India tax law guide | Updated October 2026
Central Sales Tax Rates in India: Current CST Rate, C Form and GST Applicability
Central Sales Tax (CST) is a tax on qualifying inter-State sales under the Central Sales Tax Act, 1956. Since the introduction of GST on 1 July 2017, CST generally applies only to inter-State sales of the goods that remain outside GST under the relevant provisions.
1. When does Central Sales Tax apply today?
Section 6 of the CST Act creates liability on qualifying inter-State sales, subject to exemptions and other provisions. Following GST amendments, the CST framework principally concerns the following goods, as covered by the amended definition of goods in Section 2(d):
- Petroleum crude
- High speed diesel
- Motor spirit (commonly known as petrol)
- Natural gas
- Aviation turbine fuel
- Alcoholic liquor for human consumption
Most other inter-State supplies are governed by the Integrated Goods and Services Tax (IGST) framework rather than CST. The tax treatment of a specific product depends on its legal classification, transaction and applicable law.
2. CST rates: sales with and without Form C
| Transaction | General CST treatment | Relevant provision |
|---|---|---|
| Eligible inter-State sale to a registered purchasing dealer supported by a valid Form C | 2% or the applicable local/state sales tax rate, whichever is lower, subject to statutory conditions. | Section 8(1), read with Sections 8(3) and 8(4) |
| Inter-State sale without a valid Form C, or sale not qualifying for the concessional rate | Generally taxed at the rate applicable to a sale of those goods within the originating State under the relevant State sales tax law. | Section 8(2) |
| Sale of goods exempt from tax generally under the applicable State law | May qualify for exemption or reduced treatment as specified by law; a conditional or transaction-specific exemption is not necessarily a general exemption. | Section 8(2A), where applicable |
| Special transactions, including specified subsequent sales in transit | Potential exemption if every statutory condition and required declaration/certificate is satisfied. | Section 6(2) and relevant rules |
The above is a statutory overview, not a single nationwide rate chart for every commodity. State-specific rates and notifications must be checked for the relevant goods and date.
3. What is Form C and who can use it?
Form C is the declaration furnished by an eligible registered purchasing dealer to support a concessional inter-State purchase under Section 8(1). Under Section 8(3), the goods must satisfy the prescribed purpose and registration requirements. Section 8(4) requires the prescribed declaration to be furnished in the manner and within the time permitted by law.
After GST, Form C eligibility must be assessed in light of the amended CST provisions and the particular goods and permitted purposes. A GST registration alone does not automatically establish entitlement to use Form C.
For more details, see C Form for inter-State sales and CST declaration forms.
4. Historical CST rates effective from 1 June 2008
Before GST, the concessional CST rate on eligible Form C sales was reduced to 2% from 1 June 2008. The original Delhi VAT-based illustration is retained below solely to explain the historical comparison; it is not a current universal rate table.
| Historical illustration (pre-GST) | With valid Form C | Without Form C |
|---|---|---|
| Goods generally exempt from local sales tax | Potentially nil, subject to the nature of the exemption | Potentially nil, subject to applicable law |
| Local tax rate below 2% | Lower local rate | Applicable local rate |
| Local tax rate above 2% | 2% | Applicable local rate |
The actual treatment of exempt goods requires careful attention to Section 8(2A) and the applicable State legislation. The historical figures should not be used to calculate tax on a current supply without checking current law.
5. How to determine the applicable CST rate
- Confirm whether the goods remain within the scope of the CST Act after GST amendments.
- Determine whether the transaction is an inter-State sale within Section 3 of the CST Act.
- Check the applicable State tax rate for the goods at the relevant time.
- Establish whether the purchaser and the transaction qualify under Section 8(1) and Section 8(3).
- Obtain and submit a valid Form C, where required, in accordance with Section 8(4) and applicable procedural rules.
- Check any applicable exemption, notification, return obligation or State-specific procedure.
6. Statutory provisions explained
Section 2(d): Goods
Defines the categories of goods relevant to the CST Act following the GST-related amendments.
Section 3: Inter-State sale
Specifies when a sale or purchase of goods is deemed to take place in the course of inter-State trade or commerce, including sales occasioning movement of goods between States and specified transfers of documents of title during movement.
Section 6: Liability to CST
Sets out the charge on inter-State sales and contains provisions for certain exemptions, including qualifying subsequent sales under Section 6(2).
Section 8: Rates of tax
Provides the concessional rate for qualifying registered-dealer sales, the general rate for other inter-State sales, and the related conditions and declaration requirements.
7. Official legal references
- India Code - Central Sales Tax Act, 1956 (search by Act title)
- Central Board of Indirect Taxes and Customs - GST legislation and guidance
- GST Portal - registration, returns and compliance
- Department of Revenue, Ministry of Finance
Frequently asked questions
Is the CST rate always 2%?
No. The 2% rate is concessional and applies only when the conditions for an eligible Form C transaction are satisfied. Otherwise, the applicable State rate generally determines CST under Section 8(2).
Does CST apply to all inter-State sales after GST?
No. Most inter-State supplies are subject to IGST. CST remains relevant to specified goods outside GST.
Is Form C required for every inter-State sale?
No. Form C is used to support the concessional treatment of eligible transactions; other transactions follow their applicable statutory treatment.
This article provides general information on Indian tax law. Verify the current Act, State notifications and applicable procedures before determining tax liability.