To which state 2% tax is payble in stock-transfer(st to st)
This query is : Resolved
10 January 2013
STOCK OF Rs.10, 00, 000 (TAXABLE GOODS-OF 20%VAT CLASS) TRANSFERRED FROM ORISSA BRANCH TO MAHARASHTRA BRANCH.
IN ABOVE TRANSFER:-
WHAT RATE/AMT OF TAX PAYABLE TO WHICH STATE ?
PLZ SUGGEST ME FRIENDS.
STOCK OF Rs.10, 00, 000 (TAXABLE GOODS-OF 20%VAT CLASS) TRANSFERRED FROM ORISSA BRANCH TO MAHARASHTRA BRANCH.
IN ABOVE TRANSFER:-
WHAT RATE/AMT OF TAX PAYABLE TO WHICH STATE ?
PLZ SUGGEST ME FRIENDS.
10 January 2013
from the state where the goods are moving out , to such state there would be restriction on the input tax paid on such goods as per local laws of that state.. in your instance it the state of orissa.. and in the state of mumbai it would be a regular tax payable on sales at local rate of tax applicable in the state of maharastra.
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10 January 2013
IS THAT TAX RATE DEPENDS ON THE (CLASS OF TAXABLE GOODS) ?
IS THAT TAX RATE DEPENDS ON THE (CLASS OF TAXABLE GOODS) ?
02 August 2025
Regarding your query on stock transfer and the 2% tax payable on stock transfer (from Orissa to Maharashtra):
### Basic Explanation:
* When goods are transferred **from one branch in a state to another branch in a different state**, it is treated as an **interstate transfer** of stock.
* This attracts **Central Sales Tax (CST)**, not VAT.
* CST rate on stock transfers is typically **2%** under **Section 8(1)(b)** of the CST Act, **provided the purchaser (receiving branch) is registered under the CST Act** in the destination state.
---
### Your case details:
* Stock value: Rs. 10,00,000
* Taxable goods: 20% VAT class
* Transfer from Orissa branch to Maharashtra branch
---
### Tax Payable and State to which tax is paid:
1. **Tax Rate:**
* CST at **2%** on the invoice value is payable on such stock transfers.
2. **Which State gets the tax?**
* CST is collected by the **originating state** (Orissa in this case).
* The tax is paid to **Orissa Government** because the sale originates there.
3. **Input Tax Credit:**
* Since CST is paid at 2%, the receiving branch in Maharashtra **cannot claim input tax credit** on CST paid.
* Maharashtra branch will pay VAT at the local rate (20% in your example) when goods are subsequently sold.
---
### Does tax rate depend on the class of taxable goods?
* No, the **CST rate for stock transfer is fixed at 2% regardless of the class of goods**, provided the conditions for concessional rate under Section 8(1)(b) are met (registered dealer, form C obtained, etc.).
* VAT rates differ by product but **do not affect CST rate for stock transfers**.
---
### Summary:
| Aspect | Details |
| ------------------- | ------------------------------------------- |
| Tax Type | CST (Central Sales Tax) |
| Rate | 2% |
| Payable To | Originating state (Orissa) |
| Input Tax Credit | Not available on CST paid |
| Dependence on goods | No (CST is fixed at 2% for stock transfers) |
---
If the branch in Maharashtra is **not registered**, or form C is not obtained, then **CST at 20% (normal rate) may be applicable**.
---
### Basic Explanation:
* When goods are transferred **from one branch in a state to another branch in a different state**, it is treated as an **interstate transfer** of stock.
* This attracts **Central Sales Tax (CST)**, not VAT.
* CST rate on stock transfers is typically **2%** under **Section 8(1)(b)** of the CST Act, **provided the purchaser (receiving branch) is registered under the CST Act** in the destination state.
---
### Your case details:
* Stock value: Rs. 10,00,000
* Taxable goods: 20% VAT class
* Transfer from Orissa branch to Maharashtra branch
---
### Tax Payable and State to which tax is paid:
1. **Tax Rate:**
* CST at **2%** on the invoice value is payable on such stock transfers.
2. **Which State gets the tax?**
* CST is collected by the **originating state** (Orissa in this case).
* The tax is paid to **Orissa Government** because the sale originates there.
3. **Input Tax Credit:**
* Since CST is paid at 2%, the receiving branch in Maharashtra **cannot claim input tax credit** on CST paid.
* Maharashtra branch will pay VAT at the local rate (20% in your example) when goods are subsequently sold.
---
### Does tax rate depend on the class of taxable goods?
* No, the **CST rate for stock transfer is fixed at 2% regardless of the class of goods**, provided the conditions for concessional rate under Section 8(1)(b) are met (registered dealer, form C obtained, etc.).
* VAT rates differ by product but **do not affect CST rate for stock transfers**.
---
### Summary:
| Aspect | Details |
| ------------------- | ------------------------------------------- |
| Tax Type | CST (Central Sales Tax) |
| Rate | 2% |
| Payable To | Originating state (Orissa) |
| Input Tax Credit | Not available on CST paid |
| Dependence on goods | No (CST is fixed at 2% for stock transfers) |
---
If the branch in Maharashtra is **not registered**, or form C is not obtained, then **CST at 20% (normal rate) may be applicable**.
---
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