Income Tax & ITR Filing for Companies and Founders

Private Limited companies and LLPs file income tax returns separate from founders personal returns. Company profits are taxed at corporate rates applicable for the financial year, with surcharge and cess as notified. MAT and alternate regimes may apply depending on elections and turnover — confirm with your CA at year-start, not at filing week.

Books of account must be maintained under Companies Act and Income Tax Act requirements. Bank statements alone are not books — ledgers, invoices, payroll, depreciation schedules, and expense vouchers matter.

ITR filing due dates differ by entity type, audit requirement, and transfer pricing obligations. Missing deadlines attracts interest under section 234A and penalties that scale with delay.

Domestic companies typically file ITR-6 unless exempt categories apply. LLPs and partnership firms use ITR-5. Founders file ITR-1, ITR-2, ITR-3, or ITR-4 for personal income including salary from company, dividends, capital gains on share sales, and other heads.

Choosing wrong form rejects return — match form to residential status, income heads, and audit applicability. Director salary must appear in both company payroll TDS and personal ITR.

Revised and belated returns have windows and consequences — plan original filing with buffer.

Tax audit under section 44AB applies when turnover, gross receipts, or profit declarations cross prescribed limits or specific sections are elected. Companies often face audit regardless due to Companies Act statutory audit — align statutory and tax audit scopes with one firm where possible.

Audit report Form 3CA/3CB and 3CD must be completed before return filing when audit is mandatory. Late audit blocks late return and draws scrutiny.

Start audit prep in April for March year-end — May and July chaos costs premium fees and errors.

Companies deduct TDS on salaries, professional fees, rent, and many payments. Deposit TDS by due dates and file quarterly returns — defaults block company ITR processing and hurt vendor relationships.

Advance tax instalments apply when tax liability exceeds threshold — estimate tax quarterly to avoid interest under 234B and 234C.

Reconcile Form 26AS and Annual Information Statement with books before filing — AIS shows high-value transactions regulators already see.

Pay reasonable salary for roles actually performed — zero salary with large drawings later triggers questions. TDS on salary must follow slab rates and reflect in Form 16.

Dividends are taxed in shareholders hands with applicable rules post abolition of dividend distribution tax at company level — track TDS on dividends where required.

ESOP perquisites, rent-free accommodation, and personal expenses on company card are common reassessment areas — document policies.

Turnover in ITR should reconcile with GSTR-9 and audited financials. Permanent differences — exempt income, disallowed expenses — need schedules, not silent adjustments.

Inventory and COGS mismatches between management accounts and tax return invite scrutiny for trading and manufacturing startups.

One trial balance, multiple outputs — build finance ops around that principle early.

Business losses carry forward for set-off against future profits within time limits when returns filed on time. Missing filing deadline can forfeit carry-forward benefits — catastrophic for loss-making growth years.

Startup tax holiday and section 80-IAC eligibility require DPIIT recognition and conditions — do not assume automatic benefit without application and compliance.

MAT credit tracking matters for companies that flip between tax and MAT liability across years.

Financial statements, audit report if applicable, depreciation chart, fixed asset register, loan statements, GST reconciliation, TDS certificates, bank interest certificates, investment proofs, and prior year acknowledgement.

Related-party transaction list matching ROC disclosures. Foreign transactions may need Form 3CEB transfer pricing report.

Board approval of tax positions for material uncertain tax treatments — governance investors expect.

Filing company return without paying self-assessment tax balance — invalid. Claiming personal deductions in company books. Ignoring foreign income or assets in founder personal ITR when resident.

Mismatch between 26AS TDS and booked expenses. Late filing losing loss carry-forward. Using outdated tax rates after budget changes.

Not reporting director DIN-linked directorships in personal schedules where required.

Arjun Filings pairs corporate ITR work with GST and ROC calendars so one team owns consistency. Founders get coordinated guidance on salary versus dividend mix and filing timelines.

Use AI for deadline FAQs; engage CA for audit, 3CD, and multi-entity structures. Pan-India support for companies registered in any metro.

Section 80-IAC tax holiday for eligible startups requires DPIIT recognition, inter-ministerial board approval where applicable, and continued compliance with conditions — not automatic at incorporation. Track sunset dates and turnover caps in financial model.

Section 80JJAA for additional employee cost, R&D deductions, and capital allowance schedules interact with company ITR — coordinate with auditor during year, not after books close.

Founders sometimes confuse company deductions with personal Chapter VI-A investments — keep ledgers separate.

SaaS companies billing US and EU clients face export of services rules, FEMA repatriation, and GST zero-rating documentation alongside corporate tax on global income for resident companies. Personal founders NRI status changes residential tax obligations dramatically.

Related-party transactions with parent or subsidiary abroad need arm-length pricing and Form 3CEB when thresholds apply — budget specialist TP consultant before Series A if cross-border related parties exist.

Foreign tax credit claims require treaties and proof of tax paid abroad — maintain withholding certificates meticulously.

Faceless assessments and automated mismatch notices increased in recent years — AIS and TDS mismatches trigger emails before formal scrutiny. Respond within timelines with reconciliations, not panic amendments.

Maintaining transfer pricing documentation, TP study when required, and consistent GST-ITR-ROC numbers reduces probability of deep scrutiny.

Arjun Filings prepares pre-filing reconciliation memo for company and founder returns when engaged for full-year compliance — one meeting before upload prevents most mismatch notices.

Companies follow notified accounting standards — Ind AS applies to certain large companies; smaller companies use non-Ind AS Schedule III formats. Consistency between management reporting and statutory books prevents audit qualification.

Cash versus accrual — companies generally accrual; founders sometimes mix personal cash accounting mental model with company books. Close books monthly with bank reconciliation even pre-revenue.

Fixed asset capitalization thresholds and depreciation methods chosen at purchase affect both tax and ROC financials — document policy in board note once.

TDS on salary, perquisite valuation on ESOPs when exercised, and PF contributions add to compliance surface as headcount grows. Zero payroll with active operations raises substance questions.

Reimbursements need policy — travel and phone on company account require documentation to defend deductibility. Personal expenses through company card without repayment is common reassessment area.

Arjun Filings payroll and company ITR teams share employee master data so Form 16 totals match company TDS return and books without manual re-keying.

Belated return provisions allow filing after due date with loss carry-forward restrictions and fee — better than non-filing but worse than original on-time submission. Revised return corrects bonafide errors within window — not for hiding income.

Founders should file personal ITR even when company is loss-making — personal salary, FD interest, and capital gains still oblige return independent of company status.

Founders renting personal property to company or lending interest-free must document arm-length terms and board approval — tax and ROC both scrutinise related-party deals at small companies where lines blur. Maintain transfer pricing style documentation even when formal TP report not yet mandatory.

Document every compliance decision in writing, revisit structure and registrations when revenue or fundraising milestones shift, and pair self-service research with professional CA or CS review before filings go to government portals — prevention remains cheaper than cure across MCA, GST, and income tax in India.

Document every compliance decision in writing, revisit structure and registrations when revenue or fundraising milestones shift, and pair self-service research with professional CA or CS review before filings go to government portals — prevention remains cheaper than cure across MCA, GST, and income tax in India.