If the product is sold subsequently without being processed further, it is exempt from sales tax. Sales tax can be levied either by the Central or State Government, Central Sales tax department. State sales taxes, that apply on sales made within a State, have rates that range from 4 to 15 per cent. Sales tax is also charged on works contracts in most States and the value of contracts subject to tax and the tax rate vary from State to State. However, exports and services are exempt from sales tax.
Sales tax is levied on the seller who recovers it from the customer at the time of sale.
A sale or purchase of goods is said to take place when the transfer of property in the existing goods or future goods takes place for consideration of money. The goods have been divided into different categories and different rates of sales tax are charged for different categories of goods. In most of the cases related to the sales tax, the tax on the sale or purchase of goods is at single point. Under the provisions of some state laws the assesses are divided into several categories such as manufacturer, dealer, selling agent etc. and such as assess is required to obtain a registration certificate to that effect. The sales tax or the purchase tax is levied on that assessee on the basis of his category such as dealer, manufacturer etc.