Compliance Checklist for Businesses under Income-tax Act, 2025
The Income-tax Act, 2025 has significantly raised the compliance bar for businesses. With faceless assessments, real-time data matching, and integrated digital records, business tax compliance is now continuous, not seasonal.
This checklist is designed to help businesses stay compliant, audit-ready, and litigation-safe throughout the year.
1. Business Registration and Core Details
Ensure that:
PAN is active and correct
Business constitution is correctly updated (proprietor / firm / LLP / company)
Nature of business matches actual activity
Address, email, and mobile are updated on the income-tax portal
Mismatch in core data often triggers avoidable notices.
2. Books of Accounts and Accounting Method
Businesses must:
Maintain proper books of accounts
Follow consistent accounting method (cash or mercantile)
Record all income and expenses through banking channels
Incomplete or parallel books are high-risk under data-driven scrutiny.
3. Audit Applicability Check
At the start of the year, determine whether:
Tax audit is applicable
Special audit provisions may apply
Transfer pricing compliance is triggered
Late identification of audit liability leads to penalties and defective returns.
4. Timely Tax Audit and Report Upload
Where audit is applicable:
Get accounts audited within prescribed time
Upload audit report before filing return
Ensure figures match return schedules
Mismatch between audit report and ITR is a common defect ground.
5. Advance Tax and Self-Assessment Tax
Businesses must:
Estimate income realistically
Pay advance tax in correct instalments
Pay self-assessment tax before filing return
Interest exposure under the Act is automatic and non-discretionary.
6. GST, TDS, and Income-tax Consistency
Ensure consistency across:
GST returns
TDS returns
Income-tax return
Bank statements
Cross-system mismatches are among the top scrutiny triggers under the 2025 Act.
7. AIS, TIS, and Data Reconciliation
Before filing return:
Reconcile AIS and TIS
Check high-value transactions
Provide feedback where data is incorrect
Ignoring AIS data is treated as acceptance of information.
8. Correct Tax Regime Selection
Evaluate:
Old tax regime vs new tax regime
Impact on deductions, depreciation, and incentives
Once chosen, ensure computation aligns with selected regime.
9. Return Filing within Due Date
Timely filing ensures:
Carry forward of losses
Eligibility for deductions
Full revision rights
Late filing permanently affects tax planning benefits.
10. Documentation and Evidence Readiness
Maintain:
Invoices and contracts
Bank statements
Loan and investment records
Capital expenditure proofs
Related party transaction documents
In faceless assessment, documentation replaces explanation.
11. Responding to Notices and Queries
If a notice is received:
Read section and purpose carefully
Respond within timeline
Attach clear evidence
Avoid vague replies
Non-response or casual response leads to adverse orders.
12. Penalty and Prosecution Risk Monitoring
Regularly review:
Defaults in TDS, GST, or advance tax
Disallowances that may trigger penalty
Ongoing litigation or reassessment risk
Early correction reduces long-term exposure.
13. Refund and Demand Monitoring
After filing return:
Track refund status
Check for demand adjustments
Seek rectification where required
Unnoticed demands accumulate interest silently.
14. Appeal and Remedy Awareness
If assessment is adverse:
File appeal within limitation
Seek stay of demand
Preserve evidence and grounds
Delay often closes doors permanently.
Conclusion
Under the Income-tax Act, 2025, business compliance is no longer reactive. It is continuous, data-driven, and system-monitored.
A disciplined checklist approach:
Prevents scrutiny
Protects cash flow
Reduces litigation
Builds long-term credibility
Compliance is no longer a cost.
It is a business strategy
Written by:
Abhishek Gupta
Chartered Accountant
Office No. 19, Sagar Building, 4th Floor, Plot-327,
Narshi Natha Street, Masjid Bunder (West),
Mumbai – 400009
📞9324776120
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