- It is the tax levied by a state government on the sale or purchase of items within the state
- For the movement of goods from one state to another, the Union Government also levies Sales Tax, known as Central Sales Tax (C.S.T)
Value added Tax (VAT)
- VAT is a new method of realizing tax on the sale or purchase of goods
- Unlike sales tax, in the VAT system, the tax is realized by the government at every stage right from the manufacturer to the retailer
- It is not in addition to the existing Sales Tax, but is the replacement of Sales Tax.