Introduction of CST and CST Forms (Central Sales Tax)

Dear Friends, Today we will talk about CST and CST Forms and You know very well about the Tally software. At present time Tally is one only most popular accounting cum inventory software that handles the day-to-day all routine operations of any business unit very effectively. It is widely accepted by the different accounts for its user-friendly nature. Tally provides different accounting and inventory features that allow any user to maintain his company accounts effectively. There are lot of tax charged in India and after reading this article you will be able to know about the introduction of CST (Central Sales Tax) and which CST Forms you have to use during the financial year.

Introduction of CST and CST Forms

Definition of CST:

Today we talk about what is the CST and CST Forms in Tally? CST Stands for Central Sales Tax. When any registered dealer purchases any goods from other state or sold goods to other state dealer in that case CST is applicable at the place of vat at the rate of 2%. CST Act, 1956 was enacted which came into force on 05.01.1957. Originally, the rate of CST was 1%, which was increased first to 2%, then to 3% and w.e.f. 1st July, 1975 to 4%. The CST Act, 1956 Act provides for declaration of certain goods to be of special importance in inter-State trade or commerce and lay down restrictions on the taxation of such items. The entire revenue accruing under levy of CST is collected and kept by the State in which the sale originates. The Act excludes taxation of imports and exports.

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CST being an origin based tax, is inconsistent with Value Added Tax which is a destination based tax with inherent input tax credit refund. An amendment to the Central Sales Tax Act to provide for reduction of the rate of Central Sales Tax for inter-State sales between registered dealers from 4% to 3% w.e.f. 1st April, 2007 was effected in. Through this amendment, facility of inter-State purchases by Government Departments at concessional CST rate, against Form-D has been withdrawn. After this amendment, the rate of CST on inter-State sales to Government will be same as VAT/ State sales tax rate.

CST Forms

FORM NoPurpose
A1Application for register
RG 23 part IStock account of input
RG 23 Part IIEntry book of duty credit of input goods
Annexure IIJob Work Challan
Annexure IVStock register of goods sent for job work processing
DSADaily Stock A/c
PLAPersonal ledger A/c
InvoiceFor clearance of Excisable goods
TR- 6For clearance of Excisable goods
ER – 1Monthly Return

Central Sales Tax rate has been further reduced from 3% to 2% with effect from 1st June, 2008. Reduction of CST rate first from 4% to 3% & then from 3% to 2% has been done as a precursor to the introduction of Goods & Services Tax (GST), as CST would be inconsistent with the concept & design of GST.

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