Complete Corporate Tax & Compliance Guide (Effective from FY 2026–27)

By Rokadh Financial Services Private Limited

India’s Leading Financial Services Company

Website: www.rokadh.com

1. Introduction: A New Era of Corporate Taxation in India

India’s tax system has undergone one of its most significant structural reforms since independence. The New Income Tax Act 2025 is designed to replace the decades-old Income Tax Act, 1961, bringing a simplified, technology-driven, and business-friendly tax framework into effect from 1 April 2026.

For Private Limited Companies, this reform is not just a legislative update—it is a structural change that will impact:

1. Corporate tax compliance
2. Financial reporting and documentation
3. TDS and withholding obligations
4. Audit and assessment procedures
5. Litigation and dispute resolution
6. Digital accounting requirements

This comprehensive guide explains everything a private limited company must know, including factual legal changes, compliance obligations, tax planning strategies, and how to prepare before the new law becomes operational.

2. Why India Needed a New Income Tax Act

The Income Tax Act, 1961, despite being amended more than 1,000 times, had become:

1. overly complex
2. difficult to interpret
3. litigation-heavy
4. and disconnected from modern digital financial systems

Companies often faced issues such as:

1. overlapping provisions
2. outdated language
3. multiple interpretations by courts
4. and extensive compliance burden

The government introduced the Income Tax Bill 2025 with the objective of:

1. reducing legal ambiguity
2. simplifying section structure
3. making tax law easier to read and implement
4. improving voluntary compliance among businesses

3. Key Objectives of the New Income Tax Act 2025

The new law is not primarily designed to increase tax rates. Instead, it focuses on structural clarity and efficiency.

Major objectives include:

3.1 Simplification of Language

The new Act replaces complex legal wording with clearer definitions and structured clauses, making it easier for directors and finance teams to understand obligations without relying heavily on legal interpretation.

3.2 Reduction in Litigation

By reorganising provisions and removing redundant sections, the government aims to reduce disputes between taxpayers and the Income Tax Department.

3.3 Digital Compliance Alignment

Modern businesses use ERP systems, cloud accounting, and AI-based financial tools. The new law is aligned with:

1. digital documentation
2. electronic verification
3. automated audit trails

This is particularly relevant for private limited companies that are already required to maintain digital books under the Companies Act.

4. When Will the New Act Apply to Private Limited Companies

One of the most misunderstood aspects is the timeline of applicability.

1. For FY 2024–25: Income Tax Act 1961 will be applicable
2. For FY 2025–26: Income Tax Act 1961 will be applicable
3. For FY 2026–27: Income Tax Act 2025 will be applicable

This means companies currently closing accounts for FY 2025–26 must still comply with the old law, but they must prepare systems and policies for the transition starting April 2026.

5. Structural Changes in the New Income Tax Act 2025

The most important transformation is structural rather than financial.

5.1 Reduction in Number of Sections

The old Act contained more than 800 sections, explanations, and provisos. The new Act reorganises them into approximately 536 sections, grouped in a more logical sequence.

5.2 Reorganisation into Thematic Chapters

Provisions are now grouped under clearer heads such as:

1. computation of income
2. corporate taxation
3. withholding taxes
4. international taxation
5. dispute resolution

This makes it easier for company finance teams to navigate the law.

6. Introduction of the “Tax Year” Concept

One of the most visible reforms is the replacement of:

1. Previous Year
2. Assessment Year

with a single concept called Tax Year.

Why this matters for companies

Under the old system:

1. Income earned in FY 2024–25 was taxed in AY 2025–26.
2. This dual-year system confused many new entrepreneurs and foreign investors.

Under the new system:

1. Income and tax reporting will be aligned to a single period, reducing confusion in financial reporting and compliance tracking.

7. Corporate Tax Rates Under the New Act

The government has indicated that corporate tax rates will remain unchanged, ensuring stability and predictability for businesses.

7.1 Current Corporate Tax Structure

1. Domestic company (standard): 25%
2. Concessional regime (115BAA): 22%
3. New manufacturing company: 15%

These rates are expected to continue under the new law, preserving India’s competitiveness as an investment destination.

8. Minimum Alternate Tax (MAT) and Its Future

MAT was introduced to ensure companies with high book profits but low taxable income still paid a minimum tax.

Currently:

1. MAT is levied at 15% on book profits.

The new Act aims to simplify MAT provisions, but the concept itself is expected to continue to prevent tax avoidance.

This is particularly relevant for:

1. capital-intensive companies
2. companies claiming large depreciation or tax incentives

9. Impact on Private Limited Companies Compared to Other Entities

Private limited companies face the highest compliance burden among business structures because they must comply with:

1. Companies Act, 2013
2. Income Tax Act
3. GST laws
4. Secretarial standards
5. ROC filings

The new Income Tax Act 2025 attempts to harmonise tax compliance with corporate law compliance, reducing duplication in documentation.

10. Mandatory Digital Accounting and Audit Trail

Under existing corporate regulations, companies must maintain:

1. accounting software with audit trail
2. non-editable transaction logs
3. digital record retention

The new tax regime strengthens this requirement by allowing tax authorities to rely more heavily on digital financial trails during assessments.

This means:

1. manual bookkeeping practices will become increasingly risky
2. companies using outdated accounting systems may face compliance challenges after 2026

11. Impact on Startups Registered as Private Limited Companies

India’s startup ecosystem predominantly uses the private limited company structure due to:

1. limited liability
2. easier fundraising
3. investor confidence

The new Income Tax Act supports startups by:

1. retaining concessional tax regimes
2. simplifying carry-forward of losses
3. reducing interpretational disputes during assessments

However, startups must ensure:

1. strict compliance in documentation
2. proper classification of expenses
3. and transparent related-party transactions

12. Compliance Areas That Will See Major Change

The following compliance areas will undergo structural modification:

1. Income computation provisions
2. TDS classification and rate tables
3. Assessment procedures
4. Appeals and dispute resolution
5. Definitions of income categories

These changes do not necessarily increase tax liability but change how compliance is performed, which requires training for finance teams.

13. Importance of Early Preparation Before April 2026

Many companies assume that preparation can begin once the new law becomes effective. This is a mistake.

Preparation must begin during FY 2025–26 because:

1. ERP systems may need updates
2. accounting policies may require revision
3. internal tax manuals must be rewritten
4. finance teams need training

Failure to prepare may lead to:

1. filing errors
2. compliance penalties
3. or incorrect tax planning decisions

14. How Rokadh Financial Services Private Limited Helps Companies Transition

Rokadh Financial Services Private Limited provides:

1. corporate tax advisory
2. ITR-6 filing support
3. accounting system compliance checks
4. audit trail verification
5. corporate restructuring advice

With businesses operating in cities like:

1. Delhi
2. Noida
3. Gurgaon
4. Bangalore
5. Hyderabad
6. Mumbai
7. Kanpur
8. Lucknow

our firm helps companies adapt to regulatory changes in a structured and compliant manner.

Section 2: Computation of Income for Private Limited Companies Under the New Income Tax Act 2025

One of the most important aspects of corporate taxation is how taxable income is calculated. While tax rates may remain largely unchanged, the method of computing income, classification of expenses, and allowable deductions directly determine how much tax a private limited company actually pays.

The New Income Tax Act 2025 reorganises and simplifies the provisions related to computation of income. Although the core principles remain similar to the earlier law, the structure, presentation, and cross-referencing of provisions have been significantly improved to reduce ambiguity.

This section explains, in a step-by-step and practical manner, how private limited companies will compute taxable income under the new law.

2.1 Basic Framework of Corporate Income Computation

Under both the existing and new tax regime, a company’s tax liability is calculated in the following stages:

1. Determine Gross Total Income
2. Deduct eligible business expenses and depreciation
3. Apply set-off of losses and carry forward losses
4. Deduct allowable incentives and deductions
5. Arrive at Total Taxable Income
6. Apply applicable corporate tax rate
7. Calculate surcharge and cess

The new law retains this structure but places the provisions in a clearer sequence, making it easier for accountants and directors to understand how each component affects the final tax figure.

2.2 Heads of Income Applicable to Companies

Private limited companies primarily earn income under the following heads:

1. Profits and Gains from Business or Profession
2. Income from Other Sources
3. Capital Gains

Unlike individuals, companies typically do not have income under the head “Salaries,” but they may receive interest income, dividend income, and gains from sale of assets.

The new Act reorganises the definitions and removes duplications that existed across multiple sections in the earlier law.

2.3 Business Income: The Primary Tax Base

For most private limited companies, business income forms the core taxable base. This includes:

1. revenue from sale of goods
2. income from services rendered
3. subscription or platform fees in case of SaaS businesses
4. commission and brokerage income
5. consultancy or professional fees

The computation of business income begins with net profit as per the company’s profit and loss account, which is then adjusted for tax purposes.

2.4 Starting Point: Profit as per Financial Statements

Corporate tax computation starts with the profit disclosed in the audited financial statements prepared as per:

1. Companies Act, 2013
2. Indian Accounting Standards (Ind AS) or AS

This profit is not the final taxable income. It must be adjusted for:

1. disallowed expenses
2. notional incomes
3. depreciation differences
4. tax-specific adjustments

The new Income Tax Act 2025 continues this approach but presents the adjustment provisions in a more structured and sequential format.

2.5 Allowable Business Expenses Under the New Act

A private limited company can claim deduction for expenses that are:

1. incurred wholly and exclusively for business purposes
2. supported by proper documentation
3. recorded in books of accounts

Typical allowable expenses include:

1. employee salaries and benefits
2. rent for office premises
3. professional fees
4. travel and business development expenses
5. software subscriptions and cloud services
6. marketing and advertising costs

The new Act does not materially change the concept of allowable expenses but simplifies the language to avoid disputes over interpretation.

2.6 Expenses Disallowed for Tax Purposes

Even if certain expenses are recorded in financial statements, they may not be allowed as deduction for tax purposes. Common examples include:

1. personal expenses of directors
2. penalties and fines paid to government authorities
3. expenditure not supported by invoices or documentation
4. cash payments beyond prescribed limits

The new law consolidates disallowance provisions that were previously scattered across multiple sections, making it easier for companies to identify which expenses are at risk of disallowance.

2.7 Depreciation Under the New Income Tax Act 2025

Depreciation is one of the most important deductions for companies, particularly for:

1. manufacturing companies
2. technology companies investing in servers and equipment
3. logistics and infrastructure businesses

The new Act retains the concept of block of assets, where assets are grouped into categories and depreciated at prescribed rates.

However, the presentation of depreciation tables and definitions of asset categories has been simplified to reduce cross-referencing between schedules and rules.

2.8 Difference Between Accounting Depreciation and Tax Depreciation

Companies often face confusion because:

1. accounting depreciation is calculated as per Companies Act or Ind AS
2. tax depreciation is calculated as per Income Tax rules

This leads to temporary differences and creation of deferred tax assets or liabilities in financial statements.

The new Act continues to recognise tax depreciation separately, but its clearer structure helps reduce calculation errors and reconciliation issues.

2.9 Treatment of Capital Expenditure vs Revenue Expenditure

One of the most litigated areas in corporate taxation has been the classification of expenditure as:

1. capital expenditure (not fully deductible in year of purchase)
2. revenue expenditure (fully deductible)

For example:

1. purchase of machinery → capital
2. routine maintenance of machinery → revenue

The new Income Tax Act 2025 provides clearer examples and explanations to reduce disputes in this area, especially for sectors such as technology and infrastructure where asset classification is complex.

2.10 Deduction for Employee Compensation and Benefits

Employee costs are usually the largest expense for service companies and startups. The Act continues to allow deduction for:

1. salaries and wages
2. bonus and incentives
3. employer contribution to PF and ESIC
4. staff welfare expenses

However, companies must ensure that statutory dues such as PF and ESI are deposited within prescribed time limits, failing which deductions may be disallowed.

This provision has been retained with minor structural simplification in the new law.

2.11 Treatment of Related Party Transactions

Private limited companies frequently transact with:

1. directors
2. group companies
3. subsidiaries
4. holding companies

Such transactions must be conducted at arm’s length price, and excessive or unreasonable payments may be disallowed for tax purposes.

The new law continues to regulate related-party payments to prevent profit shifting and tax avoidance, but the provisions are better organised and cross-referenced with transfer pricing rules where applicable.

2.12 Treatment of Interest and Finance Costs

Companies often borrow funds for business expansion, working capital, or capital investments. Interest paid on such borrowings is generally allowed as deduction, provided:

1. funds are used for business purposes
2. interest is not capitalised as part of asset cost where required

The new Act retains this principle but reorganises provisions relating to interest limitation and thin capitalisation, which are especially relevant for companies receiving foreign loans or group funding.

2.13 Income from Other Sources in Case of Companies

Private limited companies may earn income that is not directly connected with business operations, such as:

1. interest on bank deposits
2. dividend income from investments
3. gains from sale of securities held as investments

Such income is taxed under the head Income from Other Sources or Capital Gains, depending on the nature of transaction.

The new law clarifies classification rules to avoid disputes about whether certain income should be treated as business income or investment income.

2.14 Capital Gains for Companies

When a company sells:

1. land
2. building
3. shares
4. intellectual property
5. or other capital assets

it must calculate capital gains by deducting indexed cost of acquisition from sale consideration.

The new Act simplifies the language used in capital gains provisions and aligns definitions of long-term and short-term assets with clearer holding period tables.

2.15 Set-Off and Carry Forward of Losses

One of the most critical planning tools for private limited companies is the ability to:

1. set off current losses against other income
2. carry forward losses to future years

The new law retains the existing framework but reorganises provisions relating to:

1. business loss
2. unabsorbed depreciation
3. capital loss

This is particularly important for startups and growth-stage companies that may incur losses in initial years.

2.16 MAT Calculation Based on Book Profits

Even if a company’s taxable income is low due to deductions and depreciation, it may still be required to pay tax under the Minimum Alternate Tax (MAT) provisions based on book profits.

The new Act continues to require companies to compute:

1. profit as per profit and loss account
2. and adjust it for specific items to arrive at book profit

However, explanatory notes and adjustments have been consolidated to reduce complexity in MAT computation.

2.17 Compliance Documentation Required for Income Computation

Under the new regime, companies must maintain:

1. audited financial statements
2. tax computation sheets
3. fixed asset registers
4. related party transaction records
5. loan and interest documentation

Given the increasing reliance on digital records, the Income Tax Department may increasingly use data analytics to compare company filings across multiple years and detect anomalies.

2.18 Importance of Accurate Books for Avoiding Tax Litigation

Many corporate tax disputes arise not due to tax evasion, but due to:

1. poor documentation
2. incorrect classification of expenses
3. lack of reconciliation between books and tax returns

The new Income Tax Act aims to reduce disputes, but this will only be effective if companies maintain proper books and documentation that clearly support their tax positions.

Section 3: Deductions, Exemptions, and Incentives for Private Limited Companies Under the New Income Tax Act 2025

For any private limited company, tax liability is not determined only by revenue or profit—it is heavily influenced by the deductions and incentives the company is eligible to claim. Two companies with identical turnover can end up paying very different amounts of tax depending on how effectively they structure their expenses and utilize available provisions.

The New Income Tax Act 2025 does not aim to remove corporate incentives but seeks to streamline, reorganise, and clarify them so that companies can easily understand what they are eligible for without navigating through complex cross-referencing and outdated language.

This section explains all major deductions and incentive regimes that private limited companies must understand to optimise tax planning legally and efficiently.

3.1 Corporate Tax Regimes: Standard vs Concessional

Currently, domestic private limited companies in India can choose between:

Standard Tax Regime

1. Tax rate: 25% (for companies with turnover up to ₹400 crore)
2. Allows most deductions and incentives

Concessional Tax Regime (Section 115BAA)

1. Tax rate: 22%
2. Requires companies to forgo many exemptions and deductions

The New Income Tax Act 2025 is expected to retain this dual-regime structure but present it in a more structured manner, with simplified eligibility criteria and clearer listing of disallowed deductions under the concessional regime.

3.2 Why Many Companies Opt for the 22% Concessional Regime

The concessional regime was introduced to make India’s corporate tax structure globally competitive. Companies choosing this regime:

1. pay lower tax
2. but cannot claim certain incentives such as additional depreciation, certain deductions under Chapter VI-A, and other special benefits

For mature companies with stable profits and limited dependency on tax incentives, the concessional regime often results in lower overall tax liability.

The new Act continues to support this regime as a stable long-term tax option.

3.3 Deduction for Business Expenditure: The Foundation of Corporate Tax Planning

The most significant tax deduction available to companies is for ordinary business expenditure. As discussed in Section 2, any expense incurred wholly and exclusively for business purposes is generally deductible.

Examples include:

1. employee salaries and bonuses
2. rent and utilities
3. professional and legal fees
4. marketing and advertising costs
5. software and technology subscriptions

The new Act does not remove these deductions but simplifies their classification and removes overlapping explanations that existed in earlier provisions.

3.4 Depreciation and Additional Depreciation Benefits

Depreciation is one of the most powerful deductions available to capital-intensive businesses.

Private limited companies investing in:

1. machinery
2. manufacturing equipment
3. IT infrastructure
4. renewable energy systems

can claim depreciation on these assets over their useful life.

Additional Depreciation for Manufacturing Companies

Manufacturing companies may be eligible for additional depreciation on new plant and machinery, which allows accelerated deduction in the initial years of investment.

The New Income Tax Act reorganises depreciation provisions but continues to allow this incentive to promote domestic manufacturing and capital investment.

3.5 Deduction for Scientific Research and Development (R&D)

India encourages innovation by providing tax incentives for companies investing in research and development.

Companies engaged in:

1. product innovation
2. pharmaceutical research
3. technology development
4. artificial intelligence and software innovation

may claim deductions for expenditure incurred on approved R&D activities.

Although earlier super-deduction rates have been rationalised in recent years, the new Act retains the framework for allowing R&D expenditure as a deductible business expense.

3.6 Startup-Specific Tax Incentives

Private limited companies recognised as startups by DPIIT may be eligible for:

1. tax holiday under Section 80-IAC (for eligible years)
2. carry-forward of losses despite change in shareholding subject to conditions
3. exemptions related to angel tax under specified circumstances

The new Income Tax Act reorganises these provisions into a dedicated section for startup incentives, making them easier to locate and interpret.

This is particularly relevant for startup hubs such as:

1. Bangalore
2. Hyderabad
3. Gurgaon
4. Noida
5. Mumbai

where thousands of private limited startups operate and rely on these incentives for survival in early years.

3.7 Deduction for Export-Oriented Businesses

Companies engaged in export of goods or services may be eligible for incentives under various government schemes, although many earlier export profit deductions have been phased out to comply with international trade norms.

The new Act simplifies the treatment of export-related incentives and ensures clarity in the taxation of export incentives such as duty drawback and other government reimbursements.

3.8 Deduction for Interest on Borrowed Capital

Interest paid on loans used for business purposes continues to be deductible under the new law. This is particularly important for:

1. companies using working capital loans
2. real estate and infrastructure companies with large borrowings
3. startups funded through venture debt

However, the law retains anti-abuse provisions to prevent excessive interest payments to related parties or foreign group companies, which may be disallowed under thin capitalisation rules.

3.9 Treatment of Donations and CSR Expenditure

Corporate Social Responsibility (CSR) expenditure is mandatory for certain companies under the Companies Act. However, CSR expenditure is not treated as a normal business deduction for tax purposes.

The new Income Tax Act retains the principle that CSR expenses are not deductible as business expenditure, although donations made to eligible charitable institutions may still qualify for deduction under separate provisions.

This distinction often confuses directors and is one of the most commonly litigated areas in corporate tax assessments.

3.10 Deduction for Bad Debts Written Off

Companies engaged in trading or service businesses may face situations where customers fail to pay outstanding dues. The tax law allows deduction for bad debts that are:

1. written off in the books of accounts
2. and represent income previously recognised

The new Act clarifies documentation requirements and reorganises bad debt provisions to reduce disputes during assessment proceedings.

3.11 Deduction for Employee Welfare and Retirement Benefits

Expenditure incurred on employee welfare schemes such as:

1. provident fund contributions
2. gratuity
3. leave encashment provisions
4. health insurance for employees

continues to be deductible subject to compliance with statutory payment timelines and accounting rules.

The new Act aligns these provisions with labour law requirements, ensuring consistency between tax and employment regulations.

3.12 Restrictions on Cash Expenditure and Payments

To encourage digital transactions and curb tax evasion, the Income Tax law restricts deduction of expenses paid in cash beyond prescribed limits.

Private limited companies must ensure that:

1. vendor payments
2. contractor payments
3. and professional fees

are made through banking channels wherever required, otherwise deductions may be disallowed.

The new Act consolidates these restrictions into a single structured section, making compliance easier to monitor internally.

3.13 Carry Forward and Set-Off of Business Losses

Companies often incur losses in early years due to:

1. high setup costs
2. marketing expenses
3. capital investments
4. and low initial revenue

The tax law allows such business losses to be carried forward and set off against future profits for a specified number of years.

The new Income Tax Act retains these provisions, ensuring continuity for businesses that depend on long-term growth planning.

3.14 Deduction for Depreciation vs Loss Carry Forward: Strategic Choice

Companies must understand the interaction between:

1. claiming higher depreciation in early years
2. and preserving losses for future set-off

Proper planning can help companies:

1. reduce tax in high-profit years
2. smooth out tax liability over business cycles

The new Act’s clearer structuring helps finance teams model these scenarios more effectively.

3.15 Incentives for New Manufacturing Companies

The government introduced a special concessional tax rate of 15% for new manufacturing companies to promote domestic production under initiatives such as Make in India.

Companies eligible under this regime must:

1. commence manufacturing within specified timelines
2. avoid using old plant and machinery beyond prescribed thresholds

The new Income Tax Act incorporates these provisions into a more organised framework, ensuring long-term policy stability for manufacturing investments.

3.16 Interaction Between Tax Incentives and MAT

One of the biggest frustrations for companies claiming deductions has been that MAT reduces the effective benefit of incentives.

For example:

1. a company may reduce taxable income through depreciation and incentives
2. but still pay MAT based on book profits

The new Act simplifies MAT computation rules and attempts to make the interaction between incentives and MAT easier to understand, although the MAT system itself continues to exist.

3.17 Importance of Documentation to Claim Deductions

Even if a company is legally eligible for a deduction, it may lose the benefit during assessment if it fails to maintain:

1. invoices
2. agreements
3. bank statements
4. board resolutions
5. and statutory registrations

The new Act places greater emphasis on documented evidence, particularly because tax authorities now use data analytics and automated risk assessment systems to flag inconsistencies.

3.18 Tax Planning vs Tax Evasion: Legal Boundaries

The new Income Tax Act reinforces the principle that:

1. tax planning is legal
2. but artificial arrangements created solely to avoid tax may be challenged under anti-abuse provisions

Private limited companies must therefore ensure that their tax planning strategies have genuine commercial substance and are properly documented.

Section 4: Corporate Compliance Requirements for Private Limited Companies Under the New Income Tax Act 2025

While tax rates and deductions determine how much a company pays, compliance determines whether the company remains legally protected. A private limited company that fails in compliance can face:

1. penalties
2. disallowance of expenses
3. scrutiny notices
4. or in extreme cases, prosecution of directors

The New Income Tax Act 2025 is designed to simplify provisions, but it simultaneously strengthens digital tracking and enforcement, making non-compliance easier to detect than ever before.

This section explains all major compliance requirements that private limited companies must follow under the new law.

4.1 Mandatory PAN, TAN, and Corporate Identification

Every private limited company must maintain:

1. Permanent Account Number (PAN)
2. Tax Deduction and Collection Account Number (TAN)
3. Corporate Identification Number (CIN) under Companies Act

The new Income Tax Act continues to rely on PAN as the primary identity of taxpayers, but integrates PAN data more deeply with:

1. GST database
2. MCA filings
3. banking systems

This integration enables the tax department to perform automated cross-verification of financial information.

4.2 Maintenance of Books of Accounts

Private limited companies are already required under the Companies Act to maintain proper books of accounts. The Income Tax Act reinforces this requirement and expects companies to maintain:

1. ledger accounts
2. journal entries
3. purchase and sales registers
4. bank reconciliation statements
5. asset registers
6. inventory records

Under the new tax regime, digital maintenance of books is effectively mandatory because audit trail functionality must be enabled in accounting software.

4.3 Audit Trail Requirement in Accounting Software

One of the most important recent compliance changes affecting companies is the requirement that accounting software must:

1. record edit logs
2. maintain audit trail
3. prevent deletion of historical entries

Auditors are now required to report whether audit trail was enabled throughout the financial year. If a company disables audit trail or uses software without such functionality, it may face audit qualifications and potential regulatory action.

The new Income Tax Act supports this requirement by placing greater reliance on digital financial records during assessments.

4.4 Tax Audit Requirements for Private Limited Companies

Under the existing law, tax audit is mandatory if a company’s turnover exceeds specified limits. Private limited companies must get their accounts audited under:

1. Companies Act (statutory audit)
2. Income Tax Act (tax audit)

The new Income Tax Act simplifies tax audit provisions and cross-references them more clearly with statutory audit, reducing duplication of reporting requirements.

However, companies must still ensure:

1. audit is completed within prescribed timelines
2. audit report is uploaded in the specified format
3. all tax adjustments are properly disclosed

4.5 Filing of Income Tax Return: ITR-6

Private limited companies are required to file ITR-6, which is the designated return form for companies that are not claiming exemption under charitable provisions.

ITR-6 must be:

1. filed electronically
2. verified using digital signature certificate (DSC)
3. submitted within the due date notified by the government

The new Income Tax Act retains electronic filing as mandatory and continues to expand pre-filled data fields to reduce manual entry errors.

4.6 Due Dates for Filing Corporate Tax Returns

Under current practice, companies must file their income tax return by:

1. 31 October (if audit is required)
2. or a later date if extended by the government

The new Act simplifies procedural provisions but retains the concept of statutory deadlines. Failure to file return within due date can lead to:

1. late filing fees
2. interest on tax liability
3. restriction on carry forward of losses

This is particularly important for startups and growth companies that rely on loss carry-forward provisions for future tax planning.

4.7 Advance Tax Obligations

Companies are required to pay tax in instalments throughout the year rather than waiting until the end of the financial year. Advance tax is typically paid in four instalments based on estimated income.

The new Income Tax Act retains advance tax provisions but presents them in a more simplified structure, making it easier for companies to track their payment obligations and avoid interest penalties.

4.8 Interest and Penalties for Late Payment of Taxes

If a company:

1. delays payment of advance tax
2. or pays insufficient advance tax

interest is charged under specified provisions.

Similarly, late filing of return attracts:

1. fixed late fees
2. and in some cases, additional penalties

The new Act consolidates interest and penalty provisions into fewer sections, making it easier for companies to understand the financial consequences of non-compliance.

4.9 Tax Deduction at Source (TDS) Obligations

One of the most complex compliance areas for companies is Tax Deduction at Source. Private limited companies must deduct TDS when making payments such as:

1. salaries to employees
2. professional fees
3. contractor payments
4. rent
5. interest
6. commission

The new Income Tax Act reorganises TDS provisions into structured tables, making it easier to identify:

1. which payments require TDS
2. applicable rates
3. and due dates for deposit and return filing

This structural simplification is expected to reduce errors and improve compliance rates.

4.10 Filing of TDS Returns

Companies must not only deduct TDS but also:

1. deposit it with the government
2. file quarterly TDS returns
3. issue TDS certificates to payees

Failure to file TDS returns correctly can lead to:

1. penalties
2. interest
3. and disallowance of the underlying expense

The new Act integrates TDS reporting more tightly with PAN and Aadhaar databases, allowing automated matching of deductions and income declarations.

4.11 Consequences of Non-Deduction or Late Deduction of TDS

If a company fails to deduct TDS where required, the tax department may:

1. disallow the entire expense
2. charge interest
3. impose penalties

The new Income Tax Act continues these provisions to ensure strong enforcement of withholding obligations, which are a major source of tax collection for the government.

4.12 Transfer Pricing Compliance for Related Party Transactions

Companies engaged in international transactions or domestic transactions with related parties may be subject to transfer pricing regulations.

They must maintain:

1. transfer pricing documentation
2. benchmarking studies
3. and file specific forms disclosing international transactions

The new Act reorganises transfer pricing provisions but retains the core requirement that related party transactions must be conducted at arm’s length price.

4.13 Reporting of Specified Financial Transactions

Financial institutions and certain companies must report high-value transactions to the tax department. These include:

1. large cash deposits
2. high-value share transactions
3. foreign remittances

This reporting framework allows the tax department to cross-verify corporate tax returns with third-party data. The new Act strengthens this ecosystem by integrating multiple reporting channels into a unified information network.

4.14 Assessment Process Under the New Income Tax Act 2025

The tax department reviews company returns through:

1. automated risk assessment systems
2. data analytics
3. and selective scrutiny cases

The new Act streamlines assessment procedures and continues the move towards faceless assessment, where communication occurs electronically rather than through physical visits to tax offices.

This reduces human interaction and aims to improve transparency and reduce corruption.

4.15 Appeal and Dispute Resolution Mechanism

If a company disagrees with an assessment order, it has the right to:

1. file an appeal before Commissioner (Appeals)
2. approach the Income Tax Appellate Tribunal
3. and further approach High Courts and Supreme Court on substantial questions of law

The new Act reorganises appellate provisions into a clearer hierarchical structure, making it easier for companies to understand their legal remedies.

4.16 Penalties for Misreporting or Underreporting of Income

The tax law differentiates between:

1. genuine errors
2. and deliberate misreporting

Penalties for misreporting can be significantly higher than penalties for simple underreporting. The new Act clarifies definitions and examples of misreporting to reduce interpretational disputes.

4.17 Prosecution Risks for Directors in Extreme Cases

In cases of serious tax evasion or fraudulent documentation, directors and key managerial personnel may face criminal prosecution.

While such cases are rare and usually involve large-scale evasion, private limited companies must understand that tax compliance is not merely a financial issue but can also have legal consequences for individuals managing the company.

4.18 Importance of Professional Tax Advisory

Given the complexity of corporate compliance, most companies rely on professional advisors for:

1. tax computation
2. return filing
3. audit coordination
4. and responding to notices

Rokadh Financial Services Private Limited provides end-to-end compliance support to companies operating in cities such as:

1. Delhi
2. Noida
3. Gurgaon
4. Bangalore
5. Hyderabad
6. Mumbai
7. Kanpur
8. Lucknow

ensuring that corporate clients remain compliant with both the existing and the upcoming tax regime.