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• There are two types of sales tax in India: the central sales tax, or CST, which is governed by the central government, and the local sales tax, governed by the states. The CST remains at a static rate, whereas the local sales tax varies based upon type of commodity. Since 2005, most states have replaced local sales tax with VAT. The VAT is the value added tax levied upon the difference between cost of production and eventual cost to the consumer.
• Central government with the help of state governments is in process of implementing Goods and Service Tax (GST) which is expected to merge CST, Local VAT laws, Central Excise, Service Tax and many other Indirect Tax laws.

Interstate Sales

• If during the trade or sale of a good, the good leaves the state and enters another one, it is subject to sales tax on the part of the dealer, or the entity who is selling the good to another party. According to the Central Sales Tax Act, a sale falls under the interstate category when 1) the sale or purchase occasions the movement of goods from one state to another or 2) the sale is affected by a transfer of documents of title to the goods during their movement from one state to another.

• Central Sales Tax Act, 1956 has been enacted to govern the transaction in course of Interest State Sale or In course of Import / Export.