Business entities engaged in the sale or manufacture of goods (traders and manufacturers) in India should have a Value Added Tax (VAT) Registration, also known as the Taxpayer Identification Number (TIN) Registration, once their annual turnover exceeds Rs. 5 lakhs and Rs. 10 lakhs in some states.

The state government collects the VAT, and hence, every state government has different guidelines applicable to their respective states based on the type of goods sold and manufactured.

The producer or dealer is given a unique 11 digit number which acts as the TIN Number for the business entity. It is mandatory for a registered dealer to file VAT returns. Return filing must be done once every month or once every quarter, depending on the location and turnover of the business entity. Payment of the tax has to be done before the filing of returns.

FEATURES

  • VAT is levied on sale of goods within India. If the annual sale of goods is more than Rs. 5 lakhs and Rs. 10 lakhs in few states, the producer and dealer should then obtain VAT registration.
  • VAT is not levied on goods that are exported from India.
  • Each state has different set of VAT rules and regulations, since it is determined and collected by the state government.
  • Payment of VAT is deposited in the designated bank quarterly in case of Proprietary Firms, Partnership Firms or Limited Liability Partnership and monthly in case of business entities like Companies.

VAT RETURNS PROCESS

PREPARATION OF DOCUMENTS

Prepare the necessary information and documents required (i.e. TIN Number, balance sheet, tax liability, state of operation) for filing the returns.

Staying Compliant

File the returns to the state government; VAT returns are due on 20th of every month. VAT payments must be deposited by the Proprietary Firms, LLP’s and the Partnership Firms quarterly and other entities are required to make VAT payments monthly.

 

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