How to File VAT Return Online?

Value Added Tax or VAT is a tax applicable on goods and services produced or distributed at every stage in India. It has to be paid by the producers of the particular goods and services. Value Added Tax is a multi-level taxation system. It is firstly identified and then the tax is applied as per the interstate sales and purchases. With the government introducing VAT, businessmen and traders find it easier to manage taxes, as the VAT filing procedure is transparent and accountable. You can file for VAT return offline or online.

  • Enterprises with yearly turnover of Rs. 5 lakhs or more need to pay Value Added Tax.
  • For this purpose, apply for a VAT registration. To approve the same, it may take around 20 days to 40 days.
  • After approval, you can e-pay the amount collected and even e-file VAT returns on the Commercial Taxes website of the state you are in.
  • You may have to file for VAT returns one-time every month or quarter.

NOTE: The Goods & Services Tax (GST) introduced on 1 July 2017 replaced some 20 consumption taxes charged by the Centre and States. This includes Service Tax, CENVAT, VAT; Excise Duty, etc. VAT is however still applicable on several goods and services.

In this post we will discuss about who should file for VAT returns, how to file the same online, prerequisites for e-filing the return, benefits of online filing, and frequently asked questions.

Who Should File for VAT Returns?

All the producers of goods and services in India must file for VAT returns to the respective state government. This is regardless of a partnership firm, manufacturing or trading business, private limited company, or sole proprietorship whose annual turnover is above Rs. 5 lakhs. These entities must register themselves to the VAT Department. The dealers not mandated to register can also take benefit of tax invoice issuance by the Department.

  • The VAT rate and amount is subject to the state laws. It is the State Government that can modify the same.
  • At each phase of production VAT is collected and some of the amount collected by the customers is retained by the producer.
  • Every month the government pays the remaining amount through designated banks.

How to File VAT Return Online?

Here is how you can file your Value Added Tax return online:

  • VAT for each state is managed by the respective state government. Each state has its own VAT e-filing portal. So, login to the respective official website of Directorate of Commercial Taxes for your state.
  • If you are registering on the portal for the first time, you have to change the password.
  • Download the PDF file of zipped Form 14D. Unzip the same.
  • Fill all the annexures and sections in the form as per the details of the VAT receipts. This can take a good amount of time depending on the number of transactions you have had.
  • You have to now generate the XML file, which is possible with the downloaded software from the online portal of Directorate of Commercial Taxes.
  • You have to upload only the Form 14D in XML and not the annexures. This is because only the form is processed digitally.
  • Now upload the XML file as the filled annexures. If you have made any mistakes in the form, the filing system will spot those and ask you to rectify the same.
  • You will get an acknowledgement receipt after submitting the form. This works as a proof for the VAT returns you filed for the month. It is possible to download or print this receipt for future reference.

Things You Need Before Filing VAT Returns Online

Here are the preconditions for e-filing VAT returns:

  • Login Credentials: You will get a user ID and password from the Tax Directorate office. You have to use this credential to login to the online portal of Directorate of Commercial Taxes. If you are paying the VAT for the first time, then you have to change the given password before proceeding to e-file the returns.
  • VAT Receipts: To file the VAT returns, you need to have the Value Added Tax payment details and challan numbers on the VAT receipts. This will have all the details about payments for VAT of the previous month, required to file the returns.
  • TIN Number: Before filing VAT return online, you need to know your TIN number (Tax Identification Number). The state tax department will provide you with a TIN. This is an 11-digit number. You have to use the TIN to track e-payments or payments done and filed returns in the past.
  • Software for e-Filing: After login to the e-filing portal for VAT returns, you need to download the client software by the state tax department. This software is necessary for online return filing for VAT. This system takes the VAT form data and converts it to XML format. You have to upload this XML file to the online portal of Directorate of Commercial Tax of the state.

What Are the Benefits of Online Filing of VAT Returns?

Filing Value Added Tax returns online helps to keep in tune with the taxation procedure, especially doing away with the manual filing process. Here are the benefits of the same:

  • Easy and Time-Saving: e-filing VAT returns can be done in a short time, depending on how many transactions you have made. For most, it takes just a few hours. However, manual filing of the returns can take a couple of days if your company has had several transactions, especially if the VAT rates were different. Thus, online filing helps to make the filing procedure easy and time-saving.
  • Dynamic Filing System: After you upload the XML file on the e-filing portal, the system automatically tells you if any mistakes are there in the form. It will inform you about the errors and you can rectify those instantly. If you are unable to get through, the state portal has a dedicated FAQ section about the online filing process that you can refer.
  • Get Important Notifications: You will receive all necessary intimation in your account on the e-filing portal. This includes intimation about any details pending from your end. Thus, if you are unsure about things to do to complete the procedure, or if it is done properly or not, just login to your account. If the portal does not prompt for any clarifications or documents, then you are good to go.
  • Access Acknowledgement Anytime: If you file the Value Added Tax return online, then you can simply download the acknowledgement slip from your account on the portal. Compared to paper receipts that can get damaged or misplaced, online receipts and acknowledgements are saved on the system and cannot be lost. So, you can simply produce the soft copy of the acknowledgement to the state tax department anytime.

Frequently Asked Questions about e-filing VAT Return

Here are the FAQs on filing VAT returns online:

The Directorate of Commercial Taxes provide all the goods and services producers registered under the VAT Act 2003 with a User ID and Password. These login credentials have to be used to access the VAT e-filing system. If you lose the login details, then the Directorate help desk can help retrieve the same.

To file for VAT return online, you have to firstly register with TIN on the Directorate of Commercial Taxes website. Also use the provided user ID and password to login. Now, download the VAT return file in PDF format and fill the required information. You can edit the details in the form online. After duly filling the form, make the VAT payment and keep a note of the challan number. Now upload the return file on the website.

Payment can be made through net banking, direct debit instruction, or e-payment facility by your bank.

Collection of VAT is based on the destination. This tax is applied on the place of final consumption of goods and services. The same is categorized in the below-mentioned manner:

  • Intra-state (goods and services consumed within same state)
  • Import of goods and services.
  • Inter-state (movement of goods between two or more states)

Value Added Tax Registration or TIN Registration is required for businesses producing or trading goods in India. This tax replaced the Sales Tax in the country. The cost of it comes down to the customer. District rules are applicable on the kind of goods manufactured and sold. This is subjected to the respective State Government laws. Thus, the due rate of return and payment varies from a state to state. The filing of VAT return is due usually every month (file return by 20th of succeeding month) , quarter, or year.