Frequently Asked Questions

The old regime allows taxpayers to claim numerous deductions and exemptions — such as HRA, LTA, 80C investments, home loan interest, and medical insurance — resulting in a lower taxable income. The new regime (default from FY 2023-24) offers lower slab rates but eliminates most deductions. For individuals with significant investments and eligible deductions, the old regime may still be beneficial. We analyse your specific situation each year to determine the most tax-efficient option for you.

Under Section 44AB, a Tax Audit is mandatory if: (a) a business has gross turnover exceeding ₹1 crore (₹10 crore if 95%+ transactions are digital), or (b) a professional has gross receipts exceeding ₹50 lakh. Taxpayers opting out of presumptive taxation under Section 44AD/44ADA with income below the presumptive threshold may also require a tax audit. The audit must be completed and Form 3CA/3CB with Form 3CD must be filed by September 30 of the assessment year.

First, identify the type of notice — whether it is under Section 143(1) (intimation), 143(2) (scrutiny), 148 (reassessment), or 156 (demand). Each requires a different response approach. Do not ignore any notice — missing the deadline typically leads to ex-parte assessments or penalties. Gather supporting documents, verify the figures cited, and file a proper response within the prescribed time. Our partners handle income tax notices from the first response through to appellate proceedings if required.

Transfer pricing regulations under Sections 92 to 92F apply when an Indian entity undertakes transactions with associated enterprises located outside India. These "international transactions" include payment of royalties, management fees, purchase/sale of goods, provision of services, loans, and guarantees. The transactions must be priced at arm's length — i.e., as if they were done between unrelated parties. A Transfer Pricing Study (benchmarking) must be maintained, and Form 3CEB must be filed. Penalties for non-compliance can be severe — up to 2% of the transaction value.

Businesses are required to deduct TDS on various payments — including rent (Section 194I), professional/technical fees (194J), contractor payments (194C), commission (194H), and interest (194A) — at prescribed rates when the payment crosses the threshold limit. TDS must be deposited with the government by the 7th of the following month (April 30 for March). Quarterly TDS returns (Form 24Q/26Q/27Q) must be filed, and TDS certificates (Form 16/16A) issued to deductees. Failure to deduct or deposit TDS attracts interest and disallowance of the expense.

GST registration is mandatory if your aggregate turnover in a financial year exceeds ₹40 lakh for goods suppliers (₹20 lakh for special category states) or ₹20 lakh for service providers. Regardless of turnover, registration is compulsory for inter-state supply of goods, e-commerce operators, persons required to deduct TDS under GST, and casual taxable persons. Voluntary registration is also available for smaller businesses seeking input tax credit benefits.

Under GST, the tax is split between the Centre and the States. For intra-state transactions (buyer and seller in the same state), both CGST (Central GST) and SGST (State GST) are levied, each at half the applicable rate. For inter-state transactions (buyer and seller in different states or union territories), IGST (Integrated GST) is levied at the full rate by the Centre, and later apportioned to the destination state. Understanding which applies is critical to correctly charging tax, raising invoices, and claiming input tax credit.

ITC allows a registered taxpayer to reduce the GST paid on inputs from the GST payable on outputs — effectively taxing only the value added. To claim ITC, the supplier must have filed their GSTR-1, the tax must have been paid by the supplier to the government, the goods/services must have been received, and a valid tax invoice must be in possession. ITC cannot be claimed on certain blocked credits such as motor vehicles (with exceptions), food, entertainment, and personal expenses. Reconciling ITC with GSTR-2B monthly is critical to avoid mismatches.

A regular GST taxpayer must file: GSTR-1 (outward supply details — monthly by 11th or quarterly under QRMP scheme), GSTR-3B (summary return with tax payment — monthly by 20th or quarterly under QRMP), and GSTR-9 (annual return — by December 31). Additionally, GSTR-9C (reconciliation statement) is required for taxpayers with turnover exceeding ₹5 crore. Late fees apply for delayed filing, and ITC reversal may be required for non-reconciled credits.

E-invoicing is mandatory for B2B transactions for businesses with aggregate turnover exceeding ₹5 crore in any preceding financial year (as of the current threshold). Under this system, invoices must be reported to the Invoice Registration Portal (IRP) in real time, which generates a unique IRN (Invoice Reference Number) and QR code. The e-invoice details are auto-populated in GSTR-1, reducing manual data entry. Failure to generate e-invoices where mandatory renders the invoice invalid and the recipient ineligible to claim ITC.