Please Note: VAT does not apply any more. Kindly refer to GST Registration instead.
Value-added tax, or VAT, is to be paid by all producers of goods and services with an annual turnover of over Rs. 5 lakh. To do so, you need to apply for a VAT registration, which takes 20 to 40 days for approval. Once done, you can both make payment online for the amount collected and e-file VAT returns on the Commercial Taxes website for your state. Returns need to be filed once every month or quarter (depending on turnover or the state you’re in); VAT e-Filing due dates for each state can be found below.
What You Need For e-Filing VAT Returns
TIN Number: The tax identification number (TIN), which is the 11-digit number furnished by the state tax department. This number can help you track any payments made and previously filed returns.
Login Details: On registration, you would have received a User ID and password from the Tax Directorate office. In case this is your first VAT payment, you will need to change your password before you can proceed.
e-Filing Software: All state departments have issued a software for e-filing of VAT returns. A download option for this software can be found once you have logged in. This software will allow you to process data into xml which can be uploaded to the online portal of Directorate of Commercial Taxes of the state you’re in.
VAT Receipts: Of course, you will need the details and challan numbers of every one of the VAT receipts, against which you have made payment in the previous month.
If you have these handy, you’re ready to start filing your return. Depending on the number of VAT receipts, this could take 2 to 6 hours.
Steps for e-Filing VAT Returns
Login: With the user ID and password, you can login to the portal of the Directorate of Commercial Taxes for your state. As VAT is within the purview of state governments, each of them has its own VAT e-filing portal. However, the procedure for all of them is the same.
Form 14D: To file the return, you need to download the zipped Form 14D file. On unzipping the file, you’ll find a PDF version of the form. This form is the one you need to fill completely, along with the annexures.
Complete Form: The information you need to fill in the form will be contained in the VAT receipts, so you shouldn’t be nervous about filling in the form. Depending on the number of transactions, this can take you a couple of hours or a whole day.
Generating XML: On running the completed Form 14D through the software you downloaded from the Directorate of Commercial Taxes, you will be able to turn this PDF into an XML file within minutes. Only Form 14D needs to be in XML, not the annexures, as only it needs to be digitally processed.
Correcting Mistakes: The e-Filing system is an intelligent piece of software. It can instantly spot mistakes you’ve made once you upload the form. You will need to rectify these errors and resubmit until it is all correct.
Acknowledgement: Once accepted by the e-Filing system, an acknowledgement receipt will be generated. This is proof that you have filed your VAT returns for the month.
Benefits of Filing VAT Returns Online
As with doing everything else online, e-filing your VAT returns has several improvements over manual filing. What’s more is that all the benefits will only increase as your business grows.
Saves Time: While manual filing can take a couple of days in case your business has many transactions, particularly if the VAT rate differs, online filing can be completed in a matter of hours.
Realtime Feedback: As soon as you upload the form in XML to the e-filing portal, you will know whether there are any discrepancies. If there are errors, then you will be informed how they can be resolved. The state portals also have a fairly exhaustive set of FAQs, in case you’re stuck.
Acknowledgements Saved: Paper receipts can easily be misplaced. However, in case of an inspection, you can’t say you’ve lost them. Dealers who tend to file their returns online exclusively, tend to even be asked to produce papers on fewer occasions (“are rarely asked to produce paper receipts” OR “can also be asked to produce paper receipts”), as the information is easily accessible by the state tax department.
Be Aware: Your account on the e-filing portal is where the government will reach you regarding any information that is pending from your side. So in case you are unclear about what you still need to do to complete the procedure, all you need to do is login. If the portal does not ask for any documents or clarifications, you’re done.
Common Issues With e-Filing VAT Returns
Downtime: State government websites often have problems, particularly the smaller states. Users often complain of a downtime with the Odisha and Meghalaya Commercial Tax websites.
Monthly Procedure: Every month, even small businesses need to spend almost a whole day simply filing their VAT returns online. Even though the Internet has made it much easier to comply, the monthly filing of the form has caused many small merchants to form groups to petition for still easier process.
Due Dates for e-Filing of VAT Returns
|STATE||FREQUENCY OF RETURN||DUE DATE OF RETURN||ANNUAL RETURN|
|ANDHRA PRADESH||Monthly||20 days from the end of the month||No annual return|
|ASAM||Monthly||21 days from the end of the month||31st May|
|BIHAR||Quarterly||30 days from the end of the quarter||31st December|
|CHANDIGARH||Quarterly||30 days from the end of the quarter||20th November|
|CHHATISGARH||Quarterly||30 days from the end of the quarter||30th November|
|DELHI||Quarterly||25 days from the end of the quarter||28th January|
|GUJARAT||Monthly||60 days from the end of the quarter (>Rs. 5000); else 70 days||30th January|
|HARYANA||Quarterly||30 days from the end of the quarter||30th November|
|JHARKHAND||Monthly||25 days from the end of the month||31st December|
|KARNATAKA||Monthly||20 days from the end of the month||No annual return|
|KERLA||Monthly||25 days from the end of the month||30th April|
|MADHYAPRADESH||Quarterly||30 days from the end of the quarter||31st October|
|MAHARASHTRA||Monthly||21st of the next month||No annual return|
|ORISSA||Quarterly||20 days from the end of the quarter||30th September|
|PUNJAB||Quarterly||30 days from the end of the quarter||20th November|
|RAJASTHAN||Quarterly||45 days from the end of the quarter (>Rs. 50,000); else 60 days||31st January|
|TAMILNADU||Monthly||20 days from the end of the month||No annual return|
|UTTAR PRADESH||Monthly||20 days from the end of the month||31st October|
|UTTARAKHAND||Quarterly||20 days from the end of the quarter||31st December|
|WEST BENGAL||Quarterly||30 days from the end of the quarter||No annual return|
|SIKKIM||Quarterly||30 days from the end of the quarter||30th November|
|NAGALAND||Quarterly||30 days from the end of the quarter||30th May|
|TRIPURA||Monthly/Quarterly||30 days from the end of the month/quarter||30th May|
|MEGHALAYA||Monthly||21 days from the end of the month||31st October|
|MANIPUR||Monthly/Quarterly||20 days from the end of the month/quarter||30th April|
|MIZORAM||Quarterly||30 days from the end of the quarter||No annual return|
|ARUNACHAL PRADESH||Monthly/Quarterly||28 days from the end of month/quarter||No annual return|
|HIMACHAL PRADESH||Monthly/Quarterly||30 days from the end of the month/quarter||30th November|
|JAMMU & KASHMIR||Quarterly||30 days from the end of the quarter||31st October|
|GOA||Quarterly||30 days from the end of the quarter||No annual return|
Frequently Asked Questions
What is Input Tax Credit?
VAT is a multi-stage tax. This means that VAT is to be paid at every step of the manufacturing process (while purchasing raw materials, processing them, etc). To offset the tax to be paid at every stage, there is a provision to allow input tax credit.
This input tax credit is the amount that is adjusted between the VAT paid by the consumer and the VAT already paid by the manufacturer. This input tax credit, in relation to any period, means setting off the amount of input tax by a registered dealer against the amount of his output tax. It is given for all manufacturers and traders for purchase of inputs/supplies meant for sale, irrespective of when these will be utilised/sold.
The VAT liability of the dealer/ manufacturer is calculated by deducting input tax credit from tax collected on sales during the payment period (a month). If the tax credit exceeds the tax payable on sales in a month, the excess credit will be carried over to the end of next financial year. If there is any excess unadjusted input tax credit at the end of second year, then the same will be eligible for refund.
Can I avail of the VAT Composition Scheme?
Any assessee with a turnover of Rs. 10 lakh to Rs. 50 lakh may apply for the VAT Composition Scheme, which allows you to pay a fixed rate of tax that is lower than what others would pay, you are not required to file monthly forms and can instead opt for a form that covers a quarter or even a year, depending on the business you’re in.
You are eligible for this scheme, however, only if you have a TIN, a turnover of Rs. 10 lakh to Rs. 50 lakh, all your purchases and sales are within the same state, and do not purchase any goods from a wholesaler/dealer that has already opted for the Composition Scheme.
The downside to this scheme, however, is that you cannot collect input tax credit.