Value Added Tax (VAT)/ Central Sales Tax (CST)

Since April 1, 2005 all states in India have progressively replaced local sales tax with VAT. VAT is not different from local sales tax regime, except that it considers tax on value addition at each level of the distribution network. The rates of VAT on various commodities are uniform for all the States/UTs. There are 2 basic rates of 4 per cent and 12.5 per cent, besides an exempt category and a special rate of 1 per cent for a few selected items.

VAT is levied on sale of goods within the state. If the sale is outside the state of origin, CST is levied. The standard rate of CST is 2% provided both the seller and buyer are registered dealers. Else, the rate is as per VAT, as applicable in the state of seller. CST/VAT is neither imposed on import of goods into, nor export of goods out of India.