How to File VAT Returns Online?

The producers of multiple goods and services in the country of India were earlier required to pay a certain levy or charge to the Central Government of India. This rule was recently abolished and the GST took its place!

VAT stands for Value Added Tax and is supposed to be paid by producers of goods and services to the government. VAT is a multi-level taxation system which means that tax is levied at each stage of production of goods and services. Introduction of VAT is believed to make the taxation process more efficient and transparent. India is one of the last few countries to implement VAT. VAT as a taxation process has been implemented by almost all countries of the world.

Enterprises that make an annual turnover of Rs.5 lakhs or more are required to register for payment of VAT. Vat is applicable on both indigenous as well as imported goods and services. VAT filing by these enterprises can be done offline as well as online. In the sections below we will see how VAT can be filed online and also the various steps that feed into the entire VAT-filing process.

How To access the Online VAT Filing System?

All producers of goods and services that are registered under the VAT Act 2003 are furnished a user id and password by the Directorate of Commercial Taxes. Users are required to use this id-password combination to enter the VAT e-filing system. Alternatively, the Directorate help desk may be contacted for retrieving the login details.

Preconditions Required For E-Filing Of VAT

Before one decides to file VAT returns online, there are a few points that need to be noted. These are basically the prerequisites for filing VAT, online.

  • Get your TIN Number, Tax Identification Number before you start the process of e-filing of VAT. TIN is an 11 digit number furnished by the tax department of your state. This number is used to track all tax related progress related to your enterprise.
  • A user needs to have his/her user-id and password as furnished by the Directorate office. Without these, no user can login to the system to pay his/her VAT return, online.
  • The password that is furnished to you needs to be changed when you login to the system for the first time
  • VAT returns can be filed online only if you have the software that accepts data for e-filing of return and then processes it to xml for uploading later. This client software can be downloaded from the online portal of Directorate of Commercial Taxes once you have logged in to the system

Steps for Filing VAT Returns Online:

Listed below are all the steps that go into VAT return e-filing:

  • Step 1:

    Login to the online portal of the Directorate of Commercial Taxes for your respective state. Since VAT comes under the prerogative of state governments, hence different states have different VAT e-filing portals.

  • Step 2:

    If it is the first time you are entering the website, you will be prompted for password change which you should certainly do.

  • Step 3:

    Download the PDF version of Form 14D which is the VAT return filing form. The form is generally available in zipped form across all state websites.

  • Step 4:

    After the download is complete, the form and all the downloaded annexures need to be filled duly with data pertaining to your VAT receipts and other relevant details.

  • Step 5:

    Create xml file out of the filled forms by using the downloaded software from the Directorate of Commercial Taxes online portal.

  • Step 6:

    Upload the generated xml file as well as the duly filled annexures.

  • Step 7:

    At this points, all upload could be correct and the process could be over or there could be errors which the server will prompt and ask you to rectify.

  • Step 8:

    Once the forms have been submitted successfully, an acknowledgement receipt will be generated. You can download or print this receipt to keep as reference for e-filing of VAT.

Due Date to file VAT Returns

TIN Registration or Value Added Tax Registration is necessary for businesses trading or producing goods in the country. This tax replaced Sales Tax in India and is ultimately borne by the customer. Distinct rules are applicable in every State based on the kind of goods that are manufactured or sold. This tax is put forth by the State Government and therefore the return due date and payment due date for VAT will vary from state to state. These returns are due mostly every month, quarter or year.

Who all are required to file VAT Returns?

VAT Returns will have to be filed by all producers of goods and services to the Government of India. Any dealer regardless of manufacturing or trading business, a partnership firm, sole proprietorship or a private limited company whose turnover annually is over Rs.10 lakhs will have to compulsorily get registered with the VAT Department. However, this amount is dependent on State laws can be modified by the State Government.

However, dealers who are not under compulsion can also obtain registration and can procure the benefit of issuing tax invoice.

VAT is collected at each stage of production therefore some of the amount that has been collected by the customers will be retained by the producers and the rest will have to be paid to the government through designated banks every month.

Advantages of filing VAT returns, Online:

Filing VAT returns online is a great way of keeping up with the taxation process. Some of the most significant advantages of e-filing of VAT are listed below.

  • Faster processing of VAT returns since the tax department can easily avail all the uploaded information pertaining to a particular enterprise
  • Online filing of VAT is a less tedious and less time consuming procedure as compared to manual filing of VAT
  • Validation of filled-in forms at the server side ensures there are minimum confusions and user queries too are minimized. This saves time and effort of customers as well as that of the tax department
  • Details such as pending documents and payments for any dealer are displayed when he/she logs in to the e-filing system. Users can hence login and rectify their information or make submissions on time and avoid paying interest/penalty
  • Records of any dealer are maintained on the online tax filing platform which makes it easier for the tax department to go back and check on these whenever required. From the user point of view it is convenient since the user will not have to reproduce relevant documents over and over again

Issues regarding filing of VAT:

Filing of VAT has been made easy for traders with the introduction of online e-filing. However, there are still some issues faced by traders which are related to VAT return filing and which pose great discomfort to enterprise owners.

  • E-filing of VAT return is unable to pick up in some states due to problems in infrastructure. For example, there are states where VAT online system servers are unable to take the load during the filing period and as such certain merchants are unable to access the system and file their returns on time
  • General filing of VAT causes issues since most governments set stringent deadlines for the same. Merchants are of the view that VAT return filing is a complicated task and as such more liberal timelines should be offered. They also want penalty charges, which shoot incredibly after a particular period of time, to be brought down.

With the above points as reference, filing VAT online can be a really easy process. However, one really important point to keep in mind is that VAT comes under the purview of state governments and hence slight deviations in rules and filing process may be expected.

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