💼 Taxes in India — Business Tax Guide

Business Taxation Essentials — FY 2026-27

From corporate tax rates and TDS obligations to advance tax planning and startup benefits — everything a business owner, finance professional, or CA student needs to stay compliant and tax-efficient. Updated with official CBDT rates for FY 2026-27.

▶ Start: Corporate Tax — Rates & Computation

💡 Corporate Tax Calculation Example (115BAA):

🔷 TDS — Deduction, Deposit & Returns

TDS (Tax Deducted at Source) is deducted by the payer before making payment to the recipient. The deducted amount must be deposited with the government and reported in TDS returns. Key rates for FY 2026-27:

• 📋 Section 192 — Salary: TDS at applicable income tax slab rate; deducted monthly by employer
• 📋 Section 194C — Contractors: 1% (Individual/HUF) | 2% (Others) — threshold ₹30,000 per payment or ₹1,00,000 p.a.
• 📋 Section 194J — Professional/Technical Fees: 10% — threshold ₹30,000 p.a. (2% for call centres)
• 📋 Section 194H — Commission/Brokerage: 5% — threshold ₹15,000 p.a.
• 📋 Section 194I — Rent: 2% (plant & machinery) | 10% (land/building) — threshold ₹2,40,000 p.a.
• 📋 Section 194Q — Purchase of Goods: 0.1% on purchase exceeding ₹50 lakh p.a. from a single seller (buyer’s turnover >₹10 Cr)
• 📋 Section 206AB: TDS at twice the normal rate or 5% (whichever higher) if payee has not filed ITR for 2 preceding years

📅 TDS Compliance Timeline:

• 1️⃣ Deduct TDS at the time of payment or credit, whichever is earlier
• 2️⃣ Deposit by 7th of the following month (March deductions → 30 April)
• 3️⃣ File TDS Return (Form 26Q/24Q): Quarterly — 31 Jul, 31 Oct, 31 Jan, 31 May
• 4️⃣ Issue TDS Certificate (Form 16/16A): within 15 days of return filing due date
• ⚠️ Interest for non-deduction: 1% p.m. | Interest for non-deposit: 1.5% p.m. | Late filing fee: ₹200/day (max = TDS amount)

🔷 Advance Tax — Schedule & Calculation

Advance tax is “pay as you earn” tax — paid in 4 instalments during the year if total tax liability exceeds ₹10,000. Not applicable if you opt for presumptive taxation (44AD/44ADA) and pay full tax by 15th March.

• 📅 15 June: Pay at least 15% of estimated annual tax
• 📅 15 September: Pay at least 45% of estimated annual tax (cumulative)
• 📅 15 December: Pay at least 75% of estimated annual tax (cumulative)
• 📅 15 March: Pay 100% of estimated annual tax (cumulative)
• ⚠️ Interest u/s 234B: If total advance tax paid < 90% of tax due → 1% p.m. from April to date of assessment
• ⚠️ Interest u/s 234C: If instalments fall short of prescribed % → 1% p.m. for 3 months on shortfall

💡 Advance Tax Calculation Example:

🔷 Tax Audit — Section 44AB

A tax audit under Section 44AB requires a Chartered Accountant to audit your books and submit Form 3CA/3CB + 3CD by 30th September (or 31st October if transfer pricing applies). Thresholds for FY 2026-27:

• 🏪 Business: Turnover exceeds ₹1 Crore (or ₹10 Crore if 95%+ transactions are digital — cash receipts & payments <5%)
• 🧑‍💼 Profession: Gross receipts exceed ₹50 Lakh
• 📉 Presumptive Taxpayers (44AD/44ADA): If you declare income below the prescribed percentage AND total income exceeds basic exemption
• ⚠️ Penalty for non-compliance: Lower of 0.5% of turnover or ₹1,50,000 (Section 271B)
• 📋 Form 3CD has 44 clauses — covers depreciation, expenses disallowed, TDS compliance, loans/advances, related-party transactions, and more

🔷 Presumptive Taxation — 44AD, 44ADA & 44AE

Presumptive taxation lets small businesses and professionals pay tax on a deemed profit percentage without maintaining detailed books of accounts.

• 📋 Section 44AD (Small Businesses): Eligible if turnover ≤ ₹3 Crore (updated FY 2026-27 — ₹3 Cr limit if 95%+ receipts are digital). Deemed profit = 8% of turnover (6% for digital receipts). File ITR-4.
• 📋 Section 44ADA (Professionals): Doctors, lawyers, CAs, architects, engineers, etc. — gross receipts ≤ ₹75 Lakh (₹75L if 95%+ digital). Deemed profit = 50% of gross receipts. No books needed. File ITR-4.
• 📋 Section 44AE (Goods Carriage Owners): ≤10 vehicles. Deemed income = ₹1,000 per tonne of gross vehicle weight per month for heavy vehicles; ₹7,500/vehicle/month for others.
• ⚠️ Important: If you opt for 44AD/44ADA and declare income below the deemed %, you must maintain books AND get a tax audit — and you cannot use presumptive for 5 years

💡 44ADA Example — Freelance Consultant:

✅ End: Startup Tax Benefits & Angel Tax

• 🚀 Section 80-IAC — Tax Holiday: DPIIT-recognised startups incorporated after 1 April 2016 can claim 100% deduction on profits for 3 consecutive years out of first 10 years. Must have turnover <₹100 Cr. Apply via DPIIT portal.
• 🚀 Section 54GB — Capital Gains Exemption: Individuals/HUFs who sell residential property and invest gains in equity shares of eligible startup get capital gains exemption
• 🚀 Angel Tax (Section 56(2)(viib)) — Abolished: Finance Act 2024 abolished angel tax on equity investment by resident investors in startups. Foreign investment exemptions also expanded.
• 🚀 Section 115BAB — 15% Tax for New Manufacturers: New manufacturing companies (set up after 1 Oct 2019, starting production before 31 Mar 2024) pay only 15% corporate tax — lowest rate in Asia for new factories
• 📋 Loss Carry Forward: Startups can carry forward losses even if 51% shareholding changes — relaxation under Section 79 for DPIIT-recognised startups