Direct Tax Filing Instructions for Indian Startups

Chosen theme: Direct Tax Filing Instructions for Indian Startups. A practical, founder-friendly guide to navigate India’s direct tax rules, stay compliant, and file accurately—without losing momentum on building your company.

Who qualifies as an ‘eligible startup’ and why it matters for direct tax

If your company is recognized by DPIIT, you may access targeted direct tax incentives designed for innovation-driven businesses. Recognition also streamlines interactions with authorities and signals credibility to investors reviewing your compliance hygiene.

Who qualifies as an ‘eligible startup’ and why it matters for direct tax

Eligible startups can apply for a profit-linked deduction under Section 80-IAC for any three consecutive years within a larger window. Timely applications, accurate documentation, and proper audit trails are crucial to actually enjoy the benefit when you file.

Private limited companies: ITR-6 and regime choices

Most venture-backed startups file ITR-6. Many opt for the concessional corporate tax regime under Section 115BAA by filing Form 10-IC within timelines. Model scenarios before deciding, because the choice affects available deductions and future cash flows.

LLPs and partnerships: ITR-5 and AMT considerations

LLPs typically file ITR-5 and may face alternative minimum tax if claiming certain deductions. Keep partner capital accounts reconciled, ensure TDS credits match 26AS, and document revenue recognition policies clearly to avoid mismatches during assessments.

Solo founders as proprietors: ITR-3 or ITR-4 (presumptive)

If you operate as a proprietor, you’ll use ITR-3 or ITR-4 for presumptive income. Track business expenses meticulously, separate personal spending, and align books with your bank statements so your computation survives scrutiny and supports loan or grant applications.

The compliance calendar you can actually follow

If you expect taxable income, pay advance tax across four instalments during the year to minimize interest. Forecast quarterly, use conservative assumptions, and revisit after funding, large deals, or unexpected costs. Comment if you want a template calendar.

Deduct tax at source on salaries and specified vendor payments, deposit by the due date, and file quarterly TDS/TCS statements. Reconcile challans, PANs, and reported amounts to prevent downstream notices and maintain investor confidence during diligence.

Companies and audited entities generally have later due dates than non-audited businesses, with transfer pricing cases typically even later. Always check the current year’s CBDT notifications because timelines can shift. Subscribe to get timely due date alerts.

Books, evidence, and reconciliations that keep you safe

Lock monthly books, store invoices and contracts, and tag expenses to cost centers. Back up documents in secure cloud folders with consistent naming conventions. When the return deadline approaches, you will thank your past self for this discipline.

Deductions, regimes, and smart elections

Confirm eligibility, pick the best three consecutive years, and preserve every support: recognition letters, financials, audit reports, and board approvals. File within timelines. Share your questions below, and we’ll cover common pitfalls in an upcoming post.

Deductions, regimes, and smart elections

Evaluate Section 115BAA versus the regular regime using multi-year projections. Consider MAT/AMT interactions, deferred tax impacts, and your expected profitability path. Once opted through the correct form, reversals or changes are constrained, so analyze carefully.

Payroll, TDS, and founder compensation

Compute monthly TDS on salaries, consider perquisites, and issue Form 16 on time. Collect employee declarations early, verify proofs before year-end, and align HR, payroll, and finance systems so filings mirror actual payments and statutory deductions accurately.

Payroll, TDS, and founder compensation

Apply the correct TDS sections for contractors, professionals, rent, and purchase of goods thresholds. Maintain vendor master data with PANs, addresses, and exemption certificates where applicable, and review monthly payment runs for compliance before releasing funds.

Payroll, TDS, and founder compensation

Differentiate salaries from reimbursements with receipts, approvals, and clear policies. Avoid reclassification risks by documenting board-approved compensation. This clarity helps during audits, due diligence, and future fundraising conversations with institutional investors.

ESOP taxation and deferral for eligible startups

ESOP perquisites generally tax at exercise for employees. Eligible startups can access a statutory deferral of tax and TDS deposit until certain trigger events. Educate team members, explain timelines, and coordinate with payroll so surprises do not appear later.

Raising capital and Section 56 considerations

When issuing shares above fair value, understand anti-abuse rules and available exemptions for eligible startups. Obtain robust valuation reports, maintain investor documentation, and keep cap tables synchronized with filings to reduce friction during assessments or diligence.

Cap table changes and loss continuity

Plan ownership changes with Section 79 in mind to protect loss carry-forwards. Coordinate legal, finance, and tax advisors before closing term sheets. If this topic worries you, drop a comment, and we’ll send a concise explainer to your inbox.

Your step-by-step filing workflow on the portal

Register on the e-filing portal, link PAN, obtain or renew your DSC, and pre-validate bank accounts for refunds. Assign user roles, verify email and mobile, and create a shared timeline so nothing slips in the last week.

Your step-by-step filing workflow on the portal

Export the trial balance, finalize adjustments, and map schedules for depreciation, TDS credits, and losses. Reconcile 26AS and AIS, attach required reports, and generate a computation note explaining judgments that a reviewer—or future you—can understand.

Five mistakes we see repeatedly

Mismatched 26AS credits, missed advance tax, wrong ITR form, unreported interest income, and late auditor uploads. Each is preventable with a simple monthly ritual. Share which one worries you most, and we’ll help with a quick fix.

A quick checklist before you hit submit

Books closed, reconciliations done, challans matched, forms uploaded, board approvals recorded, DSC active, bank pre-validated, and return preview reviewed line by line. Print the acknowledgment and file it in a dedicated compliance folder immediately.