Business Tax Essentials for Startups and Small Businesses

Taxes feel like a maze, but you don’t need a degree to navigate them. Whether you’re filing GST, claiming a deduction, or wondering if an owner’s draw is taxable, this guide gives you the basics you can use right now.

Common Tax Deductions You Can Claim

In 2025 the tax code lets small businesses write off a lot of everyday costs. Office rent, internet bills, and even the coffee you serve clients are deductible if you have receipts. Equipment purchases such as laptops or a new printer can be claimed under Section 179, which lets you expense the full amount in the year you buy it.

Don’t forget travel expenses that are work‑related. A train ticket to a client meeting or a mileage log for your car both count, but you must keep a logbook or digital record showing dates, purpose and distance. Without that proof the deduction can be denied.

GST Rules You Shouldn’t Miss

GST registration becomes mandatory once your turnover crosses the INR 40 lakhs threshold for services or INR 20 lakhs for goods. Register early to avoid penalties and to claim input‑tax credit on purchases. The credit reduces the GST you owe, so track every invoice in a spreadsheet or accounting app.

If you’re exporting goods, you may qualify for a zero‑rated GST rate, meaning you charge no GST but can still claim input credit. Double‑check the export documentation requirements – a bill of export, shipping bill and proof of foreign exchange receipt are must‑haves.

Getting a GST refund is possible when your input tax exceeds output tax. The refund process typically takes 60‑90 days, but you can speed it up by filing a clean return, attaching all supporting documents, and responding promptly to any queries from the tax department.

Owner’s draw is another area that confuses many. In India, an owner’s draw isn’t a separate tax event; it’s treated as part of your business profit and taxed at the individual’s income‑tax slab. Keep the draw separate from salary to avoid confusion, but remember you still pay tax on the total profit.

Business loan interest can also be a deduction, but only the interest component, not the principal repayment. If you borrowed to buy equipment, split the EMI into interest and principal and claim the interest portion on your return.

Good record‑keeping is the backbone of all these benefits. Use cloud‑based accounting software, scan every receipt, and back up your files weekly. When the audit season rolls around, you’ll thank yourself for being organized.

Finally, stay updated. Tax laws change every financial year, and a small missed update can cost you a lot. Subscribe to a reliable finance newsletter or follow the “AP Startup Hub” blog for the latest changes affecting business tax in India.