Business

Tax Deducted at Source, or TDS for small businesses in India, often feels complicated for non finance founders and professionals. However, ignoring TDS obligations can lead to interest, penalties and disallowance of expenses under the Income Tax Act.

This guide explains the basics of TDS for small businesses in India, when you need to deduct TDS, common sections that apply to business payments, and practical compliance steps.

What is TDS for small businesses in India

TDS is a mechanism where the person making certain payments deducts tax at a prescribed rate before paying the balance to the recipient. The deducted amount is deposited with the government and reflected in the recipient’s Form 26AS.

For small businesses in India, TDS responsibilities arise once your turnover crosses certain limits or when you make specified types of payments.

Always refer to the latest provisions on the official Income Tax Department portal at https://www.incometax.gov.in for current rates and thresholds.

When does TDS apply for small businesses in India

TDS for small businesses in India usually applies in situations such as:

1. Payments to contractors and professionals

2. Rent payments above specified limits

3. Interest payments on loans (non bank)

4. Commission or brokerage

Section numbers and thresholds change over time, so keep updated. Some commonly relevant sections are 194C (contractors), 194J (professional fees) and 194I (rent).

Practical examples of TDS for small businesses in India

Example 1: Paying a freelance designer

If your small business pays a freelance designer professional fees above the applicable threshold during a financial year, you may need to deduct TDS under section 194J.

• Deduct TDS at the applicable rate on the invoice amount excluding GST where required.
• Deposit the TDS with the government within the due date.
• Issue a TDS certificate (Form 16A) to the designer.

Example 2: Paying rent for office or shop

If your monthly rent crosses the specified limit, you may have to deduct TDS for small businesses in India under section 194I.

• Deduct TDS on the rent amount at the applicable rate.
• Ensure the landlord PAN is captured correctly.

Compliance checklist for TDS for small businesses in India

To stay compliant, small businesses should follow a simple monthly and quarterly routine.

Monthly tasks

1. Identify payments on which TDS is required.

2. Deduct TDS at the time of credit or payment, whichever is earlier.

3. Deposit TDS using the correct challan (Challan ITNS 281) within due dates.

Quarterly tasks

1. File quarterly TDS returns in the correct form (for example Form 26Q for most non salary payments).

2. Reconcile TDS deducted with your books.

3. Download and issue TDS certificates to vendors and professionals.

Common mistakes in TDS for small businesses in India

Some frequent errors include:

• Not deducting TDS due to lack of awareness of thresholds
• Deducting TDS but failing to deposit on time
• Wrong section or rate leading to short deduction
• Not collecting PAN of the payee, which can trigger higher TDS rates

These mistakes can result in interest, penalties and disallowance of the expense for income tax computation.

How to make TDS compliance easier

Small businesses in India can simplify TDS compliance by:

1. Maintaining a simple checklist of payment types and applicable TDS sections.

2. Using accounting software that flags TDS eligible transactions.

3. Setting reminders for deposit and return filing due dates.

4. Working with a CA or tax professional at least once a quarter to review compliance.

TDS for small businesses in India does not have to be intimidating. With basic processes and professional support, you can stay compliant and avoid unexpected tax issues.

Related: Advance tax and estimated tax payments for small businesses in India (link: /blog/advance-tax-small-businesses-india)

Related: Common income tax mistakes made by freelancers and professionals in India (link: /blog/income-tax-mistakes-freelancers-professionals-india)

Related: Choosing the right business structure from a tax perspective in India (link: /blog/choose-business-structure-tax-perspective-india)

A well drafted founders agreement in India is one of the most important documents for early stage startups. It sets expectations between co founders, reduces the risk of disputes and gives investors confidence that the founding team has thought through key issues.

This guide explains what a founders agreement in India should cover, practical clauses to include, and common mistakes that cause friction later.

Why a founders agreement in India is essential

Many startups begin informally, with trust between friends. However, without a written founders agreement in India, misunderstandings often arise around equity, roles, time commitment and exit options.

A clear founders agreement helps:

1. Define equity split and vesting

2. Allocate roles and decision making powers

3. Protect intellectual property

4. Plan for founder exits or disputes

Core elements of a founders agreement in India

While each business is unique, most founders agreements in India should at least cover these points.

Equity split and vesting

• Clearly record the percentage shareholding or units for each founder.
• Introduce a vesting schedule to ensure founders earn their equity over time.
• For example: 4 year vesting with a 1 year cliff.

This is a standard expectation for investors and reduces the risk that a co founder who leaves early still holds a large stake.

Roles, responsibilities and decision making

Specify:

• Who is CEO, CTO, COO etc.
• Who has authority for key business decisions.
• What decisions require unanimous consent vs majority.

This avoids confusion in daily operations and helps external partners know who to talk to.

Intellectual property assignment

A founders agreement in India should make it clear that all IP created by founders in connection with the startup belongs to the company.

Include:

• Assignment of existing IP (code, designs, content, patents) to the company
• Assignment of future IP developed during the engagement

Confidentiality and non compete

Include confidentiality obligations so that founders protect business information and trade secrets.

Non compete and non solicitation clauses must be reasonable under Indian law. Overly broad restrictions can be difficult to enforce, especially post employment.

Handling founder exits in a founders agreement in India

No founder wants to think about breakup scenarios at the start, but planning for exits is vital.

Good leaver and bad leaver concepts

Many founders agreements in India distinguish between:

• Good leaver: leaving for reasons like health, relocation, or mutual agreement
• Bad leaver: leaving to join a competitor, serious misconduct, or breach of agreement

Consequences differ. For a bad leaver, unvested shares may be forfeited and even vested shares may be subject to company buyback at a lower price, subject to Companies Act and valuation rules.

Share transfer and buyback mechanisms

Clearly define how shares are handled on a founder exit:

• Right of first refusal for remaining founders or the company
• Valuation mechanism
• Timelines for completion

Align the founders agreement with the company Articles of Association and any shareholders agreement to avoid conflicts.

Investor expectations from a founders agreement in India

When you raise seed or Series A funding, investors typically review your founders agreement in India to ensure it matches their governance and risk expectations.

They look for:

1. Clear IP assignment to the company

2. Robust vesting and founder lock in mechanisms

3. Alignment between founders and formal company documents

A weak or missing founders agreement can slow down due diligence and even reduce your valuation.

Practical drafting tips for founders

When drafting or negotiating a founders agreement in India:

1. Keep language simple and clear. Avoid unnecessary complexity.

2. Align with your company incorporation documents and cap table.

3. Get an experienced startup lawyer to review the agreement.

4. Revisit and update the agreement if the founding team changes.

A thoughtful founders agreement in India is not just a legal formality. It is a practical tool to build trust, clarity and resilience in your startup.

Related: Cap table basics for Indian startups (link: /blog/cap-table-basics-indian-startups)

Related: Shareholders agreement key terms for Indian startups (link: /blog/shareholders-agreement-key-terms-india)

Related: Private limited company incorporation checklist for startups in India (link: /blog/private-limited-incorporation-checklist-startups-india)

Setting up a clothing business in India is attractive for fashion entrepreneurs, boutique owners and ecommerce sellers. This guide focuses on how to set up a clothing business in India from a legal, tax and compliance perspective so that you can sell confidently both online and offline.

We will cover how to choose the right business structure, registrations needed for a clothing business in India, important licences, GST and basic compliance steps.

Decide the business model for your clothing business in India

Before you complete formal registration for a clothing business in India, be clear about your model:

1. Offline boutique or retail store

2. Online only brand using marketplaces like Amazon or Myntra

3. Direct to consumer (D2C) website

4. Custom tailoring studio or designer label

The model will affect the type of registrations, trade licences and local approvals you need.

Choosing the right legal structure

For a small clothing business in India, typical options are:

• Proprietorship
• Partnership firm
• LLP
• Private limited company

Points to consider:

• Proprietorship: simple, low cost, but no limited liability.
• Partnership: useful when 2 or more people run the business, but liability is still unlimited.
• LLP: offers limited liability and flexible internal arrangements.
• Private limited company: better suited when you want to scale and bring investors, or create a brand that can be franchised.

Key registrations for a clothing business in India

To legally operate a clothing business in India, you should review the following registrations and licences.

GST registration for clothing businesses

If your aggregate turnover crosses the threshold prescribed under the GST law (check https://www.gst.gov.in and latest notifications), you must obtain GST registration.

Even if you are below the threshold, platforms and marketplaces may insist on GST registration for a clothing business in India to allow you to sell on their portals.

Shop and Establishment registration

Most states require shops and commercial establishments to register under the local Shops and Establishment Act. This applies to retail clothing stores, boutiques and tailoring shops.

Check your state labour department website or single window portal for details.

Trade licence and local permissions

Municipal corporations often require a trade licence to run a retail clothing business in India from a commercial or mixed use property. You may also need:

• Signage or hoarding permission for store boards
• Fire safety compliance for larger stores

MSME (Udyam) registration

If eligible, obtain Udyam registration as an MSME. While not mandatory, it can help your clothing business in India access schemes, subsidies and easier credit.

Apply through the official Udyam portal of the Ministry of MSME.

Agreements and documents for a clothing business in India

Legal documents can prevent disputes and clarify expectations. Consider:

• Shop lease or licence agreement if you are renting your retail space
• Vendor agreements with fabric suppliers, printers and manufacturers
• Employment or consulting agreements with designers and sales staff
• Website terms and conditions and privacy policy if you sell online

Having clear written contracts for your clothing business in India shows professionalism and protects your rights.

Tax and compliance checklist

Once your clothing business in India is up and running, remember these basic compliance points:

1. Maintain sales and purchase records, invoices and stock registers.

2. File GST returns on time if registered.

3. Deduct TDS where applicable and deposit it within due dates.

4. File income tax returns every year and keep track of advance tax.

5. Maintain proper books of accounts if required under the Income Tax Act or Companies Act.

Consult the official Income Tax Department portal at https://www.incometax.gov.in for updated return due dates and forms.

Building a compliant and scalable clothing brand

If you plan to scale your clothing business in India into a national brand, set up a robust legal and compliance foundation early. Choose the right structure, keep clean records, register your brand as a trademark when possible, and build standard contracts with suppliers and marketplaces.

This will make it easier to onboard investors, expand to multiple cities, and defend your brand.

Related: Legal checklist for ecommerce businesses in India (link: /blog/legal-checklist-ecommerce-business-india)

Related: Trademark registration basics for fashion and clothing brands in India (link: /blog/trademark-registration-fashion-brands-india)

Related: Choosing the right business structure for small businesses in India (link: /blog/choose-business-structure-small-business-india)

Income tax appeal procedure under new income tax law in India is an important remedy for taxpayers who are aggrieved by assessment orders, penalties or other actions of the tax department. This article provides a step by step guide to the income tax appeal procedure under new income tax law in India, with practical tips for FastLegal clients.

When to use income tax appeal procedure under new income tax law in India

You can consider using the income tax appeal procedure under new income tax law in India in situations such as:

• Additions to income you disagree with.
• Disallowance of genuine expenses.
• Incorrect computation of interest or penalties.
• Disputes regarding residential status or character of income.

Before filing an appeal, it is advisable to review the assessment order, computation sheet and all supporting documents to understand the exact points of dispute.

Related: Preparing for income tax scrutiny assessment under new law (link: /blog/income-tax-scrutiny-preparation)

Levels of income tax appeal procedure under new income tax law in India

The new income tax law broadly provides these levels of appeal:

1. Appeal to Commissioner of Income Tax (Appeals) or specified first appellate authority.

2. Appeal to the Income Tax Appellate Tribunal (ITAT).

3. Appeal to High Court on substantial questions of law.

4. Appeal to Supreme Court in appropriate cases.

At each level, the income tax appeal procedure under new income tax law in India has separate forms, time limits and fees.

External reference: Detailed procedures for appeals are provided in the Income tax Rules and instructions on www.incometax.gov.in.

Step by step process for filing first appeal

Use this typical flow for first level income tax appeal procedure under new income tax law in India:

1. Note due date

• Identify the date of service of assessment order.
• Calculate appeal filing due date as per the Act.

2. Prepare statement of facts and grounds of appeal

• Statement of facts should narrate background and key events.
• Grounds of appeal should be concise, numbered points challenging the order.

3. File appeal online

• Log in to www.incometax.gov.in.
• Select the appeal form prescribed under the new income tax rules.
• Upload statement of facts, grounds and supporting documents.
• Pay applicable appeal fee online.

4. Acknowledge and track

• Download acknowledgment of appeal filing.
• Track status of appeal on the portal under pending actions.

Related: Drafting strong grounds of appeal in income tax cases (link: /blog/drafting-grounds-appeal-income-tax)

Hearing and disposal of appeal

Once appeal is filed, the income tax appeal procedure under new income tax law in India generally involves:

1. Notice of hearing

• Appellate authority may issue notice for personal or virtual hearing.
• You may be allowed to file written submissions instead of or in addition to oral arguments.

2. Submission of additional evidence

• Additional evidence can be filed subject to conditions in the rules.
• Proper application and justification are required.

3. Passing of appellate order

• The authority passes a speaking order confirming, reducing, enhancing or annulling the assessment.
• Order is communicated electronically through the portal.

External reference: Check latest faceless appeal scheme notifications and guidelines on the Income Tax Department website.

Practical tips for FastLegal clients using income tax appeal procedure under new income tax law in India

• Do not miss limitation periods for filing appeals.
• Maintain a complete paper book with all relevant documents.
• Take professional help in drafting grounds of appeal.
• Focus on strong legal arguments and evidence rather than emotional points.
• Consider possibilities of settlement or alternate dispute resolution where available.

Related: Penalties and prosecution under new income tax law in India (link: /blog/penalties-prosecution-new-income-tax-law)

Checklist before filing an income tax appeal

Before using the income tax appeal procedure under new income tax law in India, run through this checklist:

1. Verify assessment order and demand notice details.

2. Confirm tax and interest demand, including any relief already given.

3. Decide scope of dispute and amount you are willing to contest.

4. Check whether pre deposit or stay of demand is required and available.

5. Ensure all timelines under the Act and rules can be met.

Income tax appeal procedure under new income tax law in India is a powerful right but must be exercised carefully with full understanding of legal and procedural requirements.

Company registration in India is the first big legal step for any startup or small business that wants to operate in a formal and compliant way. This guide on company registration in India is written for first time founders and small business owners who want a clear, practical checklist instead of complex legal jargon.

We will walk through how to choose the right business structure, the documents you need, the online registration process with the MCA portal, and common mistakes that delay company registration in India.

Choosing the right business structure in India

Before you start the actual company registration in India, you must decide which legal entity suits your business. The most common options are:

1. Proprietorship

2. Partnership firm

3. Limited Liability Partnership (LLP)

4. Private limited company

5. One Person Company (OPC)

How to choose the right entity

When deciding the right structure for company registration in India, think about:

• Number of founders
• How much outside investment you may need
• Risk and liability protection
• Compliance cost and complexity

Some broad guidelines:

• If you plan to raise venture capital or angel funding: private limited company is usually preferred.
• If you are two or more professionals offering services and want limited liability with simpler compliance: LLP can be useful.
• If you are testing an idea alone with very low risk and no investors: proprietorship or OPC might be enough initially.

Prerequisites for online company registration in India

To complete company registration in India through the MCA portal, you must first arrange some basic items:

1. Digital Signature Certificate (DSC) for each proposed director.

2. Director Identification Number (DIN) for each director (this is applied for as part of the SPICe+ form in many cases).

3. Proposed company name options.

4. Registered office address proof.

5. Identity and address proof of all promoters.

Documents generally required

For Indian promoters:

• PAN card
• Aadhaar card
• Passport size photo
• Latest bank statement, electricity bill or telephone bill as address proof

For foreign promoters (if any):

• Passport
• Overseas address proof
• Notarised and apostilled documents as per MCA rules

Step by step process for private limited company registration in India

Once you have decided that a private limited company is the right structure, follow these practical steps for company registration in India:

Step 1: Check name availability

• Use the “MCA Services” section on the official MCA portal (https://www.mca.gov.in) to run a name search.
• Choose a unique name that reflects your business activity and complies with the Companies (Incorporation) Rules.

Step 2: Prepare MOA and AOA

• Memorandum of Association (MOA) defines the main objects of the company.
• Articles of Association (AOA) sets out internal rules and governance.
• For most startups, standard templates modified to your needs are used.

Step 3: File SPICe+ forms online

The SPICe+ form is the core of company registration in India for private companies. It allows you to apply for:

1. Name reservation

2. Incorporation

3. PAN and TAN

4. GST registration (optional)

5. ESIC and EPFO registrations

Upload the required documents, attach DSCs of directors and professionals, and submit the form online.

Step 4: Pay stamp duty and fees

• Fees depend on authorised share capital and the state of incorporation.
• Payment is made online on the MCA portal.

Step 5: Receive Certificate of Incorporation

If everything is in order, the Registrar of Companies (ROC) issues the Certificate of Incorporation (COI). This document confirms successful company registration in India and contains your CIN (Corporate Identification Number).

Common mistakes that delay company registration in India

Company registration in India can be delayed by avoidable issues. Watch out for:

• Incorrect or inconsistent spelling of names across documents
• Using a proposed company name that is too similar to an existing entity
• Not updating address proofs (old bank statements or utility bills)
• Missing signatures or DSC issues

Checking these early will save you days of back and forth with the ROC.

Post incorporation compliances after company registration in India

Once company registration in India is complete, your legal work is not over. Some important post incorporation steps are:

1. Open a current account in the company name.

2. Deposit share capital and issue share certificates to subscribers.

3. Appoint the first statutory auditor.

4. Apply for GST registration if required.

5. Apply for Professional Tax registration where applicable.

6. Maintain statutory registers and records.

Staying compliant after company registration in India helps you avoid penalties and makes future fundraising or due diligence smoother.

Related: Choosing between LLP and private limited for startups in India (link: /blog/llp-vs-private-limited-startups-india)

Related: Checklist for post incorporation compliances for private limited companies in India (link: /blog/post-incorporation-compliance-private-limited-india)

Related: How to change the registered office address of a company in India (link: /blog/change-registered-office-company-india)

The Ministry of Corporate Affairs has notified a new framework for director KYC. Through a notification dated 31 December 2025 (GSR 943(E)), the existing DIR 3 KYC and DIR 3 KYC Web filings are being streamlined into a single Form DIR 3 KYC Web with a three year filing cycle, effective from 31 March 2026.

For company secretaries, in house legal teams and compliance professionals, this is an important change that will impact annual calendars, DIN registers and internal workflows. This guide summarises the new position, explains the official MCA illustrations, and sets out practical steps for implementation.

Related: Director KYC and DIN management checklist for Indian companies (link: /blog/director-kyc-din-management-checklist-india)

Legal background and notification reference

The director KYC framework flows from provisions of the Companies Act 2013 and the Companies (Appointment and Qualification of Directors) Rules. Over time, MCA introduced Form DIR 3 KYC and later the web version to ensure that director particulars remained current in its records.

The latest amendment notifies:

• Substitution of Form DIR 3 KYC and DIR 3 KYC Web by a single Form DIR 3 KYC Web.
• Introduction of a three year filing cycle for routine director KYC, anchored to the financial year in which DIN is allotted and the status as on 31 March of a year.
• Continued obligation to update changes in contact details and address within 30 days through DIR 3 KYC Web with applicable fees under the Companies (Registration Offices and Fees) Rules 2014.

The policy objective is to reduce repetitive compliance burden while strengthening the overall quality of director data on the MCA21 portal.

Core compliance requirements under new DIR 3 KYC Web

The key obligations can be summarised as follows:

1. Directors who hold a DIN as on 31 March of a financial year will be required to file Form DIR 3 KYC Web once in every third consecutive financial year, on or before 30 June of that year.

2. Any change in a director s mobile number, email ID or residential address must be updated within 30 days through Form DIR 3 KYC Web, with payment of the prescribed fee.

3. Non filing may still lead to consequences such as the DIN being marked as deactivated due to non compliance, along with the requirement to pay additional fees for restoration.

In practice, companies need to track both the three year cycles and intervening changes for each DIN.

Understanding the MCA illustrations in practical terms

The MCA communication includes three illustrations that clarify how the three year cycle will work. Translating these into practical compliance terms helps avoid confusion.

Illustration 1: new DINs in FY 2025 26

Where a DIN is allotted during financial year 2025 26, Form DIR 3 KYC Web is to be filed once every three consecutive financial years. The first filing becomes due between April 2029 and June 2029, and subsequently every third financial year.

Key takeaway:

• For DINs allotted in FY 2025 26, the first routine KYC under the three year cycle is effectively deferred until FY 2028 29 (April June 2029 window).

Illustration 2: existing DINs where KYC is filed for FY 2025 26

Where a director who holds a DIN as on or before 31 March 2025 has already filed DIR 3 KYC eform or DIR 3 KYC Web for FY 2025 26, no further KYC filing will be required for FY 2026 27 and 2027 28, provided there is no change in KYC particulars.

In such cases, the first filing under the new cycle will fall due between April 2028 and June 2028.

Key takeaway:

• Existing directors with up to date KYC as of FY 2025 26 effectively get a two year break before the next routine filing.

Illustration 3: DIN allotted on 1 January 2026 and KYC updated in 2027 28

Where a DIN is allotted on 1 January 2026 (that is, in FY 2025 26) and the director later updates mobile number, email ID or residential address in FY 2027 28 by filing DIR 3 KYC Web, the three year cycle is still reckoned from FY 2025 26.

This means:

• Next routine KYC under DIR 3 KYC Web will be due from April 2029 to June 2029.
• The update made in FY 2027 28 does not reset the three year cycle.

Key takeaway:

• Change filings do not restart the clock. Compliance teams must track the original allotment year for each DIN.

Suggested compliance approach for companies and professionals

To operationalise the new regime effectively, companies can adopt a structured approach.

1. Update the DIN register

Maintain an updated DIN register capturing at minimum:

• Director name
• DIN
• Date of DIN allotment
• Date of last DIR 3 KYC or DIR 3 KYC Web filing
• Next routine KYC window under the new three year cycle
• Dates of any change filings for mobile, email or address

This register can sit alongside the register of directors required under company law.

2. Revise the annual compliance calendar

Existing calendars built around yearly DIR 3 KYC filings should be revised. For each DIN, diarise:

• The relevant three year window, with internal reminders at least one month before the statutory deadline of 30 June.
• A standing item that any change in director contact details must be reported to the company secretary or compliance team within a specified internal timeline, so that the 30 day legal window can be met.

3. Create internal SOPs for change events

Many non compliance issues arise when directors change mobile numbers or email IDs without informing the company. A simple written SOP can require:

• Directors to immediately inform the company secretary of any change in contact details or residential address.
• The company to initiate a DIR 3 KYC Web change filing within a set number of working days.
• Documentation of evidence supporting the new address, where required.

4. Coordinate across group entities and professional firms

Where directors sit on boards of multiple group companies, or where a professional firm of company secretaries manages compliance for several entities, coordination becomes critical.

• Consider designating one entity or firm as the anchor for monitoring DIN KYC status, with information shared with all related companies.
• Avoid duplicate or inconsistent filings by ensuring that a single source of truth exists for DIN and KYC information.

Related: Group level governance practices for Indian business families and holding structures (link: /blog/group-governance-practices-india)

Impact assessment for directors and boards

From a governance perspective, the new DIR 3 KYC Web regime:

• Reduces mechanical annual filings and associated costs.
• Places more emphasis on maintaining up to date records when there is an actual change in particulars.
• Requires better tracking of the three year cycle, which may not align neatly with financial year routines for every director.

Boards should be briefed on these changes and reassured that the compliance obligation is becoming lighter, not heavier, provided that internal information flows are robust.

Independent directors and nominee directors in particular should be encouraged to treat KYC updates as part of their standard obligations when they join or leave boards, change their contact details or relocate.

How FastLegal can assist

FastLegal works with businesses, company secretaries and professionals across India on routine MCA compliance and governance structuring. The new DIR 3 KYC Web regime is a good opportunity to:

• Clean up DIN and director records.
• Implement a unified DIN register and compliance calendar.
• Train directors and finance or HR teams on the new process.

If you want help in assessing your current director KYC status, mapping three year cycles, or integrating these changes into your broader corporate governance framework, you can reach out through the FastLegal contact page.

Related: Annual ROC and MCA compliance services for Indian private companies (link: /blog/roc-mca-compliance-services-india)

Income tax rules for NRIs under new regime in India can feel complicated when you have income and assets both in India and abroad. This guide walks through the key income tax rules for NRIs under new regime in India, common income types, and step by step compliance actions.

Who is an NRI under the new income tax law

Income tax rules for NRIs under new regime in India start with residential status. An NRI is generally someone who is a non resident in India for the relevant financial year based on day count tests and other conditions under the new law.

Key points:

• NRI is a tax concept, not just a FEMA or passport concept
• Residential status must be checked every year separately
• A person can be resident under income tax but non resident under exchange control, and vice versa

Understanding residential status is essential before applying any specific income tax rules for NRIs under new regime in India.

What income of NRIs is taxable in India

Under income tax rules for NRIs under new regime in India, tax is generally levied on:

• Income received or deemed to be received in India
• Income that accrues or arises, or is deemed to accrue or arise, in India

Common NRI income sources that may be taxable in India include:

• Interest on NRE, NRO and FCNR deposits, subject to conditions
• Rent from property situated in India
• Capital gains on sale of Indian shares, securities or immovable property
• Dividends from Indian companies

The exact tax rate and relief available depend on the nature of income, specific provisions in the new law and applicable tax treaties.

TDS obligations for payers dealing with NRIs

Income tax rules for NRIs under new regime in India impose higher responsibilities on payers located in India. Examples:

• Buyers of property from an NRI may need to deduct TDS at higher rates on the sale consideration
• Banks may deduct TDS on interest paid to NRIs at special rates
• Companies paying dividends, royalties or fees for technical services to NRIs must apply treaty rates where applicable

Practical steps for payers:

1. Obtain correct PAN and residential details of the NRI payee

2. Check relevant sections of the law and applicable DTAA article

3. Collect tax residency certificate and other documents if treaty benefit is claimed

4. Deduct, deposit and report TDS in time

Failure to follow TDS rules can shift the tax burden and penalties to the payer in India.

Return filing and refunds for NRIs

Income tax rules for NRIs under new regime in India require return filing if taxable income exceeds the basic exemption limit or certain conditions are met, even when TDS has already been deducted.

NRIs should:

• Register and access their account on the income tax e filing portal
• Use the correct ITR form based on income type
• Report Indian income, TDS and claim treaty relief where applicable
• Disclose foreign assets and income if they become resident in a later year and the law requires such disclosure

Proper return filing helps NRIs claim refunds where TDS has been deducted at higher rates than the final tax liability.

Double taxation relief and treaty benefits

Many countries have double tax avoidance agreements with India. Under income tax rules for NRIs under new regime in India, treaty provisions can override domestic law where they are more beneficial to the taxpayer.

Important aspects:

• Determine residency under both Indian law and foreign law
• Apply tie breaker rules in the treaty if dual residency arises
• Identify the relevant article for interest, dividends, capital gains, royalties or other income
• Ensure that tax residency certificate and additional documents required by Indian authorities are obtained

NRIs should integrate treaty planning with domestic income tax rules for NRIs under new regime in India to avoid double taxation.

Practical checklist for NRIs with Indian income

A quick checklist based on income tax rules for NRIs under new regime in India:

1. Confirm residential status for the year

2. List all Indian income sources and relevant documents

3. Check TDS deducted and reconcile with Form 26AS and AIS on the portal

4. Evaluate treaty relief options and documentation

5. File the return before the due date and track refunds or demands

Related: Tax implications for NRIs selling property in India (link: /blog/nri-selling-property-tax-implications)

Related: Repatriation of funds from India for NRIs under income tax and FEMA rules (link: /blog/repatriation-funds-nri-india)

Related: Step by step guide to filing ITR for NRIs in India (link: /blog/itr-filing-guide-nris-india)

For official rules, procedures and utilities, refer to the Income Tax Department portal at https://www.incometax.gov.in/ and CBDT notifications relevant to NRI taxation.

Residential status under new income tax law in India is the starting point for determining how your income is taxed. This post explains how residential status under new income tax law in India is determined, why it matters for global income, and what individuals and NRIs should watch out for in common situations.

Why residential status under new income tax law in India matters

Residential status under new income tax law in India decides whether your global income is taxable or only Indian sourced income is taxed. It affects:

• Taxability of salary earned abroad
• Treatment of foreign interest, dividends and capital gains
• Eligibility for certain exemptions and deductions
• Applicability of tax reliefs and double taxation agreements

Before calculating tax under any regime, you must first determine your residential status correctly for each financial year.

Basic tests for residential status under the new law

While the detailed wording can change with amendments, residential status under new income tax law in India generally depends on number of days stayed in India during the relevant financial year and preceding years.

Broadly, an individual can be:

1. Resident and ordinarily resident

2. Resident but not ordinarily resident

3. Non resident

The basic tests focus on:

• Number of days of physical presence in India during the year
• Cumulative stay over a block of preceding years
• Additional conditions for Indian citizens and persons of Indian origin who visit India

The exact day count and conditions must always be checked against the current text of the law and CBDT clarifications.

Resident and ordinarily resident vs resident but not ordinarily resident

Residential status under new income tax law in India further classifies residents into ordinarily resident and not ordinarily resident. This distinction matters because:

• Residents and ordinarily residents are taxable on global income, subject to reliefs
• Residents but not ordinarily residents may be taxed only on income that is received in India or arises from a business controlled in or profession set up in India

Many returning NRIs initially fall into the resident but not ordinarily resident category. Proper planning can reduce the risk of double taxation when they hold overseas assets.

Non resident status and income taxable in India

When an individual is a non resident based on residential status under new income tax law in India, taxability is generally limited to:

• Income received or deemed to be received in India
• Income that accrues or arises, or is deemed to accrue or arise, in India

Typical examples include:

• Rent from property situated in India
• Salary for services rendered in India
• Capital gains from transfer of shares in Indian companies subject to treaty conditions
• Interest paid by residents or by the government, subject to exceptions

Non residents must consider both Indian domestic law and applicable tax treaties.

Residential status planning for NRIs and frequent travellers

Residential status under new income tax law in India can change year to year depending on travel patterns. Common planning points include:

• Tracking days of stay in India across multiple financial years
• Understanding special rules for Indian citizens leaving India for employment or as crew of Indian ships
• Considering impact of extended work from home or remote work arrangements
• Reviewing tie breaker rules under double tax avoidance agreements when dual residency arises

NRIs who plan to relocate back to India should model how their residential status will transition over two to three years.

Compliance requirements based on residential status

Once residential status under new income tax law in India is determined, individuals should align their compliance steps:

• Check whether foreign asset and foreign income disclosure is required in the return
• Evaluate TDS implications on foreign remittances and repatriations
• Use the correct ITR form based on residential status and income sources
• Maintain documentation that supports the day count and residency conclusion

Mistakes in residential status can lead to tax demands, interest and penalties. It is safer to take a conservative position and disclose material information rather than under reporting.

Related: Income tax rules for NRIs investing in India (link: /blog/income-tax-rules-nris-investing-india)

Related: Returning NRI tax planning under new Indian income tax law (link: /blog/returning-nri-tax-planning-new-law)

Related: Choosing the right ITR form in India based on income and residential status (link: /blog/choose-right-itr-form-india)

For official guidance, refer to the Income Tax Department portal at https://www.incometax.gov.in/ and relevant FAQs and circulars on residential status and NRI taxation.

TDS on salary in India under new income tax law continues to be one of the most important compliance responsibilities for employers. This guide is for HR heads, finance teams and founders who want a clear, step by step understanding of how TDS on salary in India under new income tax law works and how to avoid common mistakes.

What is TDS on salary in India under new income tax law

TDS on salary in India under new income tax law is the mechanism where employers deduct income tax from employees salary every month and deposit it with the government on their behalf. At year end, the deducted amount is adjusted against the employee s final tax liability.

Key ideas:

• Employer is treated as a deductor and employee as a deductee
• Tax is deducted based on estimated annual income and applicable slab rates
• Employers must consider declarations, investments and exemptions as per the law
• Non compliance leads to interest, penalties and disallowance of salary expense

Determining taxable salary for TDS

To calculate TDS on salary in India under new income tax law, employers must first compute estimated taxable salary for the financial year. Steps typically include:

1. Start with gross salary including basic pay, DA, HRA, allowances, bonus and commissions

2. Identify exempt components like eligible HRA, LTA and certain allowances as per rules

3. Deduct standard deduction and other permissible deductions from salary

4. Add perquisites such as rent free accommodation, ESOPs or employer provided benefits

5. Factor in any income from previous employer where applicable

The result is the estimated taxable income from salary that will be used to compute TDS for the year.

Choosing between old and new tax regime for salary

Under the evolving framework of income tax in India, employees may have a choice between an older regime with deductions and a new income tax law regime with lower rates but fewer deductions. For TDS on salary in India under new income tax law, employers should:

• Obtain a clear declaration from each employee about their chosen regime within the prescribed time
• Apply the relevant slab rates consistently through the year
• Allow changes only if permitted by CBDT instructions or subsequent amendments

HR and payroll teams should document the process so that it survives scrutiny during any TDS survey or assessment.

Monthly TDS calculation and deduction

Once the annual estimated tax is computed, TDS on salary in India under new income tax law is typically spread over the remaining months of the financial year.

A basic approach:

1. Compute total estimated tax liability based on slabs and rebates

2. Reduce this by tax already deducted in earlier months

3. Divide the balance by number of remaining payroll months

4. Deduct this amount as TDS each month

Employers must adjust TDS when there are mid year changes like salary revision, bonus payouts or revised investment declarations.

Depositing TDS and filing returns

Compliance for TDS on salary in India under new income tax law involves timely deposit and accurate reporting:

• Deposit TDS by the due date each month, usually within a fixed number of days from month end
• Use the online challan system on the income tax portal or authorised banks
• File quarterly TDS returns for salary in the prescribed form
• Download and issue Form 16 to employees within the statutory timeline

Delays in deposit or filing can lead to interest, late fees and penalties. Employers should align payroll run dates and banking processes with TDS timelines.

Handling employees with multiple incomes or jobs

In modern workplaces, many employees have income from freelancing, investments or previous jobs. When dealing with TDS on salary in India under new income tax law:

• Ask employees to disclose income from a previous employer and provide relevant details
• Allow employees to share information about other income so that TDS can be reasonably adjusted
• Avoid aggressive under deduction to keep take home high, since shortfall attracts interest for the employee

When in doubt, it is safer to deduct a little more TDS and let the employee claim a refund in their return.

Common mistakes in TDS on salary compliance

Employers in India often repeat predictable mistakes when managing TDS on salary in India under new income tax law:

• Not collecting or retaining proofs of investments and exemptions claimed by employees
• Applying wrong tax regime or slab rates
• Missing TDS on non cash perquisites
• Forgetting to deduct TDS on one time payments like notice pay or ex gratia
• Delayed deposit of TDS and filing of quarterly returns

Regular internal checks and coordination between HR, payroll and finance can significantly reduce these risks.

Related: Checklist for setting up payroll and TDS for startups in India (link: /blog/payroll-tds-startups-india-checklist)

Related: How to issue and correct Form 16 under Indian income tax law (link: /blog/form-16-issue-correct-india)

Related: New income tax regime vs old regime for salaried employees in India (link: /blog/new-vs-old-tax-regime-salaried-india)

For the latest rules and utilities, refer to the Income Tax Department portal at https://www.incometax.gov.in/ and CBDT circulars on TDS and salary.

The new income tax act for small businesses in India is changing how proprietorships, partnerships, LLPs and closely held companies plan their tax compliance. This guide explains the key structure of the new law, important chapters for small business owners, and practical steps to stay compliant under the new income tax act for small businesses in India.

How the new income tax act is structured for small businesses in India

The new income tax act for small businesses in India is organised into chapters that broadly follow the journey of a taxpayer:

1. Scope of total income and residential status

2. Heads of income and computation rules

3. Profit and gains from business or profession

4. Deductions and incentives for certain businesses

5. Tax rate structure and special regimes

6. TDS and TCS obligations

7. Return filing, assessments and appeals

8. Penalties, prosecution and relief provisions

For a typical small business, the most important parts are the chapters dealing with business income, presumptive taxation, TDS, and compliance procedures.

Profit and gains of business or profession under the new act

Under the new income tax act for small businesses in India, profit and gains of business or profession continue to be computed after allowing reasonable business expenses, depreciation and specified deductions. Key points for small business owners:

• Keep books of account and supporting documents in line with prescribed rules
• Separate personal and business expenses and avoid claiming personal spending
• Track depreciation on plant, machinery, furniture and intangibles as per notified rates
• Consider the impact of disallowances for cash payments beyond specified limits

Where turnover or gross receipts exceed the specified threshold, tax audit provisions may apply. Small businesses must plan in advance for audit timelines and documentation.

Presumptive taxation options for small businesses

Many small businesses in India prefer presumptive taxation because it reduces compliance effort. Under the new income tax act for small businesses in India, presumptive schemes may continue with updated thresholds or conditions. In general, presumptive taxation typically means:

• Taxable income is deemed at a fixed percentage of turnover or gross receipts
• Detailed expense records are not required for tax purposes, though basic records are still advisable
• Cash and non cash receipts may be treated differently for the presumptive rate
• Opting in or opting out has multi year implications, so decisions should be planned

Before choosing presumptive taxation under the new law, small businesses should compare the deemed income with actual profit and check how banks, investors or tenders view presumptive returns.

TDS and TCS compliance for small businesses

Even small businesses have tax deduction at source and tax collection at source obligations under the new income tax act for small businesses in India. Common TDS triggers include:

• Payments to contractors and professionals
• Rent for office or factory premises
• Interest payments other than to banks
• Commission or brokerage

Key compliance steps:

1. Obtain and maintain a valid TAN

2. Check each payment against the TDS thresholds and rates notified for the year

3. Deduct tax at the time of credit or payment, whichever is earlier, as applicable

4. Deposit TDS within the due dates using online challans

5. File quarterly TDS returns and issue certificates to deductees

Non compliance with TDS provisions can lead to interest, penalties and disallowance of expenses. Small businesses should set up simple internal controls or use accounting software with TDS modules.

Record keeping, audits and assessments under the new income tax act

The new income tax act for small businesses in India places emphasis on digital records and faceless procedures. Small businesses should:

• Maintain invoices, vouchers, bank statements and ledgers in organised digital form
• Reconcile turnover with GST returns and bank credits
• Respond promptly to e notices on the income tax portal
• Avoid last minute return filing to reduce the risk of errors

Assessments are increasingly conducted through online communication. Authorised representatives can respond on behalf of the assessee, but ultimate responsibility rests with the business owner.

Practical tips for small business owners under the new law

Small business owners in India can use the new income tax act as an opportunity to streamline their finances:

• Align accounting year, GST and income tax data for easy reconciliation
• Review whether presumptive taxation or normal provisions are more tax efficient
• Put written agreements in place for partners, directors and key vendors
• Plan advance tax payments to avoid interest for shortfall
• Use the income tax portal to track refunds, demands and e proceedings

Related: Small business tax planning under the new income tax regime in India (link: /blog/new-income-tax-regime-small-business-planning)

Related: TDS compliance checklist for Indian startups and MSMEs (link: /blog/tds-compliance-checklist-msme)

Related: Common income tax scrutiny triggers for small businesses in India (link: /blog/income-tax-scrutiny-triggers-small-business)

For official guidance and latest notifications, always refer to the Income Tax Department portal at https://www.incometax.gov.in/ and CBDT circulars as published on the same site.