Income Tax Compliance in India: Top Mistakes Businesses Make & How CAs Fix Them
Navigating India’s income tax landscape is no easy feat, especially for growing businesses trying to juggle operations, cash flow, and compliance. With frequent regulatory updates, stringent deadlines, and evolving digital processes, even well-intentioned businesses can make costly errors. These mistakes don’t just lead to penalties; they can trigger scrutiny from tax authorities, delay funding rounds, and impact reputation.
At PKPConsult, we specialize in turning complexity into clarity. Our Chartered Accountants (CAs) don’t just tick boxes; they provide tailored strategies, proactive guidance, and hands-on support to ensure every tax move aligns with your business goals. Here's a closer look at the most common mistakes made by businesses in India in income tax compliance and how PKPConsult steps in to fix them.
The Mistake:
Many businesses, especially MSMEs and startups, either delay filing their returns or forget statutory deadlines. This can lead to interest charges under Section 234A/B/C, penalties up to ₹10,000, and even loss of carry-forward rights for certain losses.
How PKPConsult Helps:
PKPConsult maintains a robust compliance calendar for all clients. We offer proactive reminders, auto-generated alerts, and priority processing so you never miss a deadline. Our dedicated relationship managers ensure timely documentation and e-filing. Thus, eliminating last-minute stress.
The Mistake:
The TDS (Tax Deducted at Source) aspect in income tax compliance in India is often misunderstood. Businesses may deduct TDS at wrong rates, delay depositing it, or submit incorrect TDS returns (Form 26Q/24Q). This can result in disallowance of expenses under Section 40(a)(a), interest at 1–1.5% per month, and notices from CPC-TDS.
How PKPConsult Helps:
Our team does a complete TDS health check to identify gaps in deductions, filing mismatches, or PAN errors. We automate TDS calculations as per the latest provisions and manage monthly deposit schedules. For complex payments, like contracts or international transfers, our CAs provide expert advice on section applicability and DTAA relief.
The Mistake:
Incorrect classification of income (capital vs. business gains) or improper accounting of expenses (non-business or personal expenses claimed as deductions) is a red flag for the Income Tax Department and can lead to scrutiny assessments.
How PKPConsult Helps:
We follow a compliance-first accounting approach, aligning your financial records with the Income Tax Act and prevailing industry standards. Our experts segregate allowable vs. disallowable expenses. Thus helping businesses maintain clean, defensible ledgers in the event of audits.
The Mistake:
Filing returns without matching entries in Form 26AS or the newer Annual Information Statement (AIS) often leads to mismatch notices, refunds getting delayed, or excessive tax demands.
How PKPConsult Helps:
PKPConsult uses advanced tools to perform pre-filing reconciliations of client books with Form 26AS, AIS, and TIS (Taxpayer Information Summary). Any discrepancies ( like missing TDS, unreported incomes, or high-value transactions) are flagged and addressed before return filing, ensuring smooth assessments and faster refunds.
The Mistake:
Businesses with fluctuating incomes or new revenue streams often forget to estimate and pay advance tax by the prescribed quarterly deadlines. This results in interest penalties under Sections 234B and 234C.
How PKPConsult Helps:
We help businesses forecast taxable income and structure advance tax payments accordingly. Our CAs revisit these projections every quarter, factoring in real-time changes in income, investment declarations, and new deductions. Thus ensuring you're neither overpaying nor underpaying taxes.
The Mistake:
Businesses engaging in foreign remittances, import-export, or services from overseas vendors often neglect income tax compliance in India under Sections 195 or Rule 37BB (such as missing Form 15CA/CB filings). This can invite scrutiny from the RBI and IT departments.
How PKPConsult Helps:
Our experts at PKPConsult specialize in international tax compliance. From DTAA applicability to filing Form 15CA/CB, we ensure every outbound payment is tax-compliant, backed by proper CA certification, ARN generation, and liaison with banks for smooth remittances.
The Mistake:
Businesses may claim deductions or exemptions (like Section 80JJAA for hiring new employees or Section 35 for R&D) but fail to maintain the required documentation or evidence, leading to disallowances during scrutiny.
How PKPConsult Helps:
We provide audit-ready documentation packs for every deduction claimed. This includes payroll records, proof of investment, lease agreements, R&D expenditure proofs, and relevant board resolutions. We also assist with filings in related portals (like DPIIT for startups or MCA for CSR claims).
The Mistake:
Tax laws change every year. Using outdated tax rates, slab applicability, or missing compliance updates (like changes in audit thresholds or Form 10-IC/ID for tax regime selection) leads to errors in return filing.
How PKPConsult Helps:
Our team stays updated with every CBDT notification, Finance Act amendment, and circular. Clients receive timely updates and personalized advisories. Thus ensuring they always comply with the latest rules. We also guide you on whether to opt for the old vs. new tax regime, depending on your financial structure.
Income tax compliance in India is not just about meeting deadlines; it's about strategic planning, risk reduction, and aligning your business with regulatory expectations. Whether you’re a startup, SME, or a large enterprise, one misstep can cost time, money, and peace of mind.
At PKPConsult, we go beyond filing forms; we ensure that your business is always compliance-ready. Speak to our team today and experience tax filing that’s precise, proactive, and perfectly aligned with your business vision.
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