VAT Registration Obligations for E-Commerce Businesses

• E-commerce businesses were required to register under VAT laws in each state where they operated or sold goods
  
• Online sellers had to obtain separate VAT registrations in states where they maintained warehouses or dispatched goods
  
• Marketplaces and aggregators also needed to register if they were responsible for tax collection
  
• Registration was mandatory regardless of turnover in many states, especially for interstate supplies
  
• Non-registration could lead to penalties, seizure of goods, or denial of input credit
  

VAT Collection and Invoicing Rules

• VAT had to be charged on all taxable sales made through the e-commerce platform
  
• Sellers were required to issue tax invoices mentioning VAT amount, TIN, and product details
  
• In many states, VAT was collected by the seller; however, some required marketplaces to deduct and remit VAT
  
• Proper invoice numbering, product classification, and rate application were essential
  
• Separate invoicing formats were used for VAT-liable and exempt goods
  

Return Filing and Tax Payment Requirements

• E-commerce dealers had to file monthly or quarterly VAT returns, depending on state rules
  
• Returns had to include detailed records of online sales, returns, discounts, and cancellations
  
• VAT collected was payable to the state government within the due date, usually the 20th of the next month
  
• Input tax credit could be claimed on eligible purchases and adjusted against output VAT
  
• Interest and penalties were applicable for delayed payments or incorrect returns
  

Record-Keeping and Audit Compliance

• E-commerce businesses were required to maintain detailed records of invoices, payments, shipping, and returns
  
• States mandated electronic and physical records of stock, sales, and returns for audit purposes
  
• VAT audit was mandatory if turnover exceeded the prescribed limit (e.g., ₹1 crore in many states)
  
• Online portals often had to provide automated data summaries for tax reconciliation
  
• Proper classification and matching of entries were essential to avoid disputes during VAT audits
  

Special Challenges and Transition to GST

• E-commerce faced complexities due to varying VAT rates across states and inter-state compliance
  
• Lack of uniformity in treatment of bundled offers, free goods, and returns led to compliance confusion
  
• With the introduction of GST, e-commerce businesses now follow TCS (Tax Collected at Source) and centralized filing
  
• However, VAT obligations still apply to legacy transactions and products like alcohol or petroleum
  
• Understanding old VAT laws helps resolve pending issues during assessments, audits, or refund claims