23 July 2025
Sales tax setup can vary depending on the accounting software or system you’re using, but generally, here’s how you can do a basic sales tax setup and reduce CST (Central Sales Tax) liability:
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### Basic Sales Tax Setup (General Steps):
1. **Register for Sales Tax / VAT**: Ensure your business is registered under the VAT/Sales Tax laws of your state.
2. **Create Tax Ledgers/Groups**: In your accounting software, create ledgers for:
* VAT Payable (output tax) * VAT Input (input tax credit) * CST Payable * Purchase and Sales ledgers linked to these taxes
3. **Set Tax Rates**: Define VAT and CST rates applicable for your products or services.
4. **Record Purchase and Sales Invoices**: Make sure tax amounts are recorded separately on invoices.
5. **Maintain Form C / Form F**: For CST reduction, collect Form C from your interstate buyers; this reduces CST liability from 2% to 1% or 0% (depending on state rules).
6. **File Returns Timely**: File VAT and CST returns on time to avoid penalties.
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### How to reduce CST Liability (CST Reduction):
* **Obtain Form C**: Form C allows concessional rate of CST (usually 2% or 1%) instead of full CST.
* Request interstate buyers to submit Form C. * Maintain proper records of Form C received.
* **Proper Documentation**: Maintain all transport documents and proof of interstate sales.
* **Timely Filing of Returns**: Ensure sales and Form C details are reported correctly in returns.
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### If you want help setting up in a specific software (like Tally), let me know! I can guide you step-by-step.
CAclubindia
