Difference of Taxability:
Service Tax is a form of indirect tax imposed only on services provided. From the point of view
of a layman, providing services means assistance in any work, taking up of any
work on behalf of others, any professional assignment or rendering intangible
benefits to others.
VAT (Value Added Tax) is a form of indirect tax imposed only on goods sold within a
particular state, which essentially means that the buyer and the seller needs to
be in the same state. Only when tangible goods and products are sold, VAT can
be imposed.
CST (Central Sales Tax) is a form of indirect tax imposed only on goods sold from one
state to another state, which particularly takes into account that the buyer and the
seller needs to be in two different states.
Governing Act:
Service Tax is governed by Finance Act, 1994. It was then when the finance
minister brought in taxes on services rendered to reduce the degree of
intensity of taxation on manufacturing and trade without forcing the government
to compromise on the revenue needs. Service tax does not have any specific act
to govern its stipulations.
VAT (Value Added Tax) is governed by respective state Acts. Every
state has a separate and distinct VAT act reserved for their state.
CST (Central Sales Tax) is governed by Central Sales Tax Act,
1956. This tax is governed by a single central act, though the changeability is
state specific.
Registration under Act: When Compulsory?
Service Tax registration is a function of gross turnover. Once the turnover of
the assessee crosses a threshold limit of Rs 9 lacs, the service provider is
required to get itself registered under the law, and compulsorily required to
charge service tax on services provided once the turnover crosses Rs 10 lacs.
VAT (Value Added Tax) registration is compulsory for dealers having
turnover exceeding Rs 5 lacs (or increased limit of Rs 10 lacs in some
states).On registration, such dealer is allotted a unique 11 digit TIN
(Taxpayer’s Identification Number).
CST (Central Sales Tax) registration is not dependent on amount of
turnover. Simply put, registration of dealer becomes compulsory once he affects
an inter-state sale.
Due Dates of Returns:
Service Tax returns are due half-yearly shown as under:
- April – September: 25th October.
- October – March: 25th April.
VAT (Value Added Tax) returns are due on 20th of the succeeding month
following the relevant month i.e. For June, 2012, the due date of VAT return is
20th July, 2012.
CST (Central Sales Tax) returns due date are exactly similar to VAT return
due dates i.e. 20th of the succeeding month following the relevant month.
Rate of Charge:
Service Tax: The present rate is 12.36 %, which is leviable on all services
except those captured in Negative List(the list comprising of 17 specific
services which are exempt from service tax).
VAT (Value Added Tax) do not have any uniform rate. The following
table depicts the varied rates of VAT.
Description
|
Rate of VAT
|
Natural and unprocessed products, items which are legally barred
from taxation or items having social implications
|
0%
|
Precious stones, precious and semi-precious metals, bullion,
gold and silver ornaments
|
1%
|
Items of basic necessities, all agricultural and industrial
outputs, capital goods and declared goods
|
4%
|
Luxury Goods
|
20%
|
All goods other than goods falling under aforesaid categories
|
13.5%
|
CST (Central Sales Tax) rate varies with
situations. Unlike Service Tax and VAT, neither CST has any uniform rate, nor
is the rate solely dependent upon the category of goods. The underlying table
will elaborate the applicability of CST rates.
Nature of Goods
|
Sale to Govt. on submission of ‘D’ Form
|
Sale to registered dealer for resale/use in manufacture on
submission of ‘C’ Form
|
Sale in any other case
|
Declared Goods
|
4% or State Sales Tax
(or VAT),
whichever is lower
|
4% or State Sales Tax
(or VAT),
whichever is lower
|
2 * VAT rate
|
Other Goods
|
4% or State Sales Tax
(or VAT),
whichever is lower
|
4% or State Sales Tax
(or VAT),
whichever is lower
|
10% or State Sales Tax (or VAT),
whichever is lower
|
Point of Taxation OR Changeability
Service Tax is charged at the time of rendering services, in normal
circumstances. However, there may be a situation where service tax is charged
before rendering services or after completion of service. The important thing
to note here is the timing of changeability and the rate of changeability. Changeability arises when services are rendered, while the rate is determined
at the time of payment by service receiver. Suppose when services are rendered,
the rate is 10.3% on such services. However, when the receiver makes payment,
the rate is 12.36%. So, the applicable rate is 12.36%.
On a different note, suppose when services are rendered, the
service was under exempt category. However, when the receiver makes payment,
the rate is 12.36%. In that case, the applicable rate is Nil, since changeability did not arise at the time of rendering services, the services
being exempt at that time.
VAT (Value Added Tax) follows a different practice of changeability,
where fulfilment the following conditions generate changeability:
- Existence of ‘goods’
- Sale of ‘goods’
- Within the state i.e. both the
buyer and seller should be situated in the same state.
CST (Central Sales Tax) runs parallel with VAT conditions, when it comes
to changeability, except the third condition. The difference is as follows:
- From one state to another i.e.
the buyer and seller should be situated in two different states.
Time of Payment/Deposit of Tax:
Service Tax
Assessee
|
Duration of Payment
|
Time of Payment
|
Individual, Sole Proprietorship or Partnership or LLPs
|
Quarterly
|
If tax paid electronically: 6th of the month following
the quarter, for manual payment, 5th of the month following
the quarter.
|
Any other assessee
|
Monthly
|
If tax paid electronically: 6th of the month following
the relevant month, for manual payment, 5thof the month
following the relevant month.
|
Service Tax for quarter/month ended 31st March: Payable by 31st March itself
VAT (Value Added Tax) is payable by 15th of the succeeding month
following the relevant month
i.e. For June,2015, the due date of VAT payment is
15th July,2015.
CST (Central Sales Tax) is payable by 20th of the month following
the relevant month.
i.e. For Oct,2015, the due date of VAT payment is 20th Nov,2015.
Valuation Method:
Service Tax is leviable on the value of services rendered. Such value will be
calculated under the following situations in the manner prescribed below:
Case
|
Value
|
Where provision of service is for a consideration in money
|
Gross amount charged by the service provider for such services
|
Where provision of service is for a consideration partly
consisting of money
|
Estimated monetary value of services under prevalent market
conditions
|
Where provision of service is for a consideration which is
|
Service Tax (Determination of Value) Rules, 2006
|
VAT (Value Added Tax) carries state-to-state varied valuation methods
for computing sale price. However, the valuation method laid down for CST can
be approximately applied for sale value determination on which VAT is
chargeable.
CST (Central Sales Tax) would be levied on the sale price which would
include the following :
- CST (whether or not shown
separately)
- Excise Duty (whether or not
shown separately)
- Cost of Packing Material
- Packing Charges
- Bonus Discount or Incentive
bonus for additional sales effected by the dealer
- Insurance Charges
- Dharmada Charges
To Conclude – Considering the scope of topic is so wide, it’s
not possible to cover all issues in one single article. We propose to come up
with more articles on this topic which would talk about Utilisation of Credit
Tax, Penal Provisions, changeability in case of composite service and sale of
goods scenarios and other issues.
Difference between CST
and Excise duty:-.
1.
CST refers to central sales tax which are levied on inter state sale ( sales of
movable goods between two states)
For
example:
If a trader of U.P sells goods to trader of Haryana then it will be
called inter state sales and tax collected by by U.P tax authorities will be
called CST.
Whereas, Excise duty refers to the tax levied on production of goods in India.
1. CST is levied by central government and collected by state government.
Whereas, Excise duty is levied and collected by central government.
2. CST is calculated on sale value of goods sold.
Whereas, Excise duty is calculated on cost of production of goods.
3. CST is charged after sale of goods.
Whereas, Excise duty is charged before sale of goods.
4.
Excise duty is paid by the manufacturer whereas sales tax is born by the end
consumer.
5.
Excise Duty is payable on removal of goods from factory or godown whereas Sales
tax is payable after the sale takes place
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