By Vaishnavi singh
In the rush of day-to-day operations, taxation often gets treated like a deadline, not a strategy. But here’s the reality: one overlooked filing or a poorly planned return can trigger a chain reaction — from penalties and interest to audits and loss of credibility. Taxation in India is not just complex, it’s layered, and ignoring its nuances is where most businesses start to bleed.
In this article, we break down the most common tax mistakes, the differences between direct and indirect taxes, and why tax missteps often come back harder — months or even years later.
- Missed Deadlines: The Silent Profit Killer
Many Indian businesses, especially MSMEs and startups, regularly miss critical tax due dates — not because they’re reckless, but because tax compliance isn’t embedded in their operating system. The cost?
- Late fees and interest charges (GST late filing attracts ₹50 to ₹200 per day)
- Notices from the Income Tax Department or GSTN
- Loss of input tax credit due to missed or incorrect returns
Key due dates in India you cannot afford to forget:
- Income Tax Returns (ITR) – July 31 (individuals and most businesses)
- GST Returns – 11th and 20th of every month (depending on type of return)
- TDS Payments – 7th of every month
- ROC filings – varies based on company type
Reference: Check this tax calendar for Indian businesses by ClearTax
https://cleartax.in/s/income-tax-calendar-financial-year
- Wrong Filings: A Paperwork Error Can Cost You
Filing the wrong form, using outdated data, or even a mismatch between GSTR-1 and GSTR-3B can quickly trigger scrutiny.
Examples:
- Incorrect HSN/SAC codes in GST filings
- Misreporting revenue in ITR
- Not reconciling GSTR-2A and GSTR-3B
Why it matters: Even small mismatches can result in ITC denial or lead to a GST audit. And in Income Tax? Underreported income can result in penalties up to 200 percent of the tax amount.
Reference: Learn about common GST mistakes that cause legal trouble
https://blog.saginfotech.com/common-gst-mistakes
- Ignoring Audits: The Storm You Didn’t See Coming
Getting a notice for audit is not the end of the world — but not being ready for it might be.
Many businesses:
- Don’t maintain proper documentation
- Can’t justify their expenses or input claims
- Miss audit thresholds and ignore mandatory audit filings
For instance, businesses with turnover above ₹10 crore in India (as of FY 2023–24) must maintain e-invoices and books under Section 44AB of the Income Tax Act.
Reference: Know your audit requirements under Indian law
https://cleartax.in/s/statutory-audit-of-companies
- Direct vs Indirect Taxes: Misunderstanding the Landscape
A common confusion among founders and even some accountants is mixing up how direct and indirect taxes work.
Direct Taxes:
- Paid directly to the government
- Includes income tax, corporate tax, TDS
Indirect Taxes:
- Collected from customers and paid to the government
- Includes GST, customs duty, excise (where applicable)
Mistakes happen when:
- Businesses claim expenses that aren’t allowed under Income Tax
- GST collected isn’t deposited on time
- Input Tax Credit is claimed without proper documentation
Reference: Guide to direct and indirect taxes in India
https://taxguru.in/goods-and-service-tax/difference-direct-tax-indirect-tax.html
- One Wrong Move: The Long-Term Fallout
The biggest myth? That you can “fix it later.”
In practice:
- Delays and errors invite scrutiny for multiple years
- You may be flagged for audit in future years even if the mistake was small
- You risk losing investor trust if your tax records are messy
Case in Point: A Bengaluru-based SaaS startup lost a funding deal after discrepancies in their past GST filings were uncovered during due diligence. Not because the amounts were massive — but because the lack of attention to tax compliance raised red flags about financial discipline.
Make Tax Strategy, Not Mistakes
Taxation isn’t just a legal requirement — it’s a lens through which investors, lenders, and regulators assess how seriously you run your business. Getting it right means building financial credibility and peace of mind. Getting it wrong means playing catch-up, with penalties waiting at every turn.
If you’re not sure where your business stands, get a tax health check. And if you’re filing at the last minute, chances are — you’re missing opportunities to save, comply, and grow smarter.
Vaishnavi singh ( BRAND MANAGER)
