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Unit 12: Central Sales Tax

12.8 Liability to Tax on Inter-state Sales Notes

As per Section 9(1) central Sales tax shall be levied by the central government but shall be
collected and retained by the state government where the movement of goods have commenced.

12.8.1 Rates of Tax

The rate of central sales tax is 4 % or local state rate whichever, is lower on the first point of inter-
state sale if, the goods are sold to the government or to a registered dealer, and on the fulfillment
of specified condition, subsequent sales during the movement of same goods will be exempted
from tax. But, if any of the dealers in these subsequent sales is or an unregistered dealer then the
last registered dealer will collect tax @ 10% from an unregistered dealer to whom goods have
been sold.

Incidence of Central Sales Tax in Different Situations

12.8.2 Determination of Turnover

As per section 8(A), to determine turnover following amounts will be deducted –
 Central sales tax
 Sale price of goods returned within six months

 Other items as the central government may notify
Central Sales Tax

If tax forms a part of aggregate sales price then amount of tax collected by a registered dealer
shall be deducted from his gross turnover. Tax is calculated by the following formula.

Rate of tax × Aggregate of sales price
100 Rate of tax

If the turnover of a dealer is taxable at different rates, then above formula shall be applied
separately in respect of each part of the turnover liable to a different rate of tax.

12.8.3 Collection of Tax Section 9(A)

The central sales tax can be collected from the buyers only by the registered dealers on the inter-
state sale effected by them. According to rules prescribed under this Act., Dealers who are not

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