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    Business Fundamentals

    Topic 12 of 12

    Tax, Compliance & Audit

    The tax and audit basics every founder must respect — including the two mistakes (GST and TDS) that turn into serious trouble.

    General information only — tax rules, rates and dates change. Confirm the current position with a qualified CA before acting.

    The 9 decisions this topic covers

    1. Spending the GST you collected?Stop.
    2. Deducted TDS but not deposited it?Like GST, TDS you deduct isn't your money — you deducted it on the government's behalf.
    3. Scrambling at the end of the year?The main recurring income-tax jobs are: deposit TDS every month, file TDS returns and pay advance tax every quarter, and file your income tax return (and tax audit report, if applicable) once a year.
    4. Which GST returns, and when?The main recurring GST jobs are: report your sales and pay your tax every month (or quarter, if you opt for the quarterly scheme), and file an annual return once a year.
    5. Do you actually need a CA yet?A Chartered Accountant (CA) is a qualified professional who keeps your finances accurate, your taxes filed, and your compliance clean — and who audits, advises and represents you when needed.
    6. Books done, or books verified?Accounting is creating your financial records — recording transactions and preparing your financial statements.
    7. Why audit if nobody has asked?Partly because you're legally required to, and partly because an independent audit makes your numbers trustworthy — which you need for investors, lenders and your own peace of mind.
    8. Same firm doing books and audit?You shouldn't — and for a company, you generally can't.
    9. What does a qualified report mean?An audit report is the auditor's written opinion on whether your financial statements are true and fair.

    The questions, answered

    GST misuseSpending the GST you collected?Stop. GST you collect from customers was never your money — you're holding it in trust for the government. Using it for other payments is treated very seriously: you must pay it to the government regardless, plus heavy interest and a penalty that can equal the entire amount, with no time limit on recovery.TDS defaultDeducted TDS but not deposited it?Like GST, TDS you deduct isn't your money — you deducted it on the government's behalf. Depositing it late brings interest of 1.5% per month, a 30% disallowance of the related expense, a daily late fee on returns, and — for serious or wilful defaults — even prosecution.Income tax calendarScrambling at the end of the year?The main recurring income-tax jobs are: deposit TDS every month, file TDS returns and pay advance tax every quarter, and file your income tax return (and tax audit report, if applicable) once a year.GST calendarWhich GST returns, and when?The main recurring GST jobs are: report your sales and pay your tax every month (or quarter, if you opt for the quarterly scheme), and file an annual return once a year.Why a CADo you actually need a CA yet?A Chartered Accountant (CA) is a qualified professional who keeps your finances accurate, your taxes filed, and your compliance clean — and who audits, advises and represents you when needed. For a startup, a good CA prevents expensive mistakes and keeps you fundable.Accounting vs auditBooks done, or books verified?Accounting is creating your financial records — recording transactions and preparing your financial statements. Audit is checking them — an independent examination that verifies those statements are true and fair. One builds the numbers; the other verifies them.Statutory auditWhy audit if nobody has asked?Partly because you're legally required to, and partly because an independent audit makes your numbers trustworthy — which you need for investors, lenders and your own peace of mind. An audit catches errors, deters fraud, and gives everyone confidence in your financials.Auditor independenceSame firm doing books and audit?You shouldn't — and for a company, you generally can't. The whole point of an audit is independence: someone objective checks the books. If the same firm both prepares and audits your accounts, they're effectively checking their own work, which defeats the purpose and breaks the rules.Audit reportWhat does a qualified report mean?An audit report is the auditor's written opinion on whether your financial statements are true and fair. A clean (unqualified) report means no reservations — all good. A qualified report means the auditor found a specific issue they're flagging — an “except for” opinion. It's a yellow flag investors notice.

    Who answers these

    The guide is written by the people who do this work for founders every week.