SALES TAX

16

POINTS TO BE REMEMBERED
NEWS PAPERS WHEN NEWS PAPERS ARE SOLD AS NEWSPAPERS EITHER NEW OR OLD, IS TO BE TREATED AS NOT A GOODS. WHEN OLD PAPERS ARE SOLD AS OLD NEWSPAPERS THEN TO BE TREATED AS GOODS.

2007 dec CENTRAL SALES TAX 17

FEW EXAMPLES OF SALE

SALE OF STEAM,CANNED SOFT WARE, ELECTRICAL ENERGY ANIMALS AND BIRDS, UPROOTED TREES, SECOND HAND GOODS, REGECTED GOODS, SIM CARD, TRADE MARK, LOTTERY TICKETS.

2007 dec

CENTRAL SALES TAX

18

DECLARED GOODS SEC2(C)

Declared Goods Includes Cereals ,Pulses, Coal Including Coke But Not Charcoal, Cotton Waste , Hand Made Garments,tobacco, Raw Tobacco, Cheroots Of Tobacco ,Jute, Oil Seeds, Cotton In Unmanufactured Form ,Crude Oil,sugar,khandsare Sugar, Aviation Turbine Fuel,refused Tobacco, Cigars ,Hides And Skins, Woven Fabrics Of Wool.
CENTRAL SALES TAX 19

2007 dec

POINTS TO BE REMEMBERED

DECLARED GOODS ARE GOODS OF SPECIAL IMPORTANCE.IF DECLARED GOODS ARE SOLD THERE ARE CERTAIN BENEFITS WHICH CAN BE OBTAINED BY THE DEALER ,WHICH IS NOT AVAILABLE FOR THE ORDINARY GOODS.

2007 dec

CENTRAL SALES TAX

20

INTER STATE SALE-SEC 3

ONCE THE GOODS ARE TAKEN OUT OF DEALERS PLACE THEN FINAL DESTINATION SHOULD BE TAKEN INTO CONSIDERATION AND NOT THE ROUTE THROUGH WHICH GOODS ARE TRANSFERRED.

2007 dec

CENTRAL SALES TAX

21

EXAMPLES
IN CASE OF DEPOT SALE HEAD OFFICE------------KARNATAKA DEPOT OFFICE ----------DELHI IF ORDER IS TAKEN FROM CUSTOMER IN DELHI AND GOODS ARE TRANSFERRED TO DELHI FIRST AND THEN SALE IS MADE-INTER STATE SALE

22

2007 dec

CENTRAL SALES TAX

CONTD.

IF FIRST GOODS ARE TRANSFERRED TO DELHI DEPOT AND THEN SALE IS MADE IT IS SALE WITHIN DELHI AND HENCE INTRA STATE SALE.THEN NO CST IS APPLICABLE . BUT FORM F SHOULD BE GIVEN .

2007 dec

CENTRAL SALES TAX

23

INSPECTION
CUSTOMER FROM DELHI COMES TO KARNATAKA AND INSPECTS THE GOODS ,THIS IS INTER STATE SALE,. IF PURCHASE IS ALSO MADE ALONG WITH INSPECTION THEN IT IS INTRA STATE SALE.

2007 dec

CENTRAL SALES TAX

24

SUBSEQUENT SALE

WHEN THE GOODS ARE IN TRANSIT THEN IF BUYER RE DIRECTS THE GOODS TO SOME OTHER CUSTOMER OF OTHER STATE , IT IS CALLED AS SUBSEQUENT SALE AND SHOULD BE TREATED AS INTER STATE SALE.

2007 dec

CENTRAL SALES TAX

25

BASIS OF CHARGE

WHEN ALL THESE CONDITIONS ARE

SATISFIED THEN CST WILL BE LEVIED

AT SPECIFIED RATE ON TAXABLETURNOVER WHICH WILL BE BASED ON SALES AND NOT ON PROFITS.
2007 dec CENTRAL SALES TAX 26

SPECIFIED RATES
FOR THE PURPOSE OF SPECIFIED RATES BUYERS ARE CLASSIFIED INTO THREE GOVERNMENT BUYER(FORM D) REGISTERED BUYER(FORM C) UN REGISTERED BUYER(NO FORMS)

2007 dec

CENTRAL SALES TAX

27

For Registered Buyers

LOCAL SALES TAX RATE OR 3% WHICH EVER IS LESS IF LST IS NIL CST WILL BE NIL IF LST IS < 4%-THEN CST WILL BE SAME IF LST IS >= THAN 4%-THEN CST WILL BE 3%.

2007 dec

CENTRAL SALES TAX

28

FOR UNREGISTERED BUYER

Same as LST

Sale

to Government will be equivalent to sale to unregistered dealer w.e.f. 1-4-2007 CST rate at a glance.doc

2007 dec

CENTRAL SALES TAX

29

question

A DEALER IN PUNJAB MADE INTER STATE SALE OF GOODS R,T,V,X,Y,Z.SALES TAX RATES AS PER PUNJAB SALES TAX ACT FOR SALE WITHIN STATE IS NIL, 2%,4,6,8,AND 12%.WHAT IS THE SALES TAX RATE APPLICABLE IF DEALERS WHO ISSUED ( C ) FORM, ( D) FORM ,NO FORM.
CENTRAL SALES TAX 30

2007 dec

TURN OVER.-2( j )

TURNOVER IS AGGREGATE OF THE SALE PRICES RECIEIVED AND RECEIVABLE BY THE DEALER IN RESPECT OF SALES OF ANY GOODS IN THE COURSE OF INTER STATE TRADE,MADE DURING THE PRESCRIBED PERIOD.(USUALLY QUARTERLY),LESS CST.
CENTRAL SALES TAX 31

2007 dec

FORMULA

TURNOVER = 100*SALEPRICE . 100 +RATE. TAX PAYABLE= SALEPRICE *RATE . 100 +RATE.

2007 dec

CENTRAL SALES TAX

32

PROBLEM

AGGREGATE SALE PRICE DURING JULY TO SEPTEMBER 2007 WAS RS 10400 IN INTER STATE SALE FROM HARYANA.IF THE GOODS ARE SOLD WITHIN THE STATE OF HARYANA, SALES TAX RATE IS 7% .BUYER FROM DELHI ISSUED DECLARATION IN FORM C. WHAT IS TURNOVER AND TAX PAYABLE.
CENTRAL SALES TAX 33

2007 dec

PROBLEM

Aggregate Sale Price During October To December Was Rs 11000, In Inter State Sale From Gujarath, If The Goods Are Sold Within The State Of Gujarath Sales Tax Rate Is 7% ,Buyer From Chennai Did Not Issue Any Sales Tax Declaration. What Is Turn Over And Tax Payable.

2007 dec

CENTRAL SALES TAX

34

SALE PRICE SEC 2( h )

Sale Price Means The Amount Payable To A Dealer As Consideration For The Goods, Less Any Sum Allowed As Cash Discount According To The Practice Prevailing In The Trade,but Inclusive Of Any Sum Charged For Anything Done By The Dealer In Respect Of The Goods At The Time Of Or Before The Delivery Thereof, Other Than Cost Of Freight, Or Delivery Or The Cost Of Installation In Cases Where Such Cost Is Separately Charged.
CENTRAL SALES TAX 35

2007 dec

SALE PRICE SEC-2 ( h )

INCLUDES CONSIDERATION FOR SALE EXCISE DUTY SALES TAX PAYABLE BY THE DEALER SUM CHARGE FOR ANYTHING DONE BY THE DEALER IN RESPECT OF GOODS AT THE TIME OF DELIVERY OR BEFORE THE DELIVERY. FREIGHT (IF INCLUDED IN SALE PRICE) INSURNCE (IF INCLUDED IN SALE PRICE)
CENTRAL SALES TAX 36

2007 dec

CONTD

COST OF INSTALLATION (IF INCLUDED IN SALE PRICE) COST OF PACKING MATERIALS AND PACKING CHARGES. BONUS OR INCENTIVE FOR ATTAINING SALES TARGET. DESIGN FEES CHARGED INRESPECT OF GOODS MFGD AS PER THE DESIGN GIVEN BY THE BUYER.

2007 dec

CENTRAL SALES TAX

37

WHAT IS NOT INCLUDED IN SALE PRICE

CASH DISCOUNT OR TRADE DISCOUNT OR QUANITITY DISCOUNT, COST OF FREIGHT(IF CHARGED SEPERATELY) COST OF INSURANCE(IF CHARGED SEPERATELY) DEPOSITS FOR RETURNABLE CONTAINER.

2007 dec CENTRAL SALES TAX 38

CONTD

COST OF INSTALLATION (IF CHARGED SEPERATELY) TAX AND FEES STATUTORILY RECOVERABLE FROM BUYER.(OTHER TAXES) SUBSIDY PAID BY GOVERNMENT NOT PART OF TURNOVER SALE PRICE OF THE GOODS RETURNED BY THE BUYER WITHIN 6 MONTHS SALE PRICE OF GOODS REJECTED BY THE BUYER.
CENTRAL SALES TAX 39

2007 dec

PROBLEM
A dealer effected following sales during January-March, 2007 quarter - (i) Invoice No. 65 for Rs. 1,76,800. (inclusive of tax) (ii) Invoice No. 66 for Rs. 1,25,000 plus tax @ 4% (iii) Invoice No. 67, for Rs. 40,000. plus C.S.T. @ 4% - Rs. 1,600. Goods worth Rs. 10,400 (inclusive of taxes) were returned within 6 months. Calculate the turnover and sales tax payable, if rate of tax is 4%. (ICWA Inter)
2007 dec CENTRAL SALES TAX 40

A dealer effected the following sales during (April to June)

Invoice

dt 2.4.97 for Rs 26,000 + tax @ 4%

dt 19.4.97 for Rs 70,000 + tax @ 4% dt 2.5.97 for Rs 52,000 (incl of tax) dt 4.6.97 for Rs 12,200 + tax @ 4%. dt 25.6.97 for Rs 20,000 + tax @ 4%.

Goods worth Rs 6,100 (exclusive of tax) were returned on 28.6.1997 ( sale date 4.6.97) Goods worth Rs 5,200 (inclusive of tax) sold on 25.12.1996 were returned on 30.6.1997.. Calculate the turnover and sales tax payable if the rate of tax is 4%. (ICWA Inter)

SOLUTION

Aggregate sale price (which is inclusive of CST) is total of five invoices less sales return within six months. Hence, aggregate sale price is (i) Rs 27,040 + (ii) Rs 72,800 + (iii) Rs 52,000 (iv) Rs 12,688 (v) 20,800 Less (vi) Sale Return Rs 6,344. Hence, aggregate sale price is Rs 1,78,984.
2007 dec CENTRAL SALES TAX 42

From the following details, compute the central sales-tax payable by a dealer carrying on business in New Delhi : Gross Turnover Rs 16,00,000. Other details - i) Trade commission for which credit notes have to be issued separately - 48,000 ii) Installation charges - 25,000 iii) Excise duty 80,000 iv) Freight, insurance and transport charges recovered separately in the invoices - 60,000 v) Goods returned by dealers within six months of sale, but after the end of financial year - 40,000 vi) Central Sales-tax. - Buyers have issued C forms for all purchases. (CA Inter)

How would you arrive at taxable turnover under the Central Sales Tax Act, 1956 from the following particulars : (i) Gross sales as per accounts : Rs. 10,00,000. (ii) Gross sales include : (a) Rs. 50,000 being trade discount allowed to wholesale dealers in terms of agreement. (b) Rs. 20,000 being quantity discount allowed to buyers on the basis of offtake in a specified period. (c) Rs. 70,000 being excise duty paid on goods but recovered from customers by charging the same in invoices. (iii) No sales tax is included in gross sales

(iv) Gross sales figures are net of sales returns detailed below : (a) Goods worth Rs. 25,000 received back after the expiry of six months from the date of sale as the customer rejected the goods not found in accordance with the order. (b) Goods worth Rs. 40,000 returned by the buyers after six months because of inability to the price. (v) A sum of Rs. 75,000 has been recovered from the customers towards freight which has been separately charged in the invoices. The amount of freight is not included in gross sales .(c a ).
.

SOLUTION
Hence,

taxable turnover is Rs 10,00,000 Rs 50,000 (trade discount) Rs 20,000 quantity discount + Rs 40,000 (Goods returned after 6 months added back) i.e. Rs 9,70,000/-.
CENTRAL SALES TAX 46

2007 dec

M/s Roy Brothers, Kolkata, West Bengal, are dealing in two products namely X and Y. The gross Inter State Sales are Rs. 8 lakhs and Rs. 10 lakhs respectively during 04-05. CST was not charged in the Invoice. If the products X and Y are sold within State of West Bengal, the sales tax rate is 8% and 4% respectively. Other information in respect of the year is as follows :

( a) Product X is not manufactured in India. It is imported. Product Y is declared goods, included under section 14 of CST Act. (b) Out of sale of product X, goods worth Rs. 2.50 lakhs were rejected by customer. The goods were dispatched in December 95 and returned by customer in October 96 as these were not to the specification. (c) In case of sale of Rs. 2 lakhs of X, goods were imported by Roy Brothers. These were unloaded in Kolkata port. Before goods were cleared from customs, they were sold by transfer of documents to a buyer in UP. Customs duty was paid by the buyer from UP

d) D form was received in respect of balance sales of X. The sales price is inclusive of packing charges of Rs. 10,000, shown separately in Invoice. (e) Out of total sales of Y, sales of Rs. 6 lakhs were inclusive of packing charges of Rs. 15,000, transport charges of Rs. 12,000 and transit insurance charges of Rs. 6,000. These charges were separately shown in Invoice. C form was received in respect of the sales. These goods were purchased by Roy Brothers from a manufacturer in West Bengal for Rs. 4,57,600, which included West Bengal State sales tax of Rs. 17,600

(f) Balance sale of Y was to unregistered dealers. A cash discount of Rs. 20,000 was given to buyers in respect of the sale. Roy Brothers had introduced a scheme of additional discount to those who effect sales more than 10% of their sales of previous year. Such additional discount amounted to Rs. 25,000 during the year on these sales. The sale of Rs. 4 lakhs is without considering these discounts of Rs. 20,000 and Rs. 25,000. These goods were purchased by Roy Brothers from a manufacturer in West Bengal for Rs. 2,99,200, which included local sales tax of Rs. 11,800.

SOLUTION In case of X, the position is as follows (i) Time limit of 6 months is not applicable to rejected goods. Hence, deduction of Rs 2.50 lakhs is permissible. (b) If the goods are sold before crossing of customs barrier, it will be a sale during import and hence no sales tax is payable. Thus, aggregate sale price of X for tax purposes is Rs 3.50 lakhs (out of total sale of Rs 8 lakhs). Since D form is received, CST @ 4% is payable. Hence, turnover is Rs 3,36,538.46 and CST payable is Rs13,461.54

2)In case of sale of Y of Rs 6 lakhs, deduction of transport charges of Rs 12,000 and transit insurance charges of Rs 6,000 is permissible. Thus, aggregate sale price of Y for tax purposes is Rs 5,82,000 (out of total sale of Rs 6 lakhs). Since C form is received, CST @ 3% is payable. Hence, turnover is Rs 582000 and CST payable is Rs. 17460

In case of sale of Y of Rs 4 lakhs, deduction of cash discount of Rs 20,000 is permissible but deduction of bonus discount is not permissible. Thus, aggregate sale price of Y for tax purposes is Rs 3.80 lakhs (out of total sale of Rs 4 lakhs). CST will be equal to 4% Tax payable will be equal to 3.8 lacs * 4% =15200

Will Roy Brothers be able to obtain any refund of tax paid on their purchases ? If so, how much ?

If declared goods are sold inter-state, refund of local tax paid on purchases is permissible. Hence, Roy Brothers are entitled to get refund of Rs 29,400/(Rs. 17,600 +11,800.)
2007 dec CENTRAL SALES TAX 54

(a) Sale of Rs. 2 lakhs were direct exports in their own name. (b) Sale of Rs. 5 lakhs were made to an exporter who made direct sales. (c) Sale of Rs. 3 lakhs were to Government agencies. (d) Sale of Rs. 9 lakhs were to registered dealers. (e) Sale of Rs. 4 lakhs were to unregistered dealers. If the goods are sold within State of UP, local sales tax rate is 8%. State in each of aforesaid cases : (A) Sales tax declaration form which should be obtained from the buyers. (B) State in each case Central Sales Tax (CST) rate applicable (a) If required declaration is received and (b) If required declaration is not received.

FORMS TO BE ISSUED

FORM C - REGISTERED BUYER FORM D - GOVERNMENT BUYER FORM E1- SUBSEQUENT SALE FORM E2- SUBSEQUENT SALE FORM F - STOCK TRANSFER(DEPOT) FORM H - SALE TO EXPORTER FORM I - SALE TO SEZ Forms for Declarations.doc
2007 dec CENTRAL SALES TAX 56

SUBSEQUENT SALE
IF SUBSEQUENT SALE IS MADE TO REGISTERED AND GOVERNMENT DEALER IT IS EXEMPTED(E1&E2) IF SUBSEQUENT SALE IS MADE TO UNREGISTERED DEALER THEN IT IS TAXABLE Subsequent Sales and transfer of title.doc

2007 dec CENTRAL SALES TAX 57

THANK YOU

2007 dec

CENTRAL SALES TAX

58