The Sales Tax is a small percentage of product’s value charged at the point of exchange or buying a new product. There are different forms of sales tax- retailers, wholesale, manufacturers, and value added tax (VAT).
Retail Sales Tax - It is a tax charged at the time of sale of retail goods and is directly paid by final consumer.
Manufacturers Sales Tax - It is levied on the manufacturing of certain goods.
Wholesale Tax - It is levied on individuals who deal with wholesale distribution or sale of manufactured goods.
Use Tax - This tax is levied on the consumer, if he or she has purchased good without paying sales tax. It generally happens from vendors who are not under the tax jurisdiction.
Value Added Tax - VAT is an additional tax levied on all sales by certain governments.
One of the major reasons for the growth and development of country is implementation of sales tax in India. We Indians, follow a system of a central union government in each state. It is known as Central Sales Tax act,1956. This act allows the central government to collect sales tax on various products. The central sales tax is applicable on a state where the particular goods are sold.
The Central Sales Tax Act was formulated with an objective to make tax collection streamlined and simpler.
|Form C||This form helps the purchasing dealer to get goods at concessional rates from the seller.|
|Form D||This is issued by the government department on purchasing of goods.|
|Form E1||This is issued by the dealer who initiates the inter-state movement of goods.|
|Form F||This is issued when the goods are sent to a different state.|
|Form H||This is issued by an exporter for the purchase of goods.|
|Form I||This is issued by dealers in Special Economic Zones.|
The state is offering tax exemptions in certain cases on humanitarian grounds or to avoid being in a situation of double taxation.
Total Sales Tax = Cost of item x Sales tax rate
For example : If Mr. Kumar purchases a box of biscuits at Rs. 100 which have a sales tax component of 10%, then the total sales tax paid by him becomes (100 x 0.10) = 10
Thus, he pays a sales tax of Rs. 10 on the product.
Tax can become complicated, sometimes unintentionally violates the tax rules. Here sharing the common scenarios.
The Central Board of Direct Taxes is an apex body responsible for administering the taxes in the country. It is a statutory body functions under the purview of the central board revenue act 1963. It is a division of the Ministry of Finance, working under the ambit of the Department of Revenue.
The Central Board of Direct Taxes is composed of the following members.
The Central Board of Direct Taxes looks addresses all issues and matters concerning the levy and collection of direct taxes in the country.