VAT Returns Filing
All business entities engaged in the sale of goods (traders and manufacturers) need to have a Value Added Tax (VAT) Registration, often called TIN Registration, once their annual turnover crosses around Rs. 5 lakh (Rs. 10 lakh in some states). The tax needs to be collected from consumers and deposited in a designated bank account to the state government. As VAT is decided by the state, the rates, due dates and even websites for filing returns differ by state. If you have operations in more than one location, you would, therefore, need to file returns separately. Return filing needs to be done once every month or once every quarter, depending on your location and turnover. Additionally, all states require a consolidated return to be filed at the end of the year. Instigate can ensure that you never miss a VAT due date by setting reminders for the information you would need to provide and always filing your returns before the due date.
VAT Returns Process
We will collect all the necessary information and documents (TIN Number, balance sheet, tax liability, state of operation) to prepare your returns. Once done the first time, our affiliate will then ensure that you are always reminded of the filing date so you don’t end up paying penalties.
We will give you the opportunity to review the filing. One you approve it, we will file the returns with the state government. Upon successful completion of the process, we will mail the acknowledgment form to your registered email address.
6 Essential Facts on VAT Return Filing
Whether or not you need VAT registration right now depends on the state in which your business is operating. In most states, registration is not required at all until your turnover crosses a certain threshold. This is usually Rs. 5 lakh in annual revenues. It also matters what it is you’re selling, as some items may be exempt. Salt, for example, is exempt from VAT.
To file returns on your own, you would need to have the login details for your VAT account, which would have been given to you at the time of registration, the software for preparing the returns (this is available on the government commercial taxes website) and all the VAT receipts for the period you are filing the returns for. Of course, you should also know your TIN number.
Yes, it is certainly better to file VAT returns online. Particularly given that filing VAT returns can take a whole day every month, it is best to do it online. This is because it is quicker to do so and saves you the trouble of travelling to the VAT office to file physically. The online system also gives you realtime feedback, so it’s no different than filing the return in person. On the other hand, some state government websites are often down for extended periods of time.
VAT is collected at every stage of production, so some of the amount you collect from your customers will be retained by you, while the remainder will be paid to government via designated banks on a monthly basis. Returns must also be filed. The date and frequency differs with every state.
Businesses with a turnover of between Rs. 10 lakh and Rs. 50 lakh can simplify VAT compliance by applying for the VAT Composition Scheme. By joining this scheme, they will pay a lower rate of tax, that is fixed, and file only quarterly, or, for some businesses, annual returns.
Yes, all Indian states have websites (although some don’t work very well) that allow payment of the VAT collected and return filing.