CST paid on Purchases : No Credit at all, should be shown as Expense
CST payable on Sales : Can ONLY be set off against VAT Credit available
VAT paid on Purchases : Credit available on VAT Payable & CST Payable
VAT payable on Sales : Can ONLY be set off against the VAT Credit available
VAT payable can be set off only against the VAT paid on Purchases(If Input Credit Available)
CST payable can be set off only against the VAT paid on Purchases(If Input Credit Available)
CST payable cannot be set off against the CST paid on the Inter State Purchases:
Reason: The CST Payable is arising in One State(Selling State) & CST paid on Inter State Purchases goes to the State in which the Purchases are done.
Example :
D Ltd(Chennai) made an Inter State Purchases of the Spare Parts from J Ltd (Andhra Pradesh)
D Ltd paid the CST on the Purchases to J Ltd (Andhra Pradesh)
i.e. the CST is arising as an Income in the Selling State (Andhra Pradesh)
If D Ltd made CST Sales to A Ltd (Bangalore)
The CST payable against this sales cannot be set off against the CST paid on Inter State Purchases to J Ltd (Andhra Pradesh)
As the CST paid on purchases is an Income to the Andhra Pradesh. The CST payable on the Sales made by D Ltd is an Income to Chennai.
If the CST payable is set off against the CST paid on the Purchases then there would be Revenue Loss to the Chennai State.
But the CST payable can be set off against the VAT Credit available as the CST payable(Income to Chennai) & VAT credit(VAT paid on purchases within the State of Chennai) both are relating to the Same State Only. So there will be no Revenue Loss.
CST is centrally levied though collected by the State & it is Revenue for the State Government.
Any Clarifications can reply to the same ...
CAclubindia
