How to E-File Your Tax If You Have Changed Jobs?

For businesses with an annual turnover of Rs 5 lakh or more, VAT returns are mandatory to be filed. VAT is applicable to all goods and services whether domestic or imported. One can file VAT return both online (through user id and password provided, if registered under VAT Act, 2003) and offline (by submitting required papers to authorities).

1. Account-based collection of VAT:

In this method of collection of VAT, tax is calculated on value added rather than the use of sale receipts. The difference between the revenues and allowable purchases is termed as value added. Except of Japan, most countries do not use this method of collecting VAT.

2. Invoice-based collection of VAT:

In this method, the sale receipts/ invoices involved in the sales of goods and services are used for the calculation of VAT. When sale is done, the traders give separate details of VAT collected in the invoice. Most of the countries use this method for collection of VAT.

Based on the time of collection, the methods of collection of VAT are divided in two categories:

1. Accrual-based collection of VAT:

Accrual based VAT collection is done by matching the revenue with the time period when it is earned, and the cost of raw materials used and expenses with the time when they were made. However it throws light on business information, it is very complicated compared to cash based collection.

2. Cash-based collection of VAT:

This method of collection of VAT lays emphasis on the cash that is being handled and not on the fact, that if all the bills are being paid or not. When the payment is received, it is recorded as date of receiving the funds.