Sales Tax & VAT

7/29/2019 Sales Tax & VAT

1/15

PRESENTING BY,

PHILIP.B.PHILIP

DIVYA.P.MARIA

S3MBA

KICMA


2/15


3/15

INTRODUCTION Sales tax and value added tax are indirect taxes. Sales

tax levied at the time when sale or purchase of goodstake place. VAT is a tax on the "value added" to aproduct or material, at each stage of its manufacture ordistribution. A VAT is like a sales tax in that ultimatelyonly the end consumer is taxed. It differs from thesales tax in that, with the latter, the tax is collected andremitted to the government only once, at the point ofpurchase by the end consumer.


4/15

THE KERALA GENERAL SALES TAX

ACT, 1963 It came into force on 1st April 1963.

KGST Act has more than 60 sections, no. ofsubsections and five schedules.

Short title, extent and commencement:-(1) ThisAct may be called the Kerala General Sales Tax Act,1963.

(2) It extends to the whole of the State of Kerala

(3) It shall come into force on such date as theGovernment may by notification in the Gazette,appoint.


5/15

FEATURES OF KGST ACT The goods are classified into different categories.

The definitions of terms sales or purchase of goods

have been very comprehensively given. Different rates of tax are charged for different

categories of goods.

The mode of appeal and penalities have been

prescribed. Certain goods are exempted from sales tax.

Sales tax exemption is granted for SSI units.


6/15

CENTRAL SALES TAX ACT, 1956An Act to formulate principals for determining when a

sale or purchase of goods takes place in the course ofinter-State trade or commerce or outside a State or in

the course of import into or export from India, toprovide for the levy, collection and distributions oftaxes on sale of goods in the course of inter-State tradeor commerce and to declared certain goods to be of

special importance in inter-State trade or commerceand specify the restrictions and conditions to whichlaws imposing taxes on the sale or purchase of suchgoods of special importance shall be subject.


7/15

Short tile, extent and commencement: - (1) ThisAct may be called The Central Sales Tax Act, 1956.

(2) It extends to the whole of India. (3) It shall come into force on such date as the Central

Government may, by notification if the OfficialGazette, appoint, and different dates may be

appointed for different provisions of this Act.


8/15

USES OF CST Classify the commodity.

Determine the point of levy.

Ascertain the rate of tax.Ascertain the modification /exemption / changes in

the :

Classification.

Point of levy. Rate of tax.


9/15

Determine the applicable/effective rate of tax.

The information could be used for

Planning a transaction. Locating a transaction.

Execute a transaction.

Identify the source of purchase.


10/15

VALUE ADDED TAXValue added tax is a general consumption tax that is

assessed on the value added to goods and services.

Value added tax (VAT) avoids the cascade effect ofsales tax by taxing only the value addedat each stage ofproduction.


11/15

ADVANTAGES OF VAT

1. Revenue security.2. Selectivity.

3. Simplification.

4. Transparency.

DISADVANTAGES OF VAT

1. Regressive.

2. Difficult to operate.

3. Inflationary.

4. VAT favours capital intensive firms.


12/15

FEATURES OF VAT1. VAT proposes to impose two types of tax rates:

4% on declared goods or the goods commonly used.

10-12% on goods called RNR. Two special rates will be imposed - 1% on silver or gold

and 20% on liquor. Tax on petrol, diesel or aviation turbinefuel are proposed to be kept out from the VAT system asthey would be continued to be taxed, as presently

applicable by the CST Act.


13/15

2. Uniform rates in the VAT system, a certaincommodities are exempted from tax.

3. No concession to new industries.

4. Adjustment of tax paid on the goods purchased from

the tax payable on the goods of sale.5. Collection of tax by seller/dealer at each stage.

6. VAT is not cascading or additive though the tax onthe goods sold is collected at each stage.


14/15

DIFFERENCE BETWEEN VAT & CST1. Under CST Act, the burden of the full tax bond is borne by only

one dealer, either the first or the last dealer.Under the VAT system, the tax burden would be sharedby all the dealers from first to last.

2. In CST, tax is levied at a single point.In VAT, the retailers are subject to tax except for the retail

tax.

3. Under CST, general and specific exemptions are grantedon certain goods.Under VAT , does not permit such exemptions.


15/15

CONCLUSION

The authority to impose sales tax was given to stategovernments in 1935. The state governments were free tolevy tax on goods in any manner. The govt. of Kerala hasadopted KGST Act with this view. In many cases the

trade takes place outside the state was deemed as tradewithin the state itself. There was a great confusion aboutthe territorial limits for levy of sales tax. For solving thisproblem CST Act was introduced by central govt. Inpresent conditions govt. has gone a step forward inbringing uniformity to sales tax by adopting VAT system.The sales tax will be completely replaced by VAT systemall over India by the year 2012.

Documents

Sales Tax & VAT