What is Sales Tax?
Sales tax is an indirect tax levied on the sale of goods and services. It is imposed and charged by the government of the nation. The sales tax is included in the price of the product and is collected by the seller on behalf of the government, who later is liable to pay that amount to the government. In the system of sales tax, the tax incidence and tax impact fall on two different persons. In simple words, the actual burden of tax (tax incidence) is born by the consumer of the product, but it is collected from the seller (tax impact). Like any other tax, sales tax is a source of revenue for the government and funds various projects of the government.
Geeky Takeaways:
- Sales tax is a compulsory payment made to the government indirectly via the seller on purchasing goods or services.
- Sales tax is included in the final price of the product sold or purchased.
- The real tax burden is borne by the consumer, while the tax is paid to the government by the seller. This means tax impact and tax incidences fall upon two different persons.
- There are different types of sales tax, Retail and Wholesale Sales Tax, Central Sales Tax (CST), and Value Added Tax (VAT). However, sales tax has been replaced by Goods and Services Tax (GST) in India since 1st July 2017.
- Sales taxes are implemented at various levels of government including, local, state, or national levels, and may differ from country to country according to the taxation policy of the country.
Table of Content
- Types of Sales Tax
- Sales Tax in India
- Central Sales Tax Act, 1956
- Central Board of Direct Taxes
- What is Sale Price?
- What is Inter-State Sales?
- Central Sales Tax (CST) Transaction Forms
- State Government Taxes
- Sales Tax Exemptions
- Calculation of Sales Tax
- Violation of Sales Tax Rules
- Conclusion
- Sales Tax – FAQs