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Due Diligence Support Services India | Financial Due Diligence Mumbai | N D Savla
Virtual CFO

Due Diligence Support Services
Financial & Tax Due Diligence in India

Quality of earnings, working capital and debt review, GST, income tax and TDS exposure analysis, related party review, and a structured due diligence report with risk ratings — for investors, acquirers, lenders, and businesses preparing to be reviewed.

Part of our Virtual CFO practice: Virtual CFO Services Certified Financial Statements Accounting & Tax Compliance MIS & Budgeting

Overview

What Is Financial Due Diligence and What Does It Cover?

Due diligence is the systematic process of investigating and verifying the financial, tax, legal, and operational position of a business before completing a transaction — whether that transaction is an equity investment, a business acquisition, a merger, a bank loan, or a strategic partnership. The purpose of due diligence is to give the party conducting it — the investor, acquirer, lender, or strategic partner — a clear, evidence-based understanding of what they are committing to, and to identify any risks, liabilities, or material issues that could affect the transaction or its valuation.

At N D Savla & Associates, we provide professional due diligence support services for investors, private equity funds, acquirers, lenders, and businesses on both sides of a transaction. Our CA-led team conducts financial due diligence and tax due diligence on target companies, prepares due diligence reports with clear findings and risk identification, and supports businesses preparing for investor or acquirer due diligence by helping them organise their financial records and address compliance gaps proactively.

Financial due diligence is a focused, structured investigation of the financial records, accounts, and performance of a target business. It is distinct from a statutory audit — it is not a compliance exercise. Financial due diligence is a transaction-specific investigation designed to verify the financial information presented by the target, identify any material risks or liabilities, and give the investor or acquirer the financial understanding they need to make an informed decision and negotiate the transaction on a sound basis.

What does financial due diligence cover? A comprehensive engagement covers verification of historical revenue and profitability trends over three to five years; analysis of the quality of earnings — identifying whether the reported profits are recurring and sustainable or include one-time items, accounting adjustments, or non-recurring revenues; review of working capital structure and requirements; assessment of debt, liabilities, and contingent obligations including off-balance-sheet exposures; review of the GST compliance position and any GST-related exposures; income tax compliance review including filing history, pending assessments, and potential tax exposures; TDS compliance review; review of related party transactions; and identification of material inconsistencies between the financial information presented and the underlying records.

What is the difference between financial due diligence and an audit? An audit is a statutory compliance exercise — it verifies that the accounts are prepared in accordance with applicable accounting standards and gives an audit opinion for statutory purposes. Financial due diligence is a transaction-specific investigation focused on identifying risks and verifying representations for the purpose of a specific deal. The two exercises have different objectives, different methodologies, and produce different outputs.

Our due diligence support services are integrated with our certified financial statements, accounting and tax compliance, MIS and budgeting services, and virtual CFO services — so businesses on both sides of a transaction can access comprehensive financial support from a single firm.

Who It Is For

Who Needs Due Diligence Support Services in India?

Due diligence support is relevant to both sides of a transaction — the party investing and the party being invested in:

Angel Investors and VC Funds

Pre-acquisition due diligence is the financial and tax investigation investors run before committing capital. For angel investors writing a first cheque and for funds evaluating Series A or B rounds, it is a standard, non-negotiable step that informs the decision, the structuring, and the pricing.

Businesses Being Acquired

Vendor due diligence lets a target review its own financial position before the buyer's team arrives — identifying and fixing issues early, and reducing the risk of transaction failure, price chips, or onerous deal conditions.

Startups Preparing for a Round

Preparing financial records, tax filings, accounts, and compliance documentation to be investor-ready. Clean books, GST and TDS compliance, and organised documentation move a startup through investor due diligence far more smoothly.

Banks, NBFCs and Lenders

Financial due diligence as part of credit appraisal for large loan applications, project finance, and acquisition finance — covering financial health, earnings quality, debt service coverage, and tax and regulatory compliance of the borrowing entity.

Merger and Acquisition Transactions

In an M&A context, due diligence spans financial, tax (income tax, GST, TDS, and transfer pricing), commercial, and legal workstreams — all of which must complete satisfactorily before the transaction closes and the purchase price is finalised.

Document Requirements

What Documents Are Needed for Due Diligence in India?

The document requirements depend on the nature and size of the transaction, but the core set is consistent across most deals:

Audited financial statements for the last three to five financial years — the primary historical financial record
Management accounts or unaudited accounts for the current year to date — to assess recent performance
GST returns — GSTR-1, GSTR-3B, and GSTR-9 — for the last three years, to verify revenue and tax compliance
Income tax returns for the last three to five years, along with assessments, notices, and any pending proceedings
TDS returns and certificates for the relevant period
Bank statements for all accounts for the relevant period — a critical cross-check against reported revenue and expenses
Loan agreements, sanction letters, and current loan outstanding statements for all borrowings
Material customer and supplier contracts — particularly where revenue or cost concentration is a risk
Pending legal proceedings, arbitrations, or regulatory investigations
Related party transaction details — loans to directors, inter-company transactions, lease agreements with related parties

Our Process

How Is Our Due Diligence Process Structured?

Every engagement runs through the same seven stages, from scope definition to the presentation of findings:

01

Scope Definition

We begin every engagement by defining the scope clearly — what aspects of the business are in scope, what period is covered, what the transaction structure is, and what specific risk areas the client wants us to focus on.
02

Document Request

We prepare a structured document request list covering all financial, tax, legal, and operational documents required for the scope of the engagement and work with the target to collect the required records.
03

Financial Statement Analysis

We analyse the historical P&L, balance sheet, and cash flow — examining revenue trends, margin trends, working capital movements, and key financial ratios over the review period.
04

Quality of Earnings Assessment

We identify and quantify one-time items, accounting adjustments, and non-recurring revenues or costs that affect the reported profitability, and restate the adjusted EBITDA to reflect the underlying recurring earnings power of the business.
Adjusted EBITDA
05

Tax Compliance Review

We review GST filing history and reconcile GST-reported turnover against financial accounts. We review income tax filing history, pending assessments, and TDS compliance. Tax exposures are quantified and reported.
GST · Income Tax · TDS
06

Risk Identification and Reporting

We compile all identified risks, issues, and red flags in a structured due diligence report with clear findings, risk ratings, and recommendations for deal structuring or price adjustment.
Due Diligence Report
07

Management Presentation

Where required, we present our due diligence findings to the client's investment committee, board, or senior management, and answer questions on the key findings.

Background

How Has Due Diligence Practice Evolved in India?

Formal financial due diligence as a standard transaction requirement became established in India with the growth of M&A activity and private equity investment following the 1991 liberalisation. Before this, Indian business transactions were often completed on the basis of trust, relationship, and limited financial disclosure.

The entry of international investors and multinational acquirers brought global due diligence standards to India. International private equity firms accustomed to conducting rigorous due diligence in developed markets applied the same standards to Indian investments, raising expectations across the board. The resulting improvement in transaction transparency benefited the entire M&A ecosystem.

The growth of the domestic startup ecosystem after 2010 normalised due diligence for a much wider range of transactions — not just large corporate M&A but also early-stage investments. The introduction of GST in 2017 and the digitisation of tax compliance through platforms like the MCA portal and the Income Tax e-filing system made it possible for due diligence teams to independently verify a much broader range of data points than was previously possible. This has increased the depth and reliability of financial due diligence in India significantly.

NoteDue diligence is most effective when conducted before the transaction price is agreed or at least before the final share purchase agreement is signed. Issues discovered late in the transaction — after the price is locked — are harder to deal with and may result in deal failure. Engaging a CA firm for due diligence early in the transaction process gives the client maximum leverage.
ImportantDue diligence findings can significantly affect transaction pricing, deal structure, and conditions. Tax exposures identified in due diligence — such as unadjusted GST demands, pending income tax assessments, or TDS shortfalls — are typically addressed through price adjustments, escrow arrangements, or specific indemnities. These are negotiating points that must be addressed before the deal closes.

Broader Practice

Our Broader Transaction and Business Finance Services

Due diligence sits inside a wider transaction support map. Our complete practice covers:

Virtual CFO ServicesCA-led financial leadership through fundraising and transaction processes.
Certified Financial StatementsCA-certified accounts for lenders, investors, and institutional submissions.
Accounting & Tax ComplianceThe clean compliance record that survives a buyer's review.
MIS & Budgeting ServicesMonthly MIS packs and budgets that make a data room credible.
Income Tax AuditSection 44AB tax audit for businesses above the prescribed thresholds.
Net Worth CertificateCA-certified net worth statements for transactions and applications.
Business Tax FilingReturn filing across proprietorships, firms, LLPs, and companies.
CA Certification ServicesTurnover, utilisation of funds, and other CA certificates.

Frequently Asked Questions

Common Questions on Due Diligence Support

What is due diligence in business?
Due diligence is the systematic investigation and verification of the financial, tax, and operational position of a business before a transaction — whether an equity investment, acquisition, merger, or bank loan. The purpose is to verify the information presented by the target, identify any material risks or liabilities, and give the investor or acquirer the understanding they need to make an informed decision and negotiate the transaction on sound terms.
What is financial due diligence?
Financial due diligence is a focused investigation of the target's financial records and performance — covering historical revenue and profitability, quality of earnings, working capital, debt and liabilities, and tax compliance position. It is conducted by a CA firm or financial adviser on behalf of an investor, acquirer, or lender, and culminates in a due diligence report with findings and risk identification.
What documents are needed for due diligence in India?
Core documents include audited financial statements for three to five years, management accounts, GST returns, income tax returns, TDS returns, bank statements, loan agreements, key contracts, related party transaction details, and any pending legal proceedings or tax assessment documentation.
Who conducts due diligence in India?
Financial and tax due diligence in India is conducted by CA firms and financial advisory firms. The process involves qualified professionals who systematically analyse the target business's records and produce a structured due diligence report. For larger transactions, separate legal, technical, and commercial due diligence workstreams are conducted in parallel.
What is pre-acquisition due diligence?
Pre-acquisition due diligence is the investigation conducted by a buyer or investor before completing an acquisition or investment. It verifies the target's financial health, tax position, and compliance status; identifies any material risks or liabilities that could affect the transaction or its valuation; and provides the basis for informed negotiation of the purchase price and deal structure.

Running a transaction, or preparing to be reviewed?

Talk to our due diligence team — financial and tax investigation, quality of earnings, risk reporting, and vendor-side preparation.

Get in Touch
Call +91 9821 83 26 83 WhatsApp +91 9819 000 511 Email nainitsavla@savlagroup.in Monday to Saturday, 10:00 AM – 7:00 PM
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