- Every entrepreneur, new or experienced, must be aware of the various tax provisions for their startups.
- Tax-benefits help new ventures to save a crucial amount of money and use it for further expansion of their operations.
The following are the Important Tax benefits that every entrepreneur should know:
1. Restrictions on cash payments & receipts:
- Section-40A (3)-Payment of cash or bearer Cheque for a single person, In a single day, Related to same Expense Exceeds Rs.10,000 the same should be Disallowed.
- Section-269T- Repayment of loan by cash Exceeds Rs.20,000 then the full Loan amount would be considered as a Penalty.
- Section-269SS- Received Loan Amount in Cash Exceeds Rs.20,000 then the full Loan amount would be considered as a Penalty.
Section-269ST- Receipt of cash or bearer Cheque for a single person, In a single day, Related to Transaction or Event Exceeds Rs.2,00,000 then the full Amount would be considered as a Penalty.
5. Advance Tax:
- Every person has liable to pay advance tax Except:
- Advance tax payable is less than Rs.10,000 or
- Resident Senior Citizen does not have PGBP
Time Limit
| Due Date | All Assessee (Except presumptive) | For Presumptive Tax payers |
| On or before 15th of June of P.Y. | Upto 15% of Advance Tax | |
| On or before 15th of September of P.Y. | Upto 45% of Advance Tax | |
| On or before 15th of December of P.Y. | Upto 75% of Advance Tax | |
| On or before 15th of March of P.Y. | Upto 100% of Advance Tax | Upto 100% of Advance Tax |
1. Applicable Compliances & Due Dates
Assess all the applicable compliances
- The Assessee has to file TDS and TCS Returns Quarterly and
- He has to file the Income tax Annual return Every year and
- The Applicable Tax Rate for company is 30%
1. Tax holiday for three years:
- In order to give entrepreneurial ventures a much-needed boost, the government in the union budget 2016-17 has announced to provide a deduction of 100% tax exemptions during the first three years of operation.
- Only the companies that are registered as startups under the Department of Industrial Policy and Promotion (DIPP) that involve in innovation, deployment, development or commercialization of new products and services driven by technology would be eligible for the three year tax benefits.
- Moreover, In the first three years the eligible startups would not have to pay any tax for profits except MAT (Minimum Alternate Tax). MAT is calculated on `book profit’.
2. Presumptive tax:
- It is mandatory for the entrepreneurs to maintain the books of account.
- However, under the Presumptive taxation scheme, it is not required to maintain the books of account and hence will reduce the burden of the entrepreneur.
- The Entrepreneur has to pay 8% on total turnover or 6% if he receives the amount of turnover received by A/c payee cheque, draft and in any ECS mode.
- Moreover, all the small businessmen with a turnover of up to Rs.2 crores and professionals with gross income of up to Rs 50 lakhs can avail benefit of this scheme.
3. Payment of EPF by the Government:
- The government will now provide an EPF (Employees’ Provident Fund) contribution of 8.33% for the period of three years.
- This move will relieve many employers by cutting costs of startups by 12% for straight three years and will provide opportunities to hire competent candidates for their company as candidates will have job security.
4. Tax Deducted at source:
- It is the statutory duty to deduct the tax by the Entrepreneur
- the business man needs to deduct the specified rate of tax if the value of services receiving from the party Exceeds the specified limit mentioned in the Income Tax Act
The following are the important Limits and Rates specified in the Income tax act
| Sections | Rate (%) | Threshold |
| 194A- Interest on Securities | 10% | Rs.40,000-banks and post office savings (50,000 for super seniors)Rs.5000 for others |
| 194C-Payment on Contracts | 1% and 2% if it is a company | Rs.30,000 and aggregate amount exceeds Rs.1,00,000 during the financial year |
| 194H-Commission on Brokerage | 5% | Rs.15,000 |
| 194I-Income by way of rent | 2%-Plant and Machinery10%-Land and Building | Rs.2,40,000(To one person for all Agreements) |
| 194J-Payment on Professional Charges | 10% | Rs.30,000 |
