This checklist is structured in roughly the order obligations arise as the business scales — from the incorporation formalities before the first invoice, to the ongoing monthly, quarterly, and annual compliance calendar that keeps the business in good standing with the Income Tax Department, GST authorities, MCA, and — for funded startups — the Reserve Bank of India.
At a GlanceThe 10 Must-Dos — Overview
| # | Must-Do | When | If You Miss It |
|---|---|---|---|
| 1 | Register the right business structure | Before first invoice | Operating informally — tax and liability risks |
| 2 | Apply for PAN and TAN | Immediately after incorporation | Cannot open bank account or deduct TDS |
| 3 | Register for GST (when applicable) | Before threshold breach or Day 1 for e-commerce | Penalty + interest from date of liability |
| 4 | Open a dedicated business bank account | Within days of incorporation | Personal and business finances mixed — tax complications |
| 5 | Set up accounting and bookkeeping | From first transaction | GST mismatch, ITR errors, investor red flags |
| 6 | Register for EPF and ESIC | 20+ employees (EPF) / 10+ (ESIC) | Retrospective liability + damage charges |
| 7 | Register under Udyam (MSME) | Anytime (voluntary but advantageous) | Miss out on priority lending, government schemes |
| 8 | File TDS returns every quarter | 31 Jul / 31 Oct / 31 Jan / 31 May | Rs. 200/day late fee + assessee-in-default status |
| 9 | File ROC annual returns (Pvt Ltd / LLP) | Within 60 days of AGM / September 30 | Escalating fees, director disqualification |
| 10 | FEMA / FDI compliance if foreign investment received | Within 30 days of share allotment | Compounding charges under FEMA |
Each Step Explained — With Deadlines, Thresholds, and Consequences
Register the Right Business Structure
The most important compliance decision a startup founder makes is the choice of business structure — it determines legal framework, tax treatment, personal liability, investment eligibility, and the compliance burden that follows for years.
| Structure | Best For | Tax Rate | VC/Angel Funding? |
|---|---|---|---|
| Private Limited Company | Tech/product startups seeking funding | 22% + surcharge | YES |
| LLP | Professional services, consulting | Partnership rates | Difficult |
| One Person Company (OPC) | Solo founders, bootstrapped | 22% + surcharge | Limited |
| Proprietorship | Individual freelancers, traders | Slab rates | No |
Private Limited Companies are incorporated through MCA's SPICe+ — an integrated form covering name reservation, incorporation, DIN, PAN, TAN, EPFO, ESIC, GST, and bank account opening in a single application. Most CA firms complete this in 7–10 working days. A proprietorship is simpler but not suitable for startups planning to raise investment.
Do this before raising your first invoice. Income earned before proper entity registration can create complications in entity-level tax filings.
Apply for PAN and TAN
Every legal entity requires a Permanent Account Number (PAN) for all tax filings and bank accounts. For companies and LLPs, PAN is allotted during the SPICe+ process. For proprietorships, the proprietor's personal PAN is used.
A Tax Deduction and Collection Account Number (TAN) is required by every entity that deducts TDS. This includes any startup that pays salary above the basic exemption limit, rent exceeding Rs. 2.4 lakh annually, contractors, or professional fees. TDS cannot be deducted or deposited without a TAN — operating without one while making TDS-applicable payments creates retrospective liability.
Apply for PAN and TAN simultaneously with or immediately after incorporation. Most banks require both before opening a current account.
Register for GST
GST registration is mandatory when aggregate annual turnover exceeds Rs. 40 lakh (goods) or Rs. 20 lakh (services). However, registration is required from Day 1 in situations common to startups:
- E-commerce sellers — selling through Amazon, Flipkart, Meesho, or any online marketplace
- Interstate supply — any sale or service delivery across state borders, even at the first rupee
- Export of services — IT, SaaS, and digital agencies serving overseas clients must register (exports are zero-rated and allow GST refunds)
- B2B clients needing ITC — unregistered suppliers lose clients who prioritise compliant vendors
After registration, GST returns (GSTR-1 and GSTR-3B) must be filed monthly or quarterly. An annual GSTR-9 reconciliation return is due by December 31 after the financial year end.
Late GST registration attracts a penalty of Rs. 10,000 or 10% of tax due — whichever is higher. Voluntary registration from Day 1 is recommended for most B2B-facing startups.
Open a Dedicated Business Bank Account
A dedicated current account is not technically a compliance requirement, but mixing personal and business finances has serious practical consequences:
- Income Tax scrutiny: officers reviewing personal accounts frequently disallow business expenses and add back unexplained credits
- GST reconciliation: input tax credit is matched against payment records — business payments from personal accounts create GST mismatch problems
- Investor due diligence: VCs and angel investors invariably request business bank statements. Mixed finances are a red flag that delays funding rounds
Set Up Accounting and Bookkeeping From Day 1
Accounting is the foundation on which every other compliance function rests — GST returns are prepared from ledgers, TDS returns use vendor payment data, ROC financial statements come from the books, and income tax is computed from the P&L. Starting from the first transaction — not at year-end — avoids the costly process of reconstructing a year's worth of transactions from bank statements.
Common accounting software for Indian startups: Tally Prime (strong statutory compliance features), Zoho Books (cloud-based, GST-compliant), and QuickBooks (popular with internationally connected teams). N D Savla & Associates provides accounting and bookkeeping services for startups — including chart of accounts setup, GST configuration on the invoicing system, and monthly P&L reporting. A concurrent tax compliance package ensures accounting feeds directly into compliance without a year-end scramble.
Set up accounting software in Month 1. Every unrecorded transaction is a reconstruction cost at year-end — typically 3–5× the cost of doing it in real time.
Register for EPF and ESIC Once the Team Grows
Two mandatory registration thresholds must be tracked as the startup hires:
- EPF — mandatory at 20 or more employees. Both employer (12% of basic + DA) and employee (12%) contribute monthly, with deposit due by the 15th of the following month
- ESIC — mandatory at 10 or more employees, covering those earning gross salary up to Rs. 21,000/month. Employer contributes 3.25%, employee 0.75%
Common startup mistakes: not counting temporary workers, interns, and part-time employees toward the headcount threshold; and registering late — EPF liability arises from the date the threshold is crossed, not the date of registration. Late registration results in retrospective contribution demands plus damage charges of 5–25%.
Once EPF registration is triggered, it is permanent — the obligation continues even if headcount subsequently falls below 20 due to attrition or restructuring.
Register Under Udyam (MSME)
Udyam Registration under the MSMED Act is voluntary for startups but carries significant practical benefits:
- Priority sector lending — banks provide MSME-registered businesses preferential lending rates under RBI guidelines
- Government procurement preference — up to 15% price preference in central and state procurement
- CGTMSE guarantee — collateral-free loans through the Credit Guarantee Fund Trust for Micro and Small Enterprises
- Section 43B(h) buyer compliance — if your startup sells to larger businesses, registration ensures they must pay within 45 days (with agreement) or 15 days (without), or face income tax disallowance
Registration is free and instant at the Udyam portal — only PAN and Aadhaar required. N D Savla & Associates provides Udyam registration support including classification verification and certificate issuance.
File TDS Returns Every Quarter
Any startup making payments that attract TDS must deduct at the applicable rate, deposit by the 7th of the following month, and file quarterly returns on time. Key TDS categories:
| Payment Type | TDS Section | Rate | Threshold |
|---|---|---|---|
| Salary | Section 192 | Slab rate | Above basic exemption |
| Rent (property) | Section 194-I | 10% | Rs. 2.4 lakh/year |
| Contractor payments | Section 194C | 1% (individual) / 2% (company) | Rs. 30,000 per transaction |
| Professional fees | Section 194J | 10% | Rs. 30,000/year |
| Commission / brokerage | Section 194H | 5% | Rs. 15,000/year |
| Dividend payments | Section 194 | 10% | Rs. 5,000/year |
Late TDS returns attract Rs. 200 per day (Section 234E) from due date to filing date. Missing TDS deduction makes the company an “assessee-in-default” under Section 201 — with interest and penalty on the full amount. Filing deadlines: 31 July, 31 October, 31 January, 31 May.
File ROC Annual Returns On Time
Every Private Limited Company and LLP must file annual returns with the Registrar of Companies through the MCA portal. Annual compliance calendar for a Private Limited Company with a March 31 year-end:
| Filing | Due Date |
|---|---|
| AGM (Annual General Meeting) | By September 30 (within 6 months of year end) |
| Form AOC-4 — Financial Statements | Within 30 days of AGM |
| Form MGT-7A — Annual Return (small companies) | Within 60 days of AGM |
| Form ADT-1 — Auditor Appointment | Within 15 days of AGM |
| Form DPT-3 — Return of Deposits | By June 30 every year |
| Form DIR-3 KYC — Director KYC | By September 30 every year |
ROC defaults compound fast. A Rs. 300 late fee on Day 1 becomes Rs. 27,300 after 90 days. Directors who default for 3 consecutive years face disqualification from directorships across all Indian companies (Companies Act Section 164(2)).
FEMA / FDI Compliance When Foreign Investment Is Received
This is the compliance step most commonly overlooked — and the one that attracts the steepest penalties when missed. Any startup receiving investment from a foreign entity (foreign individuals, NRI investors, foreign VCs, or overseas parent companies) must comply with FEMA and report to the RBI.
FC-GPR Filing — Within 30 Days of Share Allotment
When a startup allots shares to a foreign investor, it must file Form FC-GPR through RBI's FIRMS portal within 30 days of the date of allotment. Filing covers: the investment amount received; instruments allotted and face value; valuation methodology; and a CA certificate confirming FEMA pricing compliance. N D Savla & Associates provides FDI Filing with RBI services — including FC-GPR preparation, valuation certification, and FIRMS portal filing.
Annual FLA Return — Due July 15 Every Year
Every Indian company with outstanding FDI must file the Annual FLA (Foreign Liabilities and Assets) Return with RBI by July 15 every year. This is separate from FC-GPR and must be filed annually even if no new investment is received in the year.
Transfer Pricing Compliance for Startup Groups
Startups as part of a multinational group — Indian subsidiary of a foreign parent or an Indian holding company with overseas subsidiaries — may have transfer pricing obligations if cross-border related party transactions exceed Rs. 1 crore per year. A Form 3CEB (CA report on international transactions) must be filed with the income tax return.
Apply for DPIIT Startup India Recognition
DPIIT recognition unlocks benefits significant enough to treat as a must-do. Eligibility: incorporated as Private Limited, LLP, or Partnership; less than 10 years old; annual turnover below Rs. 100 crore; working on innovation or improvement.
Section 80-IAC Tax Exemption
100% deduction on profits for any 3 consecutive years out of the first 10 years of incorporation (subject to CBDT approval).
Angel Tax Exemption
DPIIT-recognised startups are exempt from angel tax (Section 56(2)(viib)) on investments received at a premium above fair value.
ESOP TDS Deferral
Employees can defer TDS on ESOP perquisites to the earliest of sale, resignation, or 5 years from exercise — a meaningful cash flow benefit.
Labour Law Self-Certification
DPIIT startups can self-certify compliance with specified labour laws for up to 5 years, reducing the compliance burden significantly.
End-to-End Startup Compliance Support
N D Savla & Associates provides end-to-end startup compliance support in India — from SPICe+ incorporation through to monthly GST and TDS returns, quarterly ROC compliance, FDI/FEMA filings for funded startups, and annual income tax returns. The firm's founders-first approach means compliance is handled in the background so startup teams can focus on building the product and the business.
Startup Compliance India — Common Questions
What is the first compliance step for a new startup in India?
The first step is choosing and registering the right business structure — Private Limited Company (for funding-seeking startups via MCA's SPICe+ process), LLP (for professional services), OPC (for solo founders), or Proprietorship (for individual operators). This must be done before the first invoice is raised. PAN and TAN are allotted simultaneously through SPICe+ for companies.
When must a startup register for GST?
GST registration is mandatory when turnover exceeds Rs. 40 lakh (goods) or Rs. 20 lakh (services). However, it is required from Day 1 for e-commerce sellers, interstate supply of goods or services, export of services, and B2B clients needing input tax credit. Voluntary GST registration from Day 1 is recommended for most B2B-facing startups — clients expect a GSTIN on every invoice.
What ROC filings must a Private Limited startup complete annually?
A Private Limited Company must file: Form AOC-4 (financial statements) within 30 days of the AGM; Form MGT-7A (annual return for small companies) within 60 days of AGM; Form ADT-1 (auditor appointment) within 15 days of AGM; Form DPT-3 (return of deposits and outstanding loans) by June 30; and Form DIR-3 KYC (director KYC) by September 30 annually. The AGM must be held by September 30 for March year-end companies.
Does a funded startup need FEMA compliance?
Yes. Any startup receiving foreign investment must file FC-GPR with RBI within 30 days of share allotment. An annual FLA Return must be filed by July 15 every year thereafter. Startups part of a multinational group with cross-border related party transactions above Rs. 1 crore also have transfer pricing obligations and must file Form 3CEB with their income tax return.
What is DPIIT recognition and how does it help a startup?
DPIIT Startup India recognition provides: Section 80-IAC income tax exemption (100% profit deduction for 3 years out of the first 10); angel tax exemption under Section 56(2)(viib); ESOP TDS deferral for employees; and self-certification under specified labour laws for 5 years. Eligibility requires incorporation as a Private Limited, LLP, or Partnership; less than 10 years old; turnover below Rs. 100 crore; and working on an innovation-driven business.
When must a startup start deducting TDS?
From the first payment that attracts TDS — there is no minimum turnover threshold. TDS on salary applies from the first employee earning above the basic exemption limit. TDS on rent applies from the first payment if annual rent exceeds Rs. 2.4 lakh. TDS on contractor payments applies per transaction above Rs. 30,000. Quarterly TDS returns must be filed on time — Rs. 200 per day late filing fee applies under Section 234E from the due date.
For every Indian startup, compliance is not a distraction from building the business — it is the foundation that lets you build it safely. A GST notice, a TDS default, or a missed FC-GPR filing can each consume weeks of management time and tens of lakhs of rupees in penalties, interest, and compounding charges. Setting up the right compliance infrastructure in Month 1 — incorporating the right entity, getting GST and TDS in place, setting up accounting, and knowing the ROC calendar — costs a fraction of that and compounds in the background while you focus on growth.
Reach N D Savla & Associates at +91 9819 000 511 or +91 9821 83 26 83 to discuss a startup compliance package — or visit ndsavla.com to explore the firm's services.
Get your startup’s compliance right from Day 1
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