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Adjustment of CST against VAT

Mukeshh Agarwal (E-solutions) (129 Points)

20 June 2011

Hi !

I have a trading firm in Orissa related to garments. I purchase it from other states against CST 2% and I sell the same agaisnt 4 % VAT.

My query is : Is there a way I could adjust this 2% CST against 4% Output VAT (or) Is there any alternate method ?

Thanks in advance..

rgds,

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22 Replies

ashish gupta ( student) (1922 Points)
Replied 20 June 2011

you cannot adjust CST paid against ur Vat liability. But CST paid is added to the cost. however both CST and VAT paid is allowable under Income Tax

CA Nitu Agarwal (CA, M.Com) (266 Points)
Replied 20 June 2011

CST paid on purchase can't be adjusted against output Vat. However input VAT can be adjusted against CST collected on Sales.

surender (Manager Accounts) (149 Points)
Replied 20 June 2011

Im agree with Ashish and Neetu.CST Paid on purchase can not be adjusted with Output VAT.

Maneet Puri (student) (71 Points)
Replied 20 June 2011

CSt paid on interstate purchases cannot be adjusted for the payment of vat. but however if you are also purchasing within the state then excess vat input remaining unutilised can be adjusted for the payment of CST . But Credit of cst cannot be taken for the payment of vat , there is no other alernative available , you cannot take input credit on cst .

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 20 June 2011

no it could not be adjusted

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 20 June 2011

Originally posted by : ashish gupta
	you cannot adjust CST paid against ur Vat liability. But CST paid is added to the cost. however both CST and VAT paid is allowable under Income Tax

alekhya (Article Trainee) (46 Points)
Replied 20 June 2011

hi frndz.......... ive a small doubt..

Can input taxcredit (VAT) be used for payment of CST....?

Santhosh Poojary (SIEMPRE AHÍ PARA TI) (15607 Points)
Replied 20 June 2011

Originally posted by : Nitu Agarwal
	CST paid on purchase can't be adjusted against output Vat. However input VAT can be adjusted against CST collected on Sales.

Agree.

Rajnikant Vadigoppula (CA, CS And CMA Final) (919 Points)
Replied 20 June 2011

i agree with above views, the logic behind this is,

CST is collected by the centre and remitted to the state.

if u pay cst to other state (say maharashtra) and claim vat against cst of your state ( say orissa).

in this case it is a loss of revenue to the orissa state.

so it cannot adjusted the revenue of one state to revenue of other state.

2 Like

prakash (article) (222 Points)
Replied 20 June 2011

Yes I agree with above views cst paid on purchase cant be adjusted against Vat

(Guest)

cst and input tax credit can only be adjusted if both are paid/payable to treasury of same government.

Examples-

(1) if purchased from other state and sold to same state- Cant be adjusted as because CSt is paid to that otehr state and vat is payable to domestic state

(2) Purchase made from own state and sold outside- since input vat and cst is paid to same govt. ie. own government. CST can be adjusted with input VAT paid.

(3) If purchased and sold in own state- VAt payable can be adjusted withh input vat

(4) if purchased from other state and sold to oter state (whether sold to purchasing state or not)- CSt payable cant be adjusted with CSt paid to own government.

Since cst and vat paid are deductable expense under income tax act, one may get releif of income tax on these expense

1 Like

Srinivas Reddy (CA , MBA) (59 Points)
Replied 21 June 2011

Ya i agree with Mr.Rajnikant, what he said the reason is absolutely right.

Ms.Alekhya,

for u r query also same answer, but reverse can b possible

C.A Tarun Shah (practice) (271 Points)
Replied 21 June 2011

C..S.T can't be adjusted against VAT Out put as per Sales Tax Act .But you can avoid VAT pymt.by doing 6(2) -Sales in Transit transaction wherin you have to give 'C"form to supplier & obtain E1 form from the suppliers

if you would like to know more abount the 6(2) pl.send query in CA CLUB INDIA

Tarun