The 2012 worldwide VAT, GST and sales tax guide

296 I NDIA
CST 1956
Service Tax
1994 (scope gradually widened)
Administered by
VAT
Levied and administered
by the states
CST
Levied by the central
government, but collected and
administered by the states
Service Tax
Levied and administered
by the central government
VAT rates
Standard Ranges from 12.5% to 15%
among the states
Other
Nil/1%/4% or 5%/20%, as well
as 0.25% to 1% on entire
turnover for small sellers
CST rates
Goods purchased for
resale, use in
manufacturing or other
specified usage 2%
Other cases
VAT rate applicable
in the respective state
Service Tax rate 10.30%
VAT and CST return periods Half-yearly/quarterly/monthly
(depending on the state’s
legislation)
Service Tax return periods Half-yearly
Thresholds
VAT registration
INR 500,000 (in general)
CST registration
None
Service Tax registration INR 900,000 (but with no
liability for payment of tax if
total annual turnover is less
than INR 1 million)
B. Scope of the tax
VAT. VAT applies to the following transactions:
• The sale of goods within the state. The transfer of a right to use
goods (a lease) is included in the definition of “sale” for this
purpose.
• The transfer of goods during the execution of works contracts
involving the supply of materials and services.
• The purchase of goods from nonregistered vendors in specified
situations.
• The delivery of goods with respect to hire-purchase or any
system of payment by installments.
• The supply of food or any other article for human consumption
or any drink as part of a service or in any other manner.
CST. CST applies to the interstate sale of goods, that is, to the
movement of goods from one state to another, pursuant to a sale.
Service Tax. Service Tax applies to specified “taxable services.”
Services not included in this list are not taxable. Currently, over 100
categories of services are included in the list of taxable services.