Oliver Wendell rightly said – “I like to pay taxes. With them, I buy civilization.” True indeed. With the practice of paying taxes, you not only show yourself as a responsible citizen towards country, but you are contributing some portion of your income towards the betterment of the nation. Government has various policies and get them operational in the system funds are required. These financial resources are earned in the form of taxes from the residents of the country. Hence taxes come into being and they are classified into 2 basic categories, i.e. Direct and Indirect. VAT is an example of Indirect taxes imposed on buyers.
Value Added Tax that is also known as goods and services tax i.e. GST. It is most common and prevalent method of applying taxes around the world. With the implementation of tax on a product or a manufactured good when each and every time a new value is added at every stage of production and during the time of final sale. An example can be – It can be explained as when a good is manufactured by a company, owner gets all the raw materials with applied VAT and once the goods reaches in the hands of consumers, he pays the tax with the sum of all the taxes paid by manufacturer at each stage. VAT is controlled by the Ministry of Finance and some set patterns and guidelines. There are also different types of VAT that are applicable to different categories.
VAT Registration is a system that needs to be follow to register for VAT purposes. Any business that has a certain amount of turnover are supposed for VAT registration. It is enforced for the businesses if they reach the mentioned threshold in terms of turnover. It is necessary for the business to register for VAT if they wish to supply the goods and services to others. If your annual sales are more than Rs 5 Lakh. (This varies according to different state policies)
Several benefits of registering VAT can be-
•You are entitled to a VAT deduction for trading of raw materials for your businesses if you are self-Vat registered.
•It makes your business seem credible, legal and larger.
•Person is eligible for VAT refunds
There are several important factors such as dates and modes you need to remember for filing VAT Returns. Date table that is needed to dredge up are-
•April – September: 25th October.
•October – March: 25th April.
VAT (Value Added Tax) returns are outstanding on the 20th of the next month after the related month i.e. for June, 2012, the due time of VAT return is 20th July, 2012.
Its mode can be both online and offline. A number of various websites also assist in filing tax online, but one has to be very careful in doing the same. For processing your VAT returns online, below is the detailed info.
General condition for VAT payment is you must pay your returns by the 19th day of the month following the end of each two-monthly taxable period (i.e. January/February, March/April and so on).
•Payment by Direct debit:
A person using a bi-monthly VAT accountability of equal to Rs 50.000 might pay VAT by direct debit in periodic monthly sections. If an occupation is recurrent, a person can diverge the expenses paid every month to redirect cash flow.
VAT expenses are final payable by the 25th day of the first month initiating later the end of the tax age, for companies who file their revenues and make expenditures electronically. For e-filing, this date it is the latter business day of the month afterward the conclusion of the tax period.
•Payment through e-filing
This facility can be accessed if-
•One has a bank account with the net banking facility and when your bank also provides you with e payment facilities.
•You can also opt for going straight to approved website of the bank to the e-payments of sales tax.
Many tax reforms that were implemented from the time of liberalization were there for a special purpose to accommodate the varying needs of the economy. VAT is one such part. Its working is also subjected, according to policies of different states. While doing a business, owner has to be very vigilant in terms of filing taxes, getting refunds, showing returns and most importantly doing all this in provided time frame. Over the time, VAT has also encouraged trade. Some of the benefits are that-tax compliance is enhanced, revenue growth on higher side is witnessed and export competitiveness is greatly promoted.
Author name – SHEELA JOBY
Senior editor Higrit.com, you could reach her at firstname.lastname@example.org