Company Compliance — CA Guides & Articles

Four flats in the same tower can carry four different GST outcomes — 5%, 1%, 12%, or nothing at all. The difference is not the flat; it is the date the completion certificate was issued and whether the unit clears both affordable-housing tests. This guide walks through Paragraph 5(b) of Schedule II and Paragraph 5 of Schedule III to the CGST Act, the effective rate structure under Notification No. 3/2019-Central Tax (Rate), the one-third deemed land deduction, and the 60/90 square metre plus ₹45 lakh affordable housing definition. It then covers the input tax credit trap that catches most private limited companies: the 1% and 5% rates are conditional on no ITC, while post-CC sales still trigger proportionate reversal under Section 17(3) read with Rule 42. Also covered — the 80% registered-supplier procurement condition, 28% reverse charge on cement, penalties under Sections 50, 76 and 122(2), the MCA21 v3 cross-referencing risk between AOC-4 XBRL and GSTR-9, and an eight-step action plan for classification, reversal computation and GSTR-9C reconciliation.

Every GST invoice a company receives looks claimable. Most accounting systems treat it that way. But Section 17(5) of the CGST Act 2017 blocks input tax credit on an entire list of expenses regardless of how genuine the business purpose is — cars used by directors and their insurance and servicing, team meals and catering, club and gym memberships, LTC-style employee vacation travel, capitalised building works, CSR spend under Section 135 of the Companies Act, free samples, and written-off stock. The word "notwithstanding" in Section 17(5) overrides the general entitlement in Section 16(1), so a valid tax invoice sitting in your GSTR-2B proves nothing about eligibility. This piece walks through each blocked clause with its statutory reference, explains the capitalisation test that decides most office-fitout disputes, sets out the interest and penalty exposure under Sections 50(3), 73 and 74A, and gives a seven-step process to reverse blocked credit correctly in Table 4(B)(1) of GSTR-3B.

Most founders who have heard of a GST advance ruling believe it works like a precedent they can cite. Section 103(1) of the CGST Act says otherwise — a ruling binds only the applicant who sought it and the officer assessing that applicant, and nobody else. That single misreading is why companies sign large contracts on a classification position borrowed from someone else's AAR ruling, then absorb the differential tax, 18% interest under Section 50, and a 100% penalty under Section 74 eighteen months later. This piece walks through Chapter XVII of the CGST Act 2017 — Sections 95 to 106 with Rules 103 to 107A — covering the seven questions admissible under Section 97(2), the ₹10,000 fee in Form GST ARA-01, the 90-day pronouncement deadline under Section 98(6), the fatal bar on questions already pending under the proviso to Section 98(2), the 30-day appeal window to the AAAR under Section 100(2), the split-bench deadlock trap in Section 101(3), and the void-ab-initio consequence of suppression under Section 104. It closes with a ten-step process for obtaining a ruling before signature, the contract clause that shifts rate risk to the recipient, and the Section 179(3) board resolution that protects directors when the tax position is later challenged.

A founder running a Rs 4 crore D2C brand on Amazon and Flipkart told his accountant not to bother reconciling GST because the platforms already deduct and pay it. Eighteen months later he had Rs 3.1 lakh sitting unclaimed in his electronic cash ledger and a Section 61 scrutiny notice. Tax Collected at Source under Section 52 of the CGST Act is not your GST being paid — it is a fraction of your money parked with the government under your GSTIN, and if you do not actively claim it, it stays there. This guide covers the 0.5% rate notified from 10 July 2024, how net taxable value is computed, the GSTR-8 and GSTR-2X reconciliation cycle, what Section 52(10) does when a discrepancy goes unrectified, the penalties operators face under Section 122(1)(vi), and a step-by-step monthly workflow for both marketplace sellers and platform operators.

A Bengaluru-headquartered company opens offices in Mumbai and Hyderabad. Three GSTINs, one PAN. The AWS bill, the group insurance premium and the audit fee all land at Bengaluru and the full input tax credit is claimed there. Since 1 April 2025 that arrangement is a compliance failure, not an efficiency. The Finance Act 2024 substituted Section 2(61) and Section 20 of the CGST Act and made Input Service Distributor registration mandatory for any office receiving common input-service invoices on behalf of distinct persons. This guide covers what the substituted Section 20 requires, why ISD registration is separate from your existing GSTIN, the Rule 39 turnover-based distribution formula, Rule 54(1) ISD invoices, monthly GSTR-6 filing by the 13th, and the three-way exposure most multi-state private limited companies are sitting on: wrongly availed credit at head office recoverable with 18% interest under Section 50(3), branch credit lost to the Section 16(4) time limit, and Section 122 registration penalties. Includes a step-by-step remediation sequence and the Section 73(5) voluntary payment route that extinguishes penalty entirely.

A founder pays an advocate ₹1,80,000 for a shareholders' agreement. The invoice carries no GST line — correctly so. Eleven months later the company receives a demand for ₹32,400 plus 18% interest under Section 50(1), because the reverse charge liability was the company's to pay, not the advocate's. Reverse charge is the single most common source of GST demand notices against otherwise well-run private limited companies, precisely because it never announces itself on an invoice. This guide maps the Section 9(3) entries that actually apply to a typical Pvt Ltd — legal services, GTA freight, director sitting fees, security services, sponsorship, imported SaaS, metal scrap, and commercial rent from an unregistered landlord — explains why Section 9(4) is not the blanket rule most founders believe it to be, and sets out the cash-payment rule under Section 49(4), the self-invoice requirement under Section 31(3)(f), the Section 24(iii) compulsory registration trap that ignores turnover thresholds, and the Section 16(4) credit deadline of 30 November that turns a cash-neutral compliance step into a permanent cost when RCM is discovered late.

Most founders read the GST e-invoicing threshold as a test of last year's turnover. It isn't. Rule 48(4) of the CGST Rules, as notified by Notification No. 10/2023-Central Tax, covers every registered person whose aggregate annual turnover exceeded ₹5 crore in ANY financial year from FY 2017-18 onwards — and there is no exit provision when turnover falls back below the line. This guide explains what an e-invoice actually is (you still raise it in your own system; the IRP returns an IRN and a signed QR code), how aggregate turnover under Section 2(6) is computed at PAN level including exports and exempt supplies, which supplies and taxpayer classes are excluded, and why the 30-day IRN reporting window for ₹10 crore-plus taxpayers is the most damaging trap in the framework. It covers the consequences in detail: Rule 48(5) voids a non-compliant document entirely, your customer's input tax credit fails under Section 16(2)(aa) because nothing auto-populates into GSTR-2B, and Section 122(1)(i) imposes ₹10,000 or the tax evaded per invoice. Includes an eight-step remediation sequence and a note on the CCFS-2026 window closing 31 August 2026.

A founder running a ₹90 lakh D2C brand told his accountant to move the company to the composition scheme — 1% tax instead of 18%, one quarterly statement instead of two monthly returns. Three months later the GST officer issued a notice under Section 73. The company shipped to customers in two other states and sold through a marketplace. Both facts made it ineligible from day one. The composition scheme is not a tax rate you choose; it is a levy you qualify for, and most private limited companies do not. This guide walks through the turnover ceilings under Section 10(1) — ₹1.5 crore, ₹75 lakh for special category states, ₹50 lakh for service providers under Section 10(2A) — the rate table under Rule 7, and the six disqualifiers in Section 10(2) that end most Pvt Ltd composition plans. It covers why aggregate turnover is computed PAN-India across every GSTIN, why a single inter-state invoice or one Amazon listing is an absolute bar, what ITC reversal under Rule 44(4) and Form ITC-03 costs a company sitting on capital goods credit, and what Section 10(5) recovery looks like when eligibility was never there.

Most founders treat GSTR-1 and GSTR-3B as two views of the same numbers. They are not. GSTR-1 is a statement of outward supplies under Section 37 of the CGST Act; GSTR-3B is a summary return-cum-payment challan under Section 39. They are prepared from different data, and when they diverge, Rule 88C triggers a system-generated intimation in Form DRC-01B with a seven-day clock. Miss it and Rule 59(6)(d) blocks your next GSTR-1 outright, your customers lose input tax credit visibility in their GSTR-2B, and interest runs at 18% per annum from the original due date under Section 50 — not from the date of the notice. This guide sets out exactly what each return does under the Act, what a mismatch actually costs in interest and penalty under Section 73 versus Section 74, how registration suspension under Rule 21A(2A) works, and a seven-step reconciliation and remediation process — including how voluntary payment through Form DRC-03 under Section 73(5) eliminates penalty entirely if made before a notice issues.

The ₹40 lakh GST registration threshold is real — it just doesn't apply to most newly incorporated private limited companies. Section 22 of the CGST Act sets a floor for businesses supplying goods exclusively. Section 24 overrides it entirely, making registration compulsory from day one for any company making an inter-state supply, paying tax under reverse charge (including a single foreign SaaS subscription), or selling through a marketplace. Founders who wait for the threshold typically discover the error five months in, facing penalty under Section 122(1)(xi) at ₹10,000 or the tax evaded — whichever is higher — 18% interest under Section 50, five years of best-judgement assessment exposure under Section 63, and permanently lost input tax credit on every pre-registration input service. This guide covers the exact trigger tests, the Rule 9 processing timeline, the ITC-01 transitional credit window, and the eight steps to fix it.

Most founders set their own salary by board consensus and assume that if the company pays it and deducts TDS, the matter is closed. It is not. Director remuneration sits at the junction of two statutes that do not talk to each other: the Companies Act 2013, which governs whether the payment is validly authorised, and the Income Tax Act 1961, which governs whether the company can deduct it. A salary that clears one can still fail the other. Section 197 and Schedule V limits, the private company exemption that founders over-read, Section 40A(2) disallowance for excessive payments, Section 2(22)(e) deemed dividend traps, and the exact resolutions, forms (MGT-14, DIR-12) and disclosures needed to keep a founder salary defensible on both fronts — this guide covers the full conflict and how to resolve it.

A Bengaluru-registered company hires eight remote engineers across Noida, Jaipur and Indore, runs payroll from a Delhi accountant's office, and deducts no professional tax because "Delhi has no PT." Two years later Karnataka issues a notice for unremitted PT on all eight salaries, plus interest at 1.25% per month and penalty — because PT liability follows the establishment on whose rolls the employee sits, not the employee's laptop. Professional tax is levied under Article 276 of the Constitution and capped at ₹2,500 per person per year, which makes founders treat it as immaterial. It is not: liability sits on the company as a statutory agent, the officer has near-zero discretion, and the arrears calculation is trivially easy for the department to run against your PF and TDS filings. This guide covers the PTEC vs PTRC distinction most companies get wrong, which States levy PT and which do not, current slabs, the nexus rule for distributed teams, State-wise interest and penalty exposure, the CARO 2020 Clause 3(vii) and Form 3CD Clause 26 disclosure consequences, and an eight-step remediation checklist.

A profitable private limited company that settles its entire tax bill at filing time rather than in quarterly instalments does not just pay tax late — it pays roughly 9% more tax, and none of that extra is deductible. Advance tax under Section 208 and 211 of the Income Tax Act requires companies to pay on a cumulative 15-45-75-100% schedule across 15 June, 15 September, 15 December and 15 March. Miss those checkpoints and Section 234C charges 1% per month on each shortfall; end the year below 90% of assessed tax and Section 234B adds another 1% per month from 1 April until you actually pay. There is no officer to persuade and no reasonable-cause defence — the interest computes itself the moment you file. This guide sets out the exact instalment percentages, the 12% and 36% safe-harbour thresholds most CAs never explain, the challan minor-head error that silently voids an advance tax payment, the Section 234C proviso that protects you against unexpected capital gains, and the step-by-step quarterly workflow that keeps a company out of 234B entirely.

Founders routinely deduct 1% TDS on payments that legally attract 10%, and deduct nothing on professional fees that crossed the threshold months ago. The difference between a "contract" under Section 194C and "fees for professional services" under Section 194J is not semantics — it changes your rate, your threshold, your challan code, and whether 30% of the expense is disallowed under Section 40(a)(ia). From 1 April 2026 there is a further complication: the Income-tax Act, 2025 has consolidated the entire non-salary TDS architecture into Section 393, and contractor and professional payments now carry numeric payment codes rather than the familiar 194-series references. This guide sets out the exact rates (1%, 2%, and 10%), the dual ₹30,000/₹1,00,000 threshold for contractors versus the single ₹50,000 threshold for professionals, the three grey zones that generate most disputes — digital marketing agencies, software development, and annual maintenance contracts — and the penalties that follow a wrong call, including Section 201(1A) interest, Section 234E late fees, and the Clause 34 entry in Form 3CD that reliably attracts scrutiny.

A founder buys an ₹18 lakh SUV in the company's name and claims ₹3.24 lakh of GST as input tax credit. Eighteen months later a Section 65 departmental audit flags it, and the demand is the credit plus 18% interest under Section 50(3) plus penalty. The same story repeats with the team offsite, the office fit-out and the group mediclaim policy. None of these are aggressive tax positions — they are credits that Section 17(5) of the CGST Act 2017 blocks outright, notwithstanding Section 16(1), regardless of business purpose. This guide walks through every blocked category that matters to a private limited company: motor vehicles and their running costs, food and health services, club memberships, capitalised construction and works contract, personal consumption, and written-off or gifted goods. It sets out the statutory-obligation exception that founders routinely miss, the exact interest and penalty arithmetic under Sections 50(3), 73, 74 and 74A, the director liability trap in Section 89, and an eight-step remediation plan ending in a DRC-03 voluntary payment.

A founder reads "MCA extended DPT-3 to 31 July 2026" and assumes two things — that she has an extra month, and that DPT-3 does not apply because her company never took deposits. Both are wrong, and both are expensive. General Circular 02/2026, issued after the 5 June MCA data-centre fire, does not move the statutory 30 June due date; it only waives the Section 403 additional fee if you file by 31 July. And DPT-3 is an annual return for every company except government companies — it captures director loans, inter-corporate loans, and share application money as "exempted deposits", not just public deposits. This piece explains what the form actually requires, the exact penalties that revive on 1 August (up to 12x fee plus Rule 21 penalties), and a step-by-step filing checklist to close before the window shuts.

A founder closes a Series A and discovers the 10% ESOP pool she promised her team has quietly shrunk to 6% — and that un-vested employees walked away with nothing. ESOP dilution is not a spreadsheet detail; it is governed by Section 62 of the Companies Act 2013 and Rule 12 of the Share Capital and Debentures Rules. This guide explains what the pool actually is (an authorisation, not issued capital), why a funding round dilutes it, the exact resolutions and MCA filings required — MGT-14, SH-7, PAS-3 within 30 days — the penalties for missing them, and the MCA21 v3 flags that a mismatched cap table triggers. It closes with a practical step-by-step to negotiate a pre-money pool top-up, protect vesting employees contractually, and reconcile before annual filing.

A US-style SAFE or convertible note is not a recognised instrument under the Companies Act 2013, and FEMA's real "Convertible Note" is a narrow, DPIIT-startup-only, ₹25 lakh-floor tool most companies cannot use. Here is what foreign investment into an Indian Pvt Ltd actually requires: the right instrument (CCPS, CCDs, or a valid Convertible Note), a fair-value price, a Section 42 private placement, and RBI reporting within 30 days — or a compounding application later.

On 8 July 2026, MCA General Circular No. 03/2026 pushed the CCFS-2026 closing date from 15 July to 31 August 2026 — a six-week extension of the concessional 10% additional-fee window for overdue AOC-4, MGT-7/7A and ADT-1 filings, prompted by the 5 June data-centre fire. But the extension is narrower than it looks: it does not cover DPT-3 (due 31 July), does not touch event-based forms, and does not reset your statutory due dates. Here is exactly what the scheme covers under Sections 92, 137 and 139, the MCA21 v3-only reality from 1 July, and the step-by-step filing sequence to regularise your company before the window shuts on 31 August 2026.

A founder panics over a merchant banker valuation to escape angel tax on a fresh seed round — but angel tax under Section 56(2)(viib) was abolished from AY 2025-26 by the Finance Act 2024. This guide separates the anxiety that no longer applies from the valuation, allotment, and FEMA duties that are still very much alive. It explains what changed, why legacy FY 2022-23 and FY 2023-24 rounds remain exposed to reassessment under Sections 148/149, and why the registered valuer report under Section 62(1)(c) and Rule 13 is not the same as the old angel-tax certificate. Includes a step-by-step checklist and a four-question FAQ so founders stop paying for the wrong report.

Most Indian founders close their seed round on a handshake and a bank transfer — only to discover at Series A that missing board resolutions, unfiled PAS-3 returns, and unstamped SHAs have made the allotment legally defective. The Companies Act 2013 imposes a strict sequence: a Section 179(3)(c) board resolution before allotment, Form PAS-4 offer letters, a separate bank account for application money, and Form PAS-3 filed within 15 days of allotment. CCPS issuance requires an AoA that explicitly permits it. Foreign investors trigger FEMA FC-GPR obligations within 30 days. This guide walks through every document, form, and deadline — with CCFS-2026 closing on 31 August 2026 to regularise past defaults.

Founders routinely treat a DPIIT Startup India certificate as a ten-year income tax holiday. It is not. The tax exemption lives in Section 80-IAC of the Income-tax Act, grants only three consecutive years of 100% deduction out of the first ten, and requires a completely separate Inter-Ministerial Board certificate that DPIIT recognition does not include. Claiming it without IMB certification means the Assessing Officer disallows the deduction and charges interest under Sections 234B and 234C. This guide separates the three confusions rolled into that one sentence and lays out the exact steps to claim the holiday correctly.

Founders routinely confuse director sitting fees with remuneration — booking salary as "sitting fees" or paying flat monthly retainers with no resolution behind them. But the two are legally distinct: sitting fees under Section 197(5) and Rule 4 (capped at ₹1,00,000 per meeting, payable per meeting attended, outside the managerial-remuneration ceiling), versus remuneration under Sections 197, 198 and Schedule V. This guide explains what the Companies Act 2013 actually requires — the 11% ceiling that applies only to public companies, the Schedule V slabs when profits are inadequate, the Section 197(7) bar on ESOPs for independent directors, TDS under Section 194J with no threshold, GST reverse charge at 18% on non-executive director pay, and the MGT-7/Board's Report disclosures that MCA21 v3 now auto-reconciles — plus a step-by-step fix ahead of the CCFS-2026 amnesty closing 31 August 2026.