Running a business in India means keeping a close eye on taxes. Missing a deadline or filing the wrong form can cost you both money and peace of mind. Below you’ll find the most common tax rules that every startup and small‑medium enterprise should know, plus easy steps to stay compliant.
Key Compliance Areas
GST registration and filing. If your annual turnover exceeds ₹40 lakhs (₹20 lakhs for services), you must register for GST. Once registered, file GSTR‑1 every month and GSTR‑3B by the 20th of the following month. Keep all sales invoices, purchase bills, and e‑way bills handy – the tax office can ask for them anytime.
Income tax on profits. For firms, the corporate tax rate sits at 25 % for turnover up to ₹400 crore, and 30 % beyond that. Sole proprietors and partners are taxed under personal income tax slabs, so plan your withdrawals wisely. Remember to claim allowable deductions (rent, depreciation, employee salaries) to lower your taxable income.
TDS (Tax Deducted at Source). When you pay contractors, consultants, or rent above the prescribed limits, you need to deduct tax at the applicable rate and deposit it within the month. File quarterly TDS returns (Form 24Q for salaries, 26Q for non‑salary payments) and provide the certificates to your payees.
Professional tax and PF. Most states levy a small professional tax on salaries; it’s a simple flat amount that you remit to the state authority. Employees earning above ₹15 000 per month also need to be enrolled in the Employees’ Provident Fund (EPF) and have 12 % of basic salary contributed each month.
Practical Steps to Stay On Track
1. Set up a tax calendar. Mark all filing deadlines – GST returns, income‑tax returns (usually July 31 for individuals, September 30 for companies), TDS quarters, and PF/ESI dates. A reminder app can save you from last‑minute scrambling.
2. Use accounting software. Tools like Tally, Zoho Books, or QuickBooks automatically generate invoices with GST numbers, track expenses, and produce ready‑to‑file reports. Integrating your bank feeds reduces manual entry errors.
3. Maintain proper documentation. Keep digital copies of every bill, receipt, and contract for at least six years. The Income Tax Department can request any document during an audit, and having them organized speeds up the process.
4. Hire a qualified accountant or tax consultant. Even if you’re comfortable with numbers, a professional can spot hidden deductions, advise on capital gains treatment, and ensure you’re not overpaying.
5. Stay updated. Tax rules change often – the 2025 budget introduced a new GST rate for certain e‑commerce services and adjusted the threshold for mandatory audit. Subscribe to reputable finance blogs or follow the official tax portals to catch updates early.
By treating tax compliance as a regular part of your business routine, you avoid costly penalties and keep cash flowing where it belongs – into growth. Start with the checklist above, automate where you can, and don’t hesitate to ask a pro when the rules feel fuzzy. Your business will thank you for the extra peace of mind.
Navigating the tax landscape for startups in India isn't always straightforward. While certain tax benefits exist, like the Startup India initiative, tax-free status isn't guaranteed for every business. We've got practical insights and important details on how new businesses can benefit from these schemes and what to watch out for when it comes to taxes.
