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CST vs. VAT — What's the Difference?

By Tayyaba Rehman — Published on December 7, 2023
CST (Central Sales Tax) is a tax on inter-state sales in India, while VAT (Value Added Tax) is a consumption tax levied on value added at each production or distribution stage.
CST vs. VAT — What's the Difference?

Difference Between CST and VAT

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Key Differences

CST and VAT are both indirect taxation methods implemented in India, but they are applied under different scenarios and for different purposes.
Tayyaba Rehman
Dec 07, 2023
CST, standing for Central Sales Tax, is specifically applied to sales that occur between two different states within India. On the contrary, VAT, or Value Added Tax, is imposed on goods and services, focusing on the value added at each stage of production or distribution.
Tayyaba Rehman
Dec 07, 2023
While CST is levied by the central government, VAT is implemented by state governments. This means that CST remains uniform across states, but VAT rates may differ from one state to another.
Tayyaba Rehman
Dec 07, 2023
A crucial distinction between CST and VAT lies in their application; while CST is singular in its imposition on inter-state sales, VAT gets charged multiple times as goods/services pass through various production or distribution stages.
Tayyaba Rehman
Dec 07, 2023
To sum up, while CST ensures taxation on goods sold between states, VAT ensures that the end consumer bears the tax burden by taxing the value added throughout the product's lifecycle.
Tayyaba Rehman
Dec 07, 2023
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Comparison Chart

Full Form

Central Sales Tax
Value Added Tax
Tayyaba Rehman
Dec 07, 2023

Applicability

Inter-state sales within India
On goods and services at each production or distribution stage
Tayyaba Rehman
Dec 07, 2023

Levied By

Central Government
State Governments
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Dec 07, 2023

Nature

Uniform across states
Can vary from state to state
Tayyaba Rehman
Dec 07, 2023

Point of Imposition

Singular, on inter-state sales
Multiple times, at each value-added stage
Tayyaba Rehman
Dec 07, 2023

Compare with Definitions

CST

Uniform tax across all Indian states.
CST remains consistent regardless of the states involved in the transaction.
Tayyaba Rehman
Oct 18, 2023

VAT

A tax on value addition in the product lifecycle.
The price of the product includes the VAT charged at each production stage.
Tayyaba Rehman
Oct 18, 2023

CST

Imposed on goods moving between states.
When transporting goods from Uttar Pradesh to Kerala, CST applies.
Tayyaba Rehman
Oct 18, 2023

VAT

A consumption tax borne by the end consumer.
As consumers, we pay VAT on most of our purchases.
Tayyaba Rehman
Oct 18, 2023

CST

A tax on sales between Indian states.
The company had to pay CST for selling goods to a neighboring state.
Tayyaba Rehman
Oct 18, 2023

VAT

Applied at various production or distribution points.
VAT is imposed at every stage where value is added to the product.
Tayyaba Rehman
Oct 18, 2023

CST

An indirect tax levied by the central government.
The central government oversees the collection of CST on inter-state transactions.
Tayyaba Rehman
Oct 18, 2023

VAT

Levied by state governments in India.
Different states in India might have varying VAT rates on similar products.
Tayyaba Rehman
Oct 18, 2023

CST

Ensures taxation of inter-state commerce.
For businesses engaged in inter-state trade, understanding CST is crucial.
Tayyaba Rehman
Oct 18, 2023

VAT

Aims to distribute the tax burden across the supply chain.
Manufacturers, wholesalers, and retailers all contribute to VAT before the product reaches the consumer.
Tayyaba Rehman
Oct 18, 2023

CST

Standard time in the 6th time zone west of Greenwich, reckoned at the 90th meridian; used in the central United States
Tayyaba Rehman
Oct 16, 2023

VAT

A large vessel, such as a tub, cistern, or barrel, used to hold or store liquids.
Tayyaba Rehman
Oct 16, 2023

VAT

To put into or treat in a vat.
Tayyaba Rehman
Oct 16, 2023

VAT

A large tub, such as is used for making wine or for tanning.
A vat of liquid
A vat of acid
A vat of wine
A vat of olives
A vat of fat
A vat of glue
Tayyaba Rehman
Oct 16, 2023

VAT

A square, hollow place on the back of a calcining furnace, where tin ore is laid to dry.
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Oct 16, 2023

VAT

(Roman Catholic) A vessel for holding holy water.
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Oct 16, 2023

VAT

(dated) A liquid measure and dry measure; especially, a liquid measure in Belgium and Holland, corresponding to the hectolitre of the metric system, which contains 22.01 imperial gallons, or 26.4 standard gallons in the United States.
Tayyaba Rehman
Oct 16, 2023

VAT

(transitive) To put into a vat.
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Oct 16, 2023

VAT

(transitive) To blend (wines or spirits) in a vat; figuratively, to mix or blend elements as if with wines or spirits.
Tayyaba Rehman
Oct 16, 2023

VAT

A large vessel, cistern, or tub, especially one used for holding liquors in an immature state, chemical preparations for dyeing, or for tanning, or for tanning leather, or the like.
Let him produce his vats and tubs, in opposition to heaps of arms and standards.
Tayyaba Rehman
Oct 16, 2023

VAT

A measure for liquids, and also a dry measure; especially, a liquid measure in Belgium and Holland, corresponding to the hectoliter of the metric system, which contains 22.01 imperial gallons, or 26.4 standard gallons in the United States.
Tayyaba Rehman
Oct 16, 2023

VAT

A wooden tub for washing ores and mineral substances in.
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Oct 16, 2023

VAT

A vessel for holding holy water.
Tayyaba Rehman
Oct 16, 2023

VAT

To put or transfer into a vat.
Tayyaba Rehman
Oct 16, 2023

VAT

A tax levied on the difference between a commodity's price before taxes and its cost of production
Tayyaba Rehman
Oct 16, 2023

VAT

A large open vessel for holding or storing liquids
Tayyaba Rehman
Oct 16, 2023

Common Curiosities

How is VAT different from a sales tax?

VAT is levied on the value added at each production or distribution stage, while sales tax is on the final sale to the consumer.
Tayyaba Rehman
Dec 07, 2023

Where is CST applicable?

CST is applicable to inter-state sales within India.
Tayyaba Rehman
Dec 07, 2023

Who levies the CST?

The CST is levied by the central government of India.
Tayyaba Rehman
Dec 07, 2023

Can VAT rates differ within a country?

Yes, in countries like India, VAT rates can differ from one state to another.
Tayyaba Rehman
Dec 07, 2023

How often is VAT imposed on a product?

VAT is imposed multiple times, at each stage where value is added to the product.
Tayyaba Rehman
Dec 07, 2023

Which tax ensures the end consumer bears the tax burden?

VAT ensures that the end consumer ultimately bears the tax burden.
Tayyaba Rehman
Dec 07, 2023

Is CST applicable to services?

No, CST is primarily for inter-state sales of goods.
Tayyaba Rehman
Dec 07, 2023

How does VAT impact product pricing?

VAT is usually included in the product's price, making products more expensive for the end consumer.
Tayyaba Rehman
Dec 07, 2023

What do CST and VAT stand for?

CST stands for Central Sales Tax, and VAT stands for Value Added Tax.
Tayyaba Rehman
Dec 07, 2023

Why is CST uniform across states?

CST is uniform because it's governed by the central government, ensuring consistency across states.
Tayyaba Rehman
Dec 07, 2023

Is VAT applicable only in India?

No, VAT is a global concept and is used in many countries with different names and structures.
Tayyaba Rehman
Dec 07, 2023

Does every country have both CST and VAT systems?

No, the CST system is specific to India, while VAT or similar systems exist in many countries.
Tayyaba Rehman
Dec 07, 2023

Why is VAT considered a more transparent taxation method?

Because VAT is levied at each value-added stage, it's considered transparent and distributes the tax burden.
Tayyaba Rehman
Dec 07, 2023

Can a product be subjected to both CST and VAT?

In some scenarios, a product can attract both CST and VAT, but typically they are mutually exclusive.
Tayyaba Rehman
Dec 07, 2023

If I buy a product in one state and sell it in another, do I pay CST or VAT?

If you're involved in inter-state trade, you would typically pay CST.
Tayyaba Rehman
Dec 07, 2023

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Author Spotlight

Written by
Tayyaba Rehman
Tayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.

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