In other words, VAT deals with intra-state trade and is a State government’s tax where as CST deals with inter-state trade and is a Central government’s tax.įor instance, when you’re dealing with a business between Bangalore and Mysore (both in Karnataka) VAT will come into play and whenever you’re dealing with a business between Bangalore and Mumbai, CST will be applied. The primary difference between VAT and CST is that VAT is applied on transactions where the goods’ origin and delivery destination are within the same state in India, whereas, CST is applied when the goods originate in one Indian state but the delivery is in a different Indian state. Would it be illegal when the units sold were more than 50,000 per month? Also discussed was the practice of procuring from one state and moving to another with lesser VAT% to reduce taxes.

While some of the experienced sellers and representatives from marketplaces felt that only VAT should be charged to customers, from different states also, some felt CST and not VAT should be charged. At one of our IOS Seller Meetup in Mumbai, , one of the heavily discussed topics was the difference between VAT and CST in India.

What is cst