Starting a new business requires adherence to local accounting rules, regulations and timely reporting. Due to the rapid changes in tax and accounting laws in India, startups may find it challenging to keep track of legislative updates and their application in tax filing and compliance.
Ambiguity in understanding tax legislation has led to an increase in disagreements. Taxpayers now, more than ever, need guidance from specialists throughout the tax compliance process, given the tax authorities' closer scrutiny and management.
Benefits of Tax Consultancy and Compliance Services for Start-ups in India
The benefits of availing tax consultancy services from StartupFino are the following:
Expert Guidance and Long-term Support:
- Engaging tax consultancy and compliance services from StartupFino provides start-ups with access to experienced professionals who understand the complexities of India's tax laws.
- These experts can offer personalised advice and solutions tailored to the specific needs of the business.
Minimising Tax Liabilities:
- Tax consultants at StartupFino can identify legitimate deductions, credits and incentives that start-ups may not be aware of.
- By optimising tax planning strategies, these services can help start-ups minimise their tax liabilities, which in turn allows them to retain more of their earnings for business reinvestment and growth.
Avoiding Missing out on Updates:
- Tax laws can be intricate and subject to frequent changes. Start-ups often lack the resources to keep up with these updates.
- We at StartupFino ensure that the start-up's financial transactions and reporting adhere to the latest regulations, reducing the risk of costly mistakes or non-compliance penalties.
- Tax compliance is essential for building and maintaining a positive reputation in the business community.
- Start-ups that fulfil their tax obligations demonstrate transparency and integrity, which can enhance their credibility and foster trust among investors, customers and partners.
Efficient Resource Management:
- Tax consultancy services enable start-ups to focus on their core business activities without diverting time and effort into understanding complex tax matters.
- By delegating tax-related responsibilities to our experts at StartupFino, start-up founders can streamline resource allocation and enhance overall operational efficiency.
Preventing Cash Flow Issues:
- Unforeseen tax liabilities or penalties can severely impact a start-up's cash flow, hindering its day-to-day operations.
- Tax consultants can forecast potential tax obligations, ensuring the start-up is prepared for tax payments and eliminating the risk of cash flow disruptions.
Comprehensive Risk Management:
- We at StartupFino not only handle compliance but also provide risk management strategies.
- By conducting thorough assessments and implementing appropriate controls, these experts can safeguard the start-up from potential tax-related risks and uncertainties.
Effective Business Structuring:
- Tax consultants can advise start-ups on the most tax-efficient business structure, such as choosing between sole proprietorship, partnership, limited liability partnership or private limited company.
- Selecting the right structure can have significant implications for tax liabilities and operational flexibility.
Assistance with Government Incentives:
- India's government often introduces various incentives and schemes to promote start-ups and specific industries.
- We can guide start-ups in availing themselves of these benefits, which can lead to cost savings and competitive advantages.
Smooth Expansion and Scaling:
- As start-ups grow and expand their operations, tax complexities can escalate.
- Tax consultancy services can provide valuable support during this important phase, ensuring that the business remains compliant with regional, national and international tax regulations as it enters new markets or expands its workforce.
Tax Audit Preparedness:
- In case of a tax audit, having experienced tax consultants by their side equips start-ups to handle the process smoothly.
- StartupFino can help gather the required documentation, respond to inquiries and ensure that the start-up's tax positions are well-supported and defensible.
Focus on Growth and Innovation:
- Ultimately, tax consultancy and compliance services allow start-ups to focus on what matters most – innovation, growth and achieving their business objectives.
- By leaving tax matters in our hands, start-up entrepreneurs can dedicate their time and energy to strategic decision-making and driving their ventures forward.
GST Registration and Advisory Services
The Goods and Services Tax as a unified taxation system includes all Indian service providers, traders and manufacturers. The GST consolidates central taxes like Service Tax, Excise Duty and CST, along with state taxes such as Entertainment Tax, Luxury Tax, Octroi and VAT.
In addition to this, taxpayers with a turnover of less than 1.5 crore rupees have the option to choose a composition scheme. This allows them to evade lengthy GST procedures and pay GST at a fixed rate based on their turnover.
Benefits of GST Registration
The benefits of registering with GST are as follows:
- Simplifies Taxation Services: GST integrates various indirect taxes, streamlining the taxation process and creating a unified market in India.
- Reduction in Costs of Products & Services: The elimination of cascading taxes results in reduced costs of goods and services for consumers.
- Avoiding Lengthy Taxation Services: Small businesses with turnovers below specified limits are exempt from paying GST, avoiding complex tax procedures.
- Aims to Reduce Corruption and Sales Without Receipts: GST aims to curb corruption and sales without proper receipts, promoting transparency in business transactions.
- Uniformity in Taxation Process: GST Registration enables centralised registration and a uniform taxation procedure, facilitating online tax returns filing.
- Minimises Tax Evasion: GST implementation helps minimise tax evasion due to its integrated and comprehensive tax system.
- Higher Threshold for Registration: The threshold for GST registration is higher than the previous VAT system, benefiting small traders and service providers.
- Composition Scheme for Small Businesses: Small businesses with a turnover between Rs 20 to 75 lakh can benefit from lower taxes through the Composition scheme.
- Simple and Easy Online Procedure: The entire GST process, from registration to filing returns, is conducted online, making it convenient for businesses, especially start-ups.
- Lesser Number of Compliances: GST replaces multiple tax returns and compliances with a single, unified return, reducing the administrative burden on businesses.
- Regulation of Unorganised Sectors: GST introduces online compliances and payment provisions, promoting accountability and regulation in previously unorganised industries like building construction and textiles.
Eligibility criteria for GST registration
The following entities eligible for GST registration in India:
- Business entities with an aggregate turnover exceeding Rs 40 lakhs (Rs 20 lakhs for special category states) in a financial year (dealing in goods) and for services, Rs 20 lakhs (and Rs. 10 lakhs for special category states), except for those dealing exclusively in GST-exempt goods/services.
- Entities previously registered under Excise, VAT, Service Tax, etc., need to register under GST.
- Entities engaged in inter-state supply of goods.
- Casual taxable persons.
- Taxpayers under the reverse charge mechanism.
- Input service distributors and their agents.
- E-commerce operators or aggregators.
- Non-resident taxable persons.
- Agents of a supplier.
- Persons supplying through e-commerce aggregators.
- Entities providing online information or acquiring databases from outside India to a person in India, other than a registered taxable person.
Mandatory Documents for GST Registration in India
Given below are documents needed for GST registration by various entities:
- PAN Card and address proof of the proprietor.
Limited Liability Partnership (LLP):
- PAN Card of LLP.
- LLP Agreement.
- Partners' names and address proof.
Private Limited Company:
- Certificate of Incorporation.
- PAN Card of the Company.
- Articles of Association (AOA) and Memorandum of Association (MOA).
- Resolution signed by board members.
- Identity and address proof of directors.
- Digital Signature.
Proof of Address of a Director: The following documents can be shown as proof of address for a director:
- Voter Identity Card.
- Aadhar Card.
- Ration Card.
- Telephone or Electricity Bill.
- Driving License.
- Bank Account Statement.
GST Registration Process
The process for registering under GST is provided below:
- Visit the GST portal and select 'New GST Registration.'
- Fill in business details, state, PAN card information, etc.
- Enter the OTP and proceed.
- Note the Temporary Reference Number (TRN).
- Go to 'Register' in the 'Taxpayers' menu on the GST portal.
- Enter the TRN and proceed.
- Enter OTP received on your registered mobile number or email and proceed.
- Check the status of your application on the next page.
- Fill in necessary details and upload required documents.
- Submit the application after verification using one of the provided methods.
- Receive the Application Reference Number (ARN) on your registered mobile number and email.
- Access the ARN status on the GST portal to track your application.
GST Return Filing Services
The mechanism of providing the government with data on sales, purchases and taxes collected and paid by a registered taxpayer is known as GST return filing. In India, all registered taxpayers under GST, irrespective of their sales or purchase activities during the period, are required to file GST returns.
Benefits of GST Return Filing
The benefits of filing GST return are as follows:
- GST Return Filing through a Single Form:
- All three taxes (IGST, CGST and SGST) can be recorded in a single form, simplifying the filing process.
- Eliminates the Cascading Effect:
- GST replaced multiple taxes like excise duty, service tax and state-level VAT, eliminating the cascading effect of tax.
- Higher Threshold Benefits:
- GST raised the annual turnover threshold for businesses from 5 lakhs to 20 lakhs, benefiting small-scale enterprises.
- Start-up Benefits:
- Start-ups are relieved from paying VAT and they can set off service tax on sales.
- Offers Higher Compliance Rating:
- The GST system introduces compliance ratings for entities based on their tax payment and compliance consistency.
- E-commerce for Quick Supply of Goods:
- GST simplifies e-commerce processes, making it easier for businesses to sell goods online.
- Better Regulations and Accountability:
- GST enhances tax regulation and taxpayer accountability compared to the previous tax system.
Eligibility Criteria for GST Return Filing
The following eligibility criteria applies for filing returns under GST:
Annual Turnover Requirement:
- Businesses with an annual turnover exceeding 20 lakhs(services) or 40 lakhs(goods) are eligible to file GST returns.
Activities Requiring GST Return Filing:
Individuals engaged in the following activities must file GST returns:
- Output Tax
- Input Tax
Essential Documents for GST Return Filing
There are a number of necessary documents required for filing GST returns. These are:
List of Invoices:
- B2B Services
- B2C Services
- Type of Invoice
- Invoice Number
- Place of Supply
- GST Rate
- Taxable Value
- Amount of CGST, SGST, IGST and GST Cess applicable.
- Intra-state sales
- Inter-state sales
Summary of Requisite Documents:
Types of GST Returns
Following types of GST return forms need to be followed while filing the returns:
1. GSTR-1 - Description of Outward Supplies:
- Monthly return for businesses detailing outward supplies of goods and services.
- Filed by all GST registered entities, except Input Service Distributors and Composition taxpayers.
- Captures all inward supplies (purchases) made from registered suppliers.
- Auto-filled from the supplier's GSTR-1.
- Monthly self-declaration form for normal taxpayers.
- Provides details of outward stocks, input tax credit, tax account and taxes paid.
- Filed by taxpayers opting for the 'Composition Scheme' under GST.
- Replaced GSTR 9A.
- Filed by Non-resident foreign taxpayers conducting business in India.
- Includes outward supplies, inward stocks, credit/debit notes, tax liability and taxes paid.
- Monthly return filed by 'Input Service Distributors' (ISD).
- Contains details of input tax credit received and distributed by the ISD.
- Return for government authorities deducting Tax Deducted at Source (TDS).
- Contains particulars of TDS deducted, liability payable and paid and TDS refund claimed.
- Monthly return for E-commerce operators registered under GST (Tax Collected at Source).
- Contains particulars of supplies made through the E-commerce platform and TCS received.
- Annual return filed by normal taxpayers under GST.
- Reconciliation statement for taxpayers with turnover more than Rs. two crores in the financial year.
- Filed by taxpayers whose GST registration is cancelled or surrendered.
- Return filed by taxpayers with a Unique Identity Number (UIN) to claim a refund under GST.
Procedure for GST Return Filing
The procedure to file GST returns is as follows:
Step 1: Collecting the Documents and Invoices:
- All registered taxpayers gather the necessary documents and invoices for GST Return Filing.
Step 2: Filing the Application with the Necessary Documents:
- Applicants file the GST return with all required information and documents.
Step 3: Major Pre-Compliances before Filing the GST Return:
- Review GST filing and records before submission.
- Confirm the accuracy of records, invoices and documents.
Step 4: Completing the GST Return Filing:
- After cross-checking all the documents, the applicant completes the GST return filing.
Professional Tax Registration
In every state, working professionals, including chartered accountants, lawyers and doctors, are subject to a professional tax imposed by state governments. This tax is based on the individual's occupation, trade or profession. The tax rates vary depending on the state, with a maximum cap of Rs. 2,500 per year.
Benefits of Professional Tax Registration
The benefits of professional tax registration are as follows:
1. Legal Requirement:
- In many Indian states, employers are legally obligated to obtain professional tax registration and pay taxes for their employees.
2. Avoid Penalties:
- Failure to register for professional tax can lead to substantial penalties that increase over time.
3. Easy Compliance:
- Professional tax regulations are straightforward, making the registration process quick and further proceedings easier.
- Paid professional tax allows employees to claim deductions in their salary for the corresponding year.
5. Tax is collected by respective State Governments:
- Local authorities and state governments can collect professional taxes based on employment, professions, trades, etc.
- The annual professional tax amount should not exceed 2500.
Eligibility for Professional Tax Registration
Professional tax registration liability depends on the state's regulations and individuals or entities meeting certain criteria are eligible for registration. The eligibility for professional tax registration is as following:
- Self-employed individuals and freelancers fall under this category and are liable for professional tax registration.
2. Public/Private/One Person Company:
- All types of companies, whether they are public, private or one person companies, are required to register for professional tax.
- Partnerships, which involve two or more individuals in a business venture, must also register for professional tax.
4. Co-operative Society:
- Co-operative societies, which are formed by individuals for mutual assistance and support, fall under this category.
5. Association of Persons:
- Associations of Persons formed by two or more individuals for any lawful purpose are liable for professional tax registration.
6. HUF (Hindu Undivided Family):
- Hindu Undivided Families (HUFs) are considered as separate entities for taxation purposes and need to register for professional tax if applicable in their state.
Essential Documents Required for Professional Tax Registration
To apply for Professional Tax Registration, the following essential documents are required:
1. Application Form
2. Company Documents (for Companies):
- Certificate of Incorporation (COI)
- Articles of Association (AOA) & Memorandum of Association (MOA)
- PAN (Attested by the Director)
3. Directors' Documents:
- Address proof and Identity proof of all directors
- Passport size photo of directors
4. Company Bank Account Details:
- Bank account details of the Company
- Bank statement and cancelled cheque
5. Proof of Registered Office:
- Rent agreement (in case of rented property)
- NOC from the owner
6. Board Resolution (for Companies):
- In case of a company, a board resolution is required.
- Declaration of consent by the concerned Partner (for Partnership firms).
- Salary and attendance register (for Partnership firms).
Comprehensive Process for Professional Tax Registration
The professional tax registration process involves the following steps:
Step 1: Provide Director/Partner/Proprietor Information
- Submit PAN card, address proof and identity proof of all the directors/partners/proprietors of the company.
Step 2: Furnish Employee Details
- Provide all the necessary details of employees for the registration process.
Step 3: Fill the Application Form
- Employees must fill the application form for professional tax registration.
Step 4: Submission by Experts
- Our experts at StartupFino will submit the application form to the concerned authorities on your behalf.
Step 5: Acknowledgement
- Within 5 to 7 working days, you will receive a basic acknowledgement from us.
Step 6: Registration Hard Copy
- In major cities, the registration hard copy will be issued within 10 days.
Step 7: Processing Time for Other Places
- In other places, the processing time may take up to 15 to 20 working days for issuance of the registration hard copy.
Penalties for Violation of Professional Tax Regulation
Penalties may be imposed by the state government on individuals who violate professional tax regulations. The penalties vary depending on the specific state's rules and can be levied in the following cases:
1. Failure to Obtain Registration:
- Individuals who fail to register for professional tax even after it has become applicable will be liable for a penalty for the period during which they remain unregistered.
2. Late Deposition:
- Penalties will be levied for delays in depositing the required amount to the government.
3. Non-Deposition of Amount:
- If a person fails to deposit the requisite amount, officials can recover it along with interest from the defaulter's assets and impose applicable penalties. In severe cases, prosecution cases may be filed and bank accounts can be attached.
4. Failure to Initiate Payment and File Returns:
- Penalties may be imposed for failing to initiate any payment within the due date and for not filing the return within the specified deadline.
Specific Penalty Details:
- A penalty of Rs 5/- per day is applicable for late obtainment of the registration certificate.
- Non/late payment of professional tax may result in a penalty of 10% of the tax amount.
- Late filing of returns may lead to a penalty of Rs. 1000.
- If the delay exceeds one month, the penalty increases to Rs. 1000.
TDS Return Filing
Tax Deducted at Source or TDS is a system used by the Government of India to collect taxes at the point of transaction occurrence. In this situation, the tax is taken when the payee's account is credited or when payment is made, depending on which occurrence comes first.
The company making the payment is required to deposit the deducted tax amount with the Income Tax Department. TDS is useful as it allows for the direct payment of a portion of the tax to the Income Tax Department.
Benefits of TDS Return Filing Online
Filing TDS return online offers various advantages for individuals and companies, ensuring seamless tax compliance and facilitating government revenue collection. Some of its benefits are:
1. Steady Inflow of Income to the Government:
- TDS return filing ensures a regular and steady inflow of income to the government. By deducting taxes at the source, it prevents tax evasion and ensures timely tax collection.
2. Smooth Collection of Taxes for Welfare:
- The TDS system facilitates the smooth collection of taxes, which are utilised for various welfare programs and developmental initiatives. It contributes to the country's economic growth and social welfare.
3. Quarterly Payment for the Whole Year:
- One of the significant advantages of TDS return filing is that taxpayers do not bear the burden of paying taxes in a lump sum. Instead, they make payments every three months, spreading the tax liability throughout the year.
4. Ease and Convenience of Online Filing:
- Online TDS return filing offers ease and convenience to taxpayers. It eliminates the need for manual paperwork and allows quick and efficient submission of returns.
5. Avoiding Penalties and Legal Consequences:
- Timely and accurate TDS return filing helps avoid penalties and legal consequences that may arise due to non-compliance with tax regulations.
6. Tracking Refund Status:
- Online filing enables taxpayers to track their refund status easily. They can monitor the processing of their refunds and ensure timely receipt of any eligible tax refunds.
Eligibility Criteria for TDS Deduction in India
Following entities are considered eligible for TDS deduction and filing in India:
- Individuals making specified payments under the Income Tax Act, such as salaries, commissions, professional fees and rent exceeding specified thresholds.
- Hindu Undivided Family (HUF) carrying out business or professional activities and making payments eligible for TDS deduction.
- Limited Companies or Organisations, including private and public limited companies, deducting TDS on various payments like salaries, interest, rent and consultancy fees.
- Partnership Firms with two or more partners, deducting TDS on transactions like interest, professional fees and rent exceeding specified limits.
- Body of Individuals formed for a common purpose, meeting the criteria set by the Income Tax Act and deducting TDS accordingly.
- Association of Individuals coming together for a shared objective and deducting TDS on eligible payments.
- Local Authorities, such as municipal corporations and panchayats, deducting TDS on specific payments as per tax laws.
Documents Required for Online TDS Return Filing
The list of documents needed for online TDS return filing are:
- TAN details
- PAN details
- Last TDS filing details, if applicable
- Period for TDS filing
- Date of business incorporation
- Number of transactions for TDS returns
Procedure for TDS Return Filing
The process for TDS return filing is as follows:
Step 1: Preparation of TDS Return Form:
- Prepare the TDS Return in the format prescribed by the Income-tax Department.
- Include details of total TDS deducted, amount deposited by the Deductor, TAN/PAN of the Deductor and Deductee, challan information, etc.
Step 2: Submission of Form and Documents:
- Submit the duly filled TDS Return form along with necessary documents at the nearest TIN Facilitation Centre.
Step 3: Verification and Corrections:
- The authority will verify all the submitted documents and information.
- Make necessary corrections if required.
- The authority may provide a memo stating the reason for rejection if applicable.
Step 4: Receipt of Acknowledgment:
- Receive a receipt of acknowledgment from the authority, confirming successful filing of the TDS return.
Step 5: Payment of TDS Amount (If Applicable):
- If there is any TDS amount outstanding, make the necessary payment within the stipulated time.
Step 6: Issuance of TDS Certificate:
- Deductor must issue TDS certificates to the Deductees after successful TDS return filing and payment.
- TDS certificates serve as proof of tax deducted at source.
Step 7: Regular Compliance and Reporting:
- Continue to comply with TDS regulations and maintain proper records for future reporting and audits.
Income Tax Return Filing
Every responsible Indian citizen is required by law to file income taxes with the government. You may quickly file your income tax online using today's technologies. This procedure is quick and precise, with no time limits.
However, filing an income tax return in India via the official website necessitates the completion of ITR forms. Individuals must complete a different ITR form than salaried employees. This is an important responsibility because the income tax department has a variety of forms, each with a defined function and belonging to a distinct category. StartupFino’s team of experts can help you in understanding and filing the complex ITR forms in a hassle-free manner in no time.
Benefits of Income Tax Return Filing
Following are the advantages of income tax filing in India:
- Demonstrates Responsibility: Paying taxes showcases responsible citizenship and contributes to the nation's development.
- Eases Transactions: Regular tax filing provides a record of income and tax payments, simplifying future transactions.
- Facilitates Real Estate Transactions: Many states require tax return verification for real estate registrations.
- Improves Loan Eligibility: Consistent tax filing history enhances chances of loan approval for mortgages and other financial needs.
- Builds Credibility: Financial institutions may require tax returns as a prerequisite for doing business.
- Enables Loss Adjustment: Regular tax filing allows adjustments for losses in subsequent years, providing tax benefits.
- Secures Future Deductions: Properly documented losses in tax returns can be deducted from taxable income in the future.
Eligibility for Filing Income Tax Returns in India
The following are eligible for filing income tax returns:
1. Individuals with Taxable Income:
- Individuals earning more than Rs. 3 lakhs annually (age below 60).
- Senior citizens (age 60-79) with income exceeding Rs. 3 lakhs.
- Super senior citizens (age 80 and above) with income exceeding Rs. 5 lakhs.
2. Legal Entities:
- All legal entities generating income, regardless of profit or loss.
3. Claiming Refunds:
- Individuals who have paid more in income taxes or payroll taxes than owed and seek a refund.
4. International Financial Relationships:
- Individuals with financial ties to companies headquartered outside India due to treaty rights.
- Certain companies headquartered abroad with operations within India.
Necessary Documents for ITR Filing
These are the necessary documents for ITR filing given below:
- Pay slips
- Form-16 (TDS Certificate) from the employer
- Interest Certificates from banks and post offices
Investment and Savings Proof:
- Passbook for accounts (PPF, RRSP, savings accounts)
- Form 16A for non-salary payments exceeding TDS limits
- Form 16B (if applicable) for real estate sale proceeds
Tax Deduction Details:
- Form 26AS (annual tax statement)
- TDS deducted by employer, banks or other organisations
- Advance taxes submitted
- Self-assessment taxes paid
Tax Saving Investment Proof:
- Evidence of deductions under Sections 80D to 80U
Mortgage Loan Documents:
- Bank statement for a mortgage loan
Aadhar Card and PAN Card:
- Aadhar Card and PAN Card for identity verification
Form 16C for Rent:
- Form 16C from your landlord for rent tax withholdings
Form 16-B for Real Estate Sale:
- Form 16B from the buyer for tax withheld from real estate sale proceeds.
How to File Your Income Tax Return in India?
The overview of the process for filing ITR is given below:
Step 1: Gather Required Documents
- Keep soft copies and scanned copies of necessary documents, including bank statements and last year's return.
- Fill out Income Tax Form 16.
Step 2: Submit Documents to Experts
- Submit all required documents to our experts at StartupFino for ITR filing online.
Step 3: Expert Assistance for Online Filing
- Our experts will file your income tax return online through the registered portal.
Step 4: Information and Exemptions
- Experts will select the appropriate ITR filing form and fill in all required information.
- They will claim any applicable exemptions.
Step 5: Review Tax Payable Amount
- Our experts will inform you about the tax payable amount, if any, after considering all exemptions.
What are the Tax Consultancy Services Offered by Startupfino for Startups?
StartupFino offers tax and regulatory compliance services in addition to preparing and submitting company tax returns, computing advanced tax and all related taxation services. We assist enterprises in efficiently running their business operations by completing a full health check-up of the business operations in order to become eligible for the greatest tax incentives benefits, deduct any deductions where possible and improve tax compliance.
Our professional team of specialists saves your time by managing the majority of Tax and Regulatory Compliance areas, including local tax queries, disclosure and documentation requirements.
Our services include the below mentioned:
- Accessing experienced professionals who understand India's tax laws and receive personalised advice for your start-up's specific needs.
- Identifying legitimate deductions and incentives to minimise tax burdens, enabling your start-up to retain more earnings for growth.
- Staying updated with changing tax laws and regulations to avoid costly errors and penalties in tax filing and compliance.
- Projecting potential tax obligations to avoid cash flow disruptions caused by unforeseen tax liabilities or penalties.
- Ensuring compliance and implementing risk management strategies to safeguard your start-up from potential tax-related risks.
- Advising on the most tax-efficient business structure, impacting tax liabilities and operational flexibility.
By availing our services, entrepreneurs can avoid the negative outcomes of non-followance of rules and compliances. StartupFino works hard to provide services that are prompt and effective, so you can manage your business without any issues and without facing penalties or problems.