The sales tax you pay while purchasing a toothpaste is a

[amp_mcq option1=”tax imposed by the Central Government” option2=”tax imposed by the Central Government but collected by the State Government” option3=”tax imposed by the State Government but collected by the Central Government” option4=”tax imposed and collected by the State Government” correct=”option4″]

This question was previously asked in

UPSC IAS – 2014

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The correct option is D. The sales tax you pay while purchasing a toothpaste is a tax imposed and collected by the State Government (in the pre-GST era or as a conceptual understanding).

Prior to the implementation of the Goods and Services Tax (GST) in India, Sales Tax (or Value Added Tax – VAT) on the sale of goods within a state was a state subject. This meant that the power to levy and collect sales tax on intra-state sales rested with the State Government, as per the State List (List II) of the Seventh Schedule of the Constitution of India.

With the advent of GST (implemented from July 1, 2017), most indirect taxes, including Sales Tax/VAT, Central Sales Tax, Service Tax, etc., were subsumed into a single tax. Under GST, tax on an intra-state sale is bifurcated into Central GST (CGST) and State GST (SGST), both levied simultaneously. However, the question refers to “sales tax,” implying the pre-GST regime or a general understanding of the tax on sales, which was a state domain.

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