The Sales Tax is one of the significant sources of revenue generation in India. Sales tax is imposed on the sale of movable goods. The Value Added Tax (VAT) has replaced the sales tax from April 01, 2005. Since then, in most of the states in India Value Added Tax is in force. The Value Added Tax is one type of indirect tax imposed on the consumption of the goods that is paid by the original producers upon the change in goods or upon the transfer of the goods to the ultimate consumers. ‘Sales tax is levied on the sale of a commodity, which is produced or imported and sold for the first time. If the product is sold afterwards without further modification or change it is exempt from sales tax. Imposition of VAT is related to the difference of the value added by the transferor and not just a profit. The Value Added Tax is levied only on goods and not services. The Value Added Tax does not replace any other indirect taxes such as excise duty, service tax etc. The interstate Sales are governed by the Central Sales Tax Act, 1956. The Sales Tax Acts of different states regulate sales within the states by imposing tax at different rates. The Value Added Tax is applied at the State level by the State Governments
