Trade to get costly in Telangana, Andhra Pradesh
Sale transactions between Telangana and AP to attract CST from June 2
By : DC Correspondent
Update: 2014-04-23 05:59 GMT
Hyderabad: Come June 2, sale and purchase transactions between two dealers in Telangana and Seema-ndhra may get little costly due to imposition of central sales tax (CST), which is collected on the interstate movement of goods.
According to an Ernst and Young advisory, companies need to closely monitor developments regarding this to understand actual implications. As some of the implications can have far reaching impact on business, it is advised that companies relate these legal developments to their business and specifically, determine its impact.
Till now, trade in Andhra Pradesh had attracted only Value Added Tax. Since VAT is levied on goods at every level in the production chain till they are finally sold to the end consumer, traders have the benefit of taking the credit for tax paid on inputs. However, the trader can’t claim input tax credit in case of CST.
This could result in at least two per cent increase in the cost, which either reduce the margins or lead to an increase the product price. Since Hyderabad is a hub of many products, traders in the city fear that CST could hit their sales. Some of the traders are already planning open their branches in Seemandhra to avoid paying higher taxes.
Industry bodies in Andhra Pradesh are planning to approach new state governments and also Central government to withhold the implementation of CST on the movement of goods between Seemandhra and Telangana.