As of my last update in September 2021, filing a company tax return for startups in India follows a similar process to that of small businesses. However, there are some specific considerations that startups should keep in mind. Please note that tax laws and regulations may change over time, so it's essential to consult with a qualified tax professional or refer to the latest information from the Indian tax authorities for the most up-to-date guidance.
Here's a general overview of the process for filing a company tax return for startups in India:
1. Legal Structure:
Startups in India can be registered as private limited companies, limited liability partnerships (LLPs), or other legal entities. The tax implications will vary based on the chosen structure.
2. Bookkeeping and Accounting:
Startups should maintain proper books of accounts and follow the accounting standards set by the government. It's crucial to maintain accurate records of income, expenses, assets, and liabilities.
3. Tax Deductions and Exemptions:
Startups may be eligible for certain tax deductions and exemptions offered by the government to promote entrepreneurship and innovation. For example, startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) may be eligible for tax benefits under the Startup India initiative.
4. Tax Incubation Scheme (if applicable):
Under the Startup India initiative, eligible startups may opt for the "Tax Incubation Scheme," which allows them to defer income tax payments for up to three years. This can provide significant relief to startups in their initial years of operation.
5. Tax Audit:
Startups that cross a certain turnover threshold may be required to get their accounts audited by a chartered accountant. For the Financial Year 2021-22 (Assessment Year 2022-23), this threshold was set at Rs 10 crore for businesses that receive digital payments and Rs 1 crore for businesses that do not receive digital payments. These thresholds may change in subsequent years.
6. Choosing the Correct Tax Form:
Startups must choose the appropriate Income Tax Return (ITR) form based on their legal structure and income. For example, startups with turnover up to Rs 50 crore can file Form ITR-6 for the Assessment Year 2022-23.
7. File the Tax Return:
Prepare and file the startup's tax return using the chosen ITR form. The tax return filing due date varies each year and depends on the type of entity and its turnover.
8. Compliance Records:
Maintain proper records of all filed tax returns, financial statements, and relevant documents to ensure compliance and in case of any future tax audits or inquiries.
As mentioned earlier, tax laws in India can be intricate, and startups may benefit from seeking advice from tax professionals who specialize in working with startups and have knowledge of the latest tax regulations and incentives applicable to them.
Startup India: Eligibility, Tax Exemptions and Incentives:- Prime Minister Narendra Modi proclaimed the Startup India campaign in 2016 to boost entrepreneurship in India. The action plan aimed at promoting bank financing for startups, simplifying the ...
Starting a business in India requires entrepreneurs to navigate through various legal and regulatory processes. One of the most crucial steps is company registration. This process establishes a legal entity and provides several benefits, including ...
Strategic Growth. Smart Compliance. Seamless Support. “Behind every thriving startup is not just a founder’s vision—but also a Chartered Accountant who knows how to turn that vision into a compliant and scalable business.” ? Dwarka: Delhi’s ...
? Financial Due Diligence for Startups in Bangalore: Building Investor Confidence from Day One Bangalore—India’s innovation capital—is a breeding ground for startups across fintech, edtech, SaaS, healthtech, and AI. While creativity, speed, and ...
? How to Open a Multi-Currency Bank Account for Indian Startups In today’s global marketplace, Indian startups are increasingly engaging in cross-border transactions—whether it's receiving investments, paying for global SaaS tools, or servicing ...