GST, TDS and Tax Compliance: A No-Nonsense Guide for Founders

Why founders underestimate tax compliance

In the first 18 months of a business, three things compete fiercely for the founder's attention: building the product, finding customers, and managing cash. Tax compliance rarely makes the shortlist. Returns are filed late or filed wrong, input credits go unclaimed, TDS is deducted but not deposited, registrations are missed, and the founder rationalises it all as a problem to solve "later, once we have scale."

The trouble is that "later" arrives with interest and penalty. We have walked into many companies whose first round of due diligence surfaces a backlog of GST returns, TDS notices, and book-to-portal mismatches that take months to clean up — and that materially complicate the fundraise that prompted the diligence in the first place. Tax compliance is one of those domains where the cost of getting it right is small and the cost of getting it wrong compounds.

GST in a paragraph

India's Goods and Services Tax replaced a tangled web of central and state indirect taxes in July 2017. It is a destination-based tax on supply, levied at multiple rate slabs, with a chain of input tax credit that only works if every link in the chain — your suppliers, you, your customers — is filing correctly. The big numbers most founders need to know: registration is mandatory above prescribed turnover thresholds (₹20 lakh or ₹40 lakh, varying by state and supply type), with lower thresholds for service providers and specific categories. Inter-state supply and e-commerce supplies trigger registration regardless of turnover.

The day-to-day rhythm involves issuing tax invoices in the prescribed format, collecting GST at the right rate and HSN classification, filing GSTR-1 (outward supplies) and GSTR-3B (summary return) on monthly or quarterly cycles, claiming input tax credit only against invoices reflected in your supplier's filings, and reconciling your books with the auto-drafted GSTR-2B every month. e-Invoicing and e-Way Bills layer in additional disciplines for businesses above prescribed thresholds.

The five GST mistakes we see most often

• Wrong HSN or rate classification — leading to short or excess collection and downstream reconciliation pain.
• Claiming ITC against invoices that don't appear in GSTR-2B — a guaranteed mismatch and a very common notice trigger.
• Missed reverse-charge accounting — particularly on imports, legal services, and specific goods.
• Late return filing — late fees and interest accrue automatically and there is no easy waiver.
• Inadequate documentation — invoices that don't meet prescribed format requirements, missing e-way bills, weak audit trails.

Each of these is fixable. None of them is hard to avoid if the finance team has the right monthly close discipline.

TDS in a paragraph

Tax Deducted at Source is exactly what it sounds like — a portion of certain payments is withheld by the payer and deposited with the government on behalf of the payee. It applies to a long list of payments: salaries, contractor and professional fees, rent above thresholds, interest, commissions, dividends, payments to non-residents, and many others. Each section has its own rate, its own threshold, and its own form.

The operational rhythm: deduct TDS at the right rate when the payment is made or credited (whichever is earlier), deposit it with the government by the prescribed due date (typically the 7th of the following month, with March's deduction due by 30 April), file quarterly TDS returns (Forms 24Q for salaries, 26Q for resident non-salary payments, 27Q for non-resident payments, 27EQ for TCS), and issue TDS certificates (Form 16 for salaries, Form 16A for others) to the payee.

The TDS mistakes that cost the most

The single most expensive TDS mistake is not deducting at all when you were required to. It triggers a 30% disallowance of the underlying expense, which can convert a profitable year into a loss year for tax purposes. Other common slips include deducting at the wrong rate (too low triggers a shortfall demand; too high creates refund hassles for the payee), depositing late (interest at 1% to 1.5% per month), and failing to file the quarterly return on time (penalty of ₹200 per day until filed). The PAN of the deductee matters as well — a missing or invalid PAN bumps the rate to 20% (or 5%, depending on the section) regardless of the standard rate.

Direct tax — the other side of the ledger

Beyond GST and TDS, businesses face direct tax obligations: advance tax, self-assessment tax, the annual income tax return, transfer pricing if there are international related-party transactions, and a growing set of disclosure requirements. The advance tax cycle alone — with instalments in June, September, December, and March — catches founders who are used to thinking of tax as a year-end exercise. Underpayment triggers interest that compounds quietly until the return is filed.

Building the operating discipline

The companies that handle compliance without drama do four things consistently. They calendar everything. Every return, every payment, every due date — captured in a single shared compliance calendar with owners and reminders. They reconcile monthly. Books to GSTR-2B, books to GSTR-3B, payroll to TDS deposits, vendor ledgers to TDS certificates. They keep a clean documentation trail. Tax invoices in the right format, e-invoices and e-way bills issued on time, vendor declarations on file, exemption certificates handy. They engage their CA early and often. Quarterly reviews catch mistakes before they snowball.

What changes at scale

The compliance footprint gets noticeably more complex as a business scales. Multi-state operations add additional GST registrations and intra-organisational invoicing. Crossing the e-invoicing turnover threshold introduces real-time portal integration. International transactions bring in transfer pricing, withholding tax, and FEMA compliance. Subsidiaries, joint ventures, and SPVs each carry their own filing obligations. The right time to professionalise compliance is before these layers arrive, not after — retrofitting governance onto a complicated structure is always more expensive than building it in from the start.

How Savitur supports clients on tax

Our compliance practice handles GST, TDS, and direct tax workflows for clients ranging from early-stage founders filing their first GST return to multi-entity groups with hundreds of monthly filings. We set up the calendars, run the monthly reconciliations, prepare and file returns, manage notices when they come, and represent clients before tax authorities. Behind the scenes, we plug compliance directly into the digitised finance stack — so that filing happens as a clean, automated by-product of doing business well, rather than a monthly emergency.