SALES TAX: The saga of most powerful direct taxes by the Ministry of Finance

Sales Tax is another form of all Taxes which can be paid by the consumer for all their products and services to the government. In India, there is a different form of sales tax. Sales Tax applied by the Central government as well as State government. So, we should know how to calculate sales tax.

NOTE: In India, Sales Tax has been replaced by GST,

Sales Tax:

This tax is applied by both the government Central Government and State Government. Based on the Tax policies the central government decides on Tax, which does not be varied inside the country. State Sales Tax laws may vary from one state to another state.

Different Form of Sales Tax:

In most of the company Standard types of Sales Tax is applicable.

§  Whole Sales Tax

§  Manufactures Sales Tax

§  Retails Sales Tax

§  Use Tax

§  Value Added Tax (VAS)

How to Calculate Sales Tax at a glance?

The formula for calculating the Sale Tax as given below:

Sales Tax = Cost of Products * Rate of Sales Tax

In India, the Sales Tax Rate Stands at 18%. From 2006 to 2017 the average sales rate of 14.22%. The lowest sales tax rate of 12.36% in 2012 and the highest sales tax rate of 18% in 2017.

        Sale Tax can vary from state to state.

        Sale Tax is always calculated in a percentage.

        If there are more items, then after adding the cost of all items, Sales tax will be calculated.

Sales Tax & It’s Variations

In India, there are exactly three different types of sales tax and they are as follows:

Ø  Central Sales Tax:It is payable inside the State in which the products are sold. It depends upon the Tax policies. The Act, which is for Central Sales Tax, was formed for making the collection of the Tax simpler. The Central Sales Tax started in 1956. Due to the CST Act, the Central Government allowed collecting all sales tax on various products.


Ø  State Government Tax: Every state government of India has the power on sales Tax to achieve its financial requirement. It can differ from one state to another state. It can vary in Value Added Service (VAS).


Ø  Sales Tax Mitigation: It can be seen that the Sales Tax can be reduced by Business for themselves and also their customer.  Due to proper planning and activities for tax consequence.

Designing hat type of invoices so that it can reduce the taxable portion of a sales transaction.


Sales Tax is another type of Indirect Tax that is paid by the consumer at the time of purchasing any products. In India, Sales Tax is replaced by GST on 1st July 2017. Sales Tax can differ from State to State to meet their financial requirement. Sales Tax can be reduced with the activities for tax consequence.

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