Confusion over CST for online businesses
I manufacture and sell products online, through my website, as well as through 3rd party such as Amazon.
I have been getting different information from different CAs regarding the CST applicable, when i sell a product from my state to a customer in another state.
Should I be charging 4% CST in such a case, or 14.5% (K-VAT) ? Some CAs have said 4%, others say that since 14.5% is higher, I am oblidged to charge 14.5%.
Looking for clarity on this once and for all.
Asked 2 years ago in VAT from Bengaluru, Karnataka
The real position is as under :-
1) When you sell interstate to another registered dealer & if he provides C form for the transaction, you can charge CST @ 2%. In your case, since you are selling to a end consumer, Form C is not applicable and hence question of C form does not arise and 2% tax is not applicable to you.
2) In case of inter state sale to other than registered dealers, the CST to be charged is the rate at which it is charged when the same product is sold within state. (i.e) if you charge 4% tax for the product when you sell within the state, you need to charge 4%. If you charge 14.5% for the product when you sell the same product within the state, you need to charge 14.5%.
Hope this clarifies your doubt.
To help you provide further clarity on your matter I would need to understand your query in exact terms first:
What do you mean by CST is 4% and KVAT - 14.5%. Is the CST 4% you are talking about is a reduced liability and is it against C-Form ?
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP.
Please find the response below:
In an inter-state sale to a registered dealer against form C the rate of CST is 4% or local sales tax rate whichever is lower.
-If under the local sales tax law, sale or purchase is exempt from CST the CST is Nil.
- In an inter-state sale to government against form D the rate of CST is 4% or local sales tax rate whichever is lower.
- Rate of CST in case of inter-state sale of declared goods without form C or D is twice the rate of tax applicable to the local sale or purchase of such goods in that state.
- Rate of CST in case of other goods ( i.e. non-declared goods) is 10% or the applicable local sales tax of that state, which ever is higher.
Thanks and Regards,
CA Abhishek Dugar