What is the full form of CST in GST?
The CST Full Form in GST is Central Sales Tax. The Central Sales Tax (CST) was an indirect tax levied by the central government on the sale of goods between states within India. It applied to inter-state transactions, whereas Value Added Tax (VAT) was levied on intra-state sales (within a state). The Central Sales Tax Act, 1956, governed CST.
Why was CST Replaced by GST?
The limitations of CST were a significant factor in replacing it with GST. Here is how GST addressed these issues.
Abolition of Cascading Effect:
Under GST, taxes are only levied on the value added at every step of the supply chain, which has reduced the final price for the consumer.
Single Rate Tax Structure:
GST has a uniform tax rate structure across the nation for most goods and services and also made the taxing environment quite predictable.
Simplified Administration:
GST brought in a common registration and filing structure. This has helped simplify the compliance for business houses.
Although CST forms a part of the tax history of India, the introduction of the GST regime brought about a more effective and transparent tax regime. Elimination of cascading effects and an effective structure has benefitted both businesses and consumers. Knowing what CST is is helping to understand the differences that GST brought.