Differences Between VAT & CST

The CST and VAT are two forms of taxation in India.

The Central Sales Tax (CST) and Value Added Tax (VAT) are two forms of taxation put in place by the Indian Government. These taxes are generally applied to manufactured goods and services.

Central Sales Tax (CST)

The CST is applied to a commodity when it is imported, produced or sold. This tax is only applied once; if the item is resold, it is tax-exempt from the CST.

Value Added Tax (VAT)

The VAT is an indirect consumption tax. This tax is based on the "value" of a commodity or service and is added at the point of sale. Thus, the cost of the VAT is passed on to the consumer. Merchants collect the VAT and remit it to the Indian government.

Applicability of the Taxes

The CST is levied by the Central government of India on manufactured goods. The Sales Tax, which is a different tax, is levied by the individual state governments.

The VAT applies to goods and services across India, regardless of the state in which an item is purchased. It is a tax found commonly throughout the world.

References

• Government of India: Value Added and Sales Tax