PRESENTING BY,

PHILIP.B.PHILIP DIVYA.P.MARIA S3MBA KICMA

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

tax levied at the time when sale or purchase of goods take place. VAT is a tax on the "value added" to a product or material, at each stage of its manufacture or distribution. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer.

THE KERALA GENERAL SALES TAX ACT, 1963

It came into force on 1st April 1963.

KGST Act has more than 60 sections, no. of

subsections and five schedules. Short title, extent and commencement:-(1) This Act 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 the Government may by notification in the Gazette, appoint.

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.

CENTRAL SALES TAX ACT, 1956

An Act to formulate principals for determining when a

sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distributions of taxes on sale of goods in the course of inter-State trade or commerce and to declared certain goods to be of special importance in inter-State trade or commerce and specify the restrictions and conditions to which laws imposing taxes on the sale or purchase of such goods of special importance shall be subject.

 Short tile, extent and commencement: - (1) This

Act 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 Official Gazette, appoint, and different dates may be appointed for different provisions of this Act.

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.

 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.

VALUE ADDED TAX

Value 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 of sales tax by taxing only the value added at each stage of production.

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.

FEATURES OF VAT
1.

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 turbine fuel are proposed to be kept out from the VAT system as they would be continued to be taxed, as presently applicable by the CST Act.

2. Uniform rates in the VAT system, a certain

3.
4.

5.
6.

commodities are exempted from tax. No concession to new industries. Adjustment of tax paid on the goods purchased from the tax payable on the goods of sale. Collection of tax by seller/dealer at each stage. VAT is not cascading or additive though the tax on the goods sold is collected at each stage.

DIFFERENCE BETWEEN VAT & CST

1.

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 shared by all the dealers from first to last. In CST, tax is levied at a single point. In VAT, the retailers are subject to tax except for the retail tax.

2.

3.

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

CONCLUSION
The authority to impose sales tax was given to state

governments in 1935. The state governments were free to levy tax on goods in any manner. The govt. of Kerala has adopted KGST Act with this view. In many cases the trade takes place outside the state was deemed as trade within the state itself. There was a great confusion about the territorial limits for levy of sales tax. For solving this problem CST Act was introduced by central govt. In present conditions govt. has gone a step forward in bringing uniformity to sales tax by adopting VAT system. The sales tax will be completely replaced by VAT system all over India by the year 2012.