What is the difference between a Central Sales Tax and GST

By Registrationwala

4th April 2017


With each passing day, tax payers and traders are getting more curious to know how the newly introduced GST (Goods and Service Tax) will affect their business. Actually, the introduction of GST has completely simplified India’s cumbersome indirect taxation calculation – which often led to double taxation of the same products in the past.

As the unified GST will come into force repealing or subsuming all other forms of indirect state and central level taxes, let’s analyze how GST is different from the CST (Central Sales Tax).

Basis of Difference: GST Vs CST

  • Timing of Taxation: CST is charged when a good is sold and the same gets mentioned on the sales invoice too. But GST will be charged on goods and services at the end stage of the distribution process.
  • Effect of GST: The introduction of GST will lead to the complete merger or removal of CST. Both taxes won’t be charged individually on a single good.
  • For Future Transaction: CST is levied on inter-state sale or movement of goods, but in the proposed GST regime, such transactions will be charged under IGST head.
  • Who Gets What: The tax collected under CST goes to central government’s share but GST taxes would go to the share of both the state and centre.
  • Exemption Amount: CST need not be paid for a certain turnover of small firms or SMEs determined by the central government. While GST need is exempted for a trader whose annual turnover falls below 15-lakh.
  • Collection: CST is collected by the state government while GST will be collected by the central government.
  • The Scope of Tax: GST will be levied on both goods and services but CST can be levied only on goods.

From this year onwards, GST will be introduced at all goods and services after the exemption limit. Anyway, GST is expected to bring down the actual cost of goods for the final consumers as it will remove or get merged with lots of indirect taxes.


What is the difference between a Central Sales Tax and GST