Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups.

1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction

• Who can claim? DPIIT-recognized startups registered as a Private Limited Company or LLP.
• What’s the benefit?
  • 100% tax exemption on profits for three consecutive years within the first ten years of incorporation.
  • Previously, only startups incorporated until March 31, 2024, could avail of this benefit. Now, this has been extended to March 31, 2030.

2. Exemption from Angel Tax (Section 56(2)(viib))

• What’s Angel Tax? If a startup raises funds from an investor at a price higher than the fair market value (FMV), the extra amount is taxed as “Income from Other Sources.”
• Who is exempt? DPIIT-recognized startups with total share capital & premium not exceeding ₹25 crore.
• What’s the benefit? Startups don’t have to pay tax on funds received from Indian investors above FMV.

3. Carry Forward of Losses (Section 79)

• Who can benefit? Startups that incur losses within the first seven years of incorporation.
• What’s the condition? Even if there’s a change in shareholding, the losses can still be set off as long as at least 51% of original shareholders remain.

4. Lower Corporate Tax Rate

• For regular domestic companies: 22% corporate tax (if no other exemptions are claimed).
• For new manufacturing startups (set up after October 1, 2019, and starting operations before March 31, 2024): 15% tax rate.

5. Other Benefits

✅ Self-Certification for Compliance: Startups can self-certify compliance with labor & environmental laws for 3-5 years.
✅ Faster Patent & Trademark Registration: Startups get a 50% rebate on trademark fees and 80% rebate on patent filing fees.

Final Thoughts

These tax benefits help startups reduce costs, improve cash flow, and grow faster. However, startups must ensure they meet eligibility conditions and file the necessary documents on time to claim these benefits.

Who is Required to Pay TCS (Tax Collected at Source)?

Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government.

🔹 Who is Required to Collect TCS?

As per Section 206C of the Income Tax Act, the following sellers are required to collect TCS when selling specified goods or services:

✔ Companies (Private Ltd. & Public Ltd.)
✔ Partnership firms
✔ Proprietorships (in specific cases)
✔ Cooperative societies
✔ Local authorities & State/Central Government agencies

📌 Individuals & HUFs (Hindu Undivided Families) need to collect TCS only if their turnover exceeds ₹1 crore (for business) or ₹50 lakh (for professionals) in the previous financial year.

🔹 When is TCS Collected?

TCS is collected at the time of sale of certain specified goods or services.

📌 List of Goods/Services Liable for TCS:

🚀 Key Point: TCS is collected from the buyer at the time of receipt of payment or sale invoice generation, whichever is earlier.

🔹 When is TCS Not Required?

✔ If the buyer is the Government, an embassy, or a recognized international organization.
✔ If the buyer is liable to deduct TDS under any section of the Income Tax Act.
✔ If the sale value does not exceed the threshold limit specified above.

🔹 How is TCS Deposited?

📌 The seller must deposit the collected TCS to the government by the 7th of the following month.
📌 TCS is reported in Quarterly TCS Returns (Form 27EQ).
📌 Buyers can claim TCS credit when filing their Income Tax Return (ITR).

🔹 Conclusion

✔ Sellers of specified goods/services are required to collect TCS from buyers.
✔ TCS rates vary based on the nature of the goods/services.
✔ Buyers can claim TCS as a credit while filing ITR.
✔ Proper compliance with TCS deposit & return filing deadlines is necessary to avoid penalties.

Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197)

A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure is as follows:

Step-by-Step Process to Obtain Lower TDS Certificate

Step 1: Eligibility Check

✔ The applicant should be earning income where TDS is applicable (e.g., salary, interest, professional fees, rent, etc.).
✔ The applicant must justify that the TDS deduction at normal rates would result in excess tax deduction leading to a refund situation.

Step 2: Online Application on TRACES Portal

1. Login to TRACES (https://www.tdscpc.gov.in/) using the taxpayer’s PAN and password.
2. Go to “Statements / Forms” > “Request for Form 13 (Lower/Nil Deduction Certificate)”.
3. Fill in the details:
   • Personal details (PAN, Address, Contact Info, etc.)
   • Financial details (Income, Deductions, Tax Liability, etc.)
   • Nature of income for which lower TDS is requested
   • Justification for lower deduction (like previous year’s tax filings showing refund situations).
4. Attach supporting documents:
   • Computation of estimated total income and tax liability
   • Copies of previous years’ ITRs
   • Financial statements (if applicable)
   • Relevant agreements, contracts, or invoices
5. Submit the application online.

Step 3: Processing by the Assessing Officer (AO)

✔ The Assessing Officer (AO) reviews the application and may request additional documents.
✔ If satisfied, the AO will issue a Lower/Nil TDS Deduction Certificate (Form 13).
✔ The certificate specifies the validity period and applicable TDS rate (which could be lower than the standard rate).

Step 4: Submission to Deductor

✔ The taxpayer must provide the lower TDS certificate to the deductor (payer).
✔ The deductor will deduct TDS at the specified lower rate instead of the standard rate.

Key Points to Remember:

✔ Validity: The certificate is valid for a financial year or a specific period mentioned in the approval.
✔ Deadline: Apply at the beginning of the financial year to avoid excess TDS deductions.
✔ Form 15G/15H: For individuals with income below the taxable limit, Form 15G (for non-senior citizens) or 15H (for senior citizens) can be submitted instead of Form 13.

A trader is liable to deduct TCS (Tax Collected at Source) on the sale of goods under Section 206C(1H) of the Income Tax Act, subject to the following conditions:

1️⃣ Applicability of TCS on Sale of Goods (Sec 206C(1H))

✔️ The seller must have a turnover exceeding ₹10 crore in the previous financial year.
✔️ TCS applies when the buyer purchases goods worth more than ₹50 lakh in a financial year.
✔️ TCS is applicable only on the amount exceeding ₹50 lakh.

2️⃣ TCS Rate on Sale of Goods

✔️ 0.1% of the amount exceeding ₹50 lakh (If PAN is available).
✔️ 1% if the buyer does not provide a PAN or Aadhaar.

3️⃣ When to Collect & Deposit TCS?

✔️ TCS should be collected at the time of receipt of payment from the buyer.
✔️ It must be deposited with the government by the 7th of the next month.

4️⃣ Exemptions from TCS on Sale of Goods

❌ TCS is NOT applicable if:

• The buyer is the government, embassy, RBI, or public sector company.
• The sale is already subject to TDS under any other provision.

✅ Example:
If a trader has a turnover of ₹12 crore in the last financial year and sells goods worth ₹60 lakh to a customer, TCS will be applicable on ₹10 lakh (₹60 lakh – ₹50 lakh).

TCS Calculation:
👉 TCS @0.1% on ₹10 lakh = ₹1,000 (if PAN is available).

Under section u/s 184 (1) and (2) disclosure is required to be given by the directors.

Section 184 (1) is a general disclosure requires to be given by all directors to disclose their concern or interest in any company (ies), bodies corporate, firms, or other association of individuals, along with shareholding in the following situation:

1. At the first Board Meeting in which he participates as a Director post appointment;
2. At the first Board Meeting held in every financial year;
3. At the first Board Meeting held after any change in the interest or concern in the disclosures already made earlier

Disclosure u/s 184 (2) is a specific disclosure given by the director at the meeting of
the Board in which a contract or arrangement is discussed and entered into/proposed to be entered into with any entity in which such director has an interest in the manner/ to the extent specified therein.