Compliance Checklist: India AY 2025-26 for Businesses

It’s estimated that over 60% of Indian businesses face compliance-related penalties annually due to missed deadlines or incorrect filings. As a business owner or finance professional, you understand the complexities of navigating the Indian regulatory landscape. This checklist provides a structured approach to ensure your business remains compliant throughout Assessment Year (AY) 2025-26, covering key areas like GST, Income Tax, and MCA filings.

This guide is based on my experience as a compliance practitioner in India. I've seen firsthand the challenges businesses face, and this checklist aims to provide a practical, actionable framework for staying on track.

GST Compliance

The Goods and Services Tax (GST) regime is a cornerstone of indirect taxation in India. Consistent and accurate compliance is crucial to avoid penalties and maintain a healthy GST credit chain. You must understand the various components of GST compliance and their respective deadlines.

1. GST Registration:

• Threshold Limit: If your aggregate turnover exceeds ₹20 lakhs (₹10 lakhs for specified special category states) in a financial year, you are liable for GST registration. For service providers, this limit applies across all states.
• Mandatory Registration: Certain businesses are required to register for GST regardless of turnover, including those engaged in inter-state supply, e-commerce operators, and those liable to pay tax under reverse charge.
• Registration Process: Obtain GST registration through the GST portal (https://www.gst.gov.in/). Ensure all details provided are accurate and supported by valid documentation.

2. Filing GST Returns:

• GSTR-1 (Outward Supplies): File monthly (or quarterly, if eligible under the QRMP scheme) by the 11th of the following month. This return details all your outward supplies (sales).
• GSTR-3B (Summary Return): File monthly by the 20th of the following month. This is a summary return declaring your total outward supplies and input tax credit (ITC) claimed.
• GSTR-9 (Annual Return): File annually by December 31st of the following financial year. This is a consolidated summary of all your GST transactions for the entire year. Note that certain taxpayers with aggregate turnover below a specified threshold may be exempt from filing GSTR-9.
• GSTR-9C (Reconciliation Statement): File annually by December 31st of the following financial year, if applicable. This is a reconciliation statement between your audited financial statements and GSTR-9, certified by a Chartered Accountant or Cost Accountant.
• Late Filing Penalties: Failure to file GST returns on time attracts late fees under Section 47 of the CGST Act, 2017. The late fee is ₹200 per day (₹100 under CGST and ₹100 under SGST), subject to a maximum of ₹5,000. Interest at 18% per annum is also levied on the outstanding tax amount.

3. Input Tax Credit (ITC) Management:

• Eligibility: Ensure you meet all conditions for claiming ITC under Section 16 of the CGST Act, 2017, including possession of valid invoices, receipt of goods or services, payment to the supplier, and filing of returns.
• ITC Matching: Reconcile your ITC claims with GSTR-2B (auto-generated statement of ITC available) to identify discrepancies and take corrective action.
• Rule 36(4): Be mindful of Rule 36(4) of the CGST Rules, which restricts ITC claims to 100% of the eligible ITC reflected in GSTR-2B.
• Reversal of ITC: Reverse ITC if payment to the supplier is not made within 180 days from the date of invoice.

4. E-Invoicing:

• Applicability: If your aggregate turnover exceeds ₹5 crore in any preceding financial year from 2017-18 onwards, you are required to generate e-invoices.
• Process: Generate e-invoices on the Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).
• Compliance: Ensure all your invoices are compliant with the e-invoicing schema prescribed under GST rules. Refer to our guide on GST Compliance: MFD Invoice Deadline AY 2025-26 for more details.

5. E-Way Bill:

• Applicability: Generate an e-way bill for the movement of goods with a consignment value exceeding ₹50,000.
• Validity: Ensure the validity of the e-way bill covers the entire transit period.
• Compliance: Comply with all the provisions related to e-way bills under Rule 138 of the CGST Rules, 2017.

6. Reverse Charge Mechanism (RCM):

• Applicability: Pay GST under RCM on specified supplies, such as services received from unregistered persons or certain notified goods and services.
• Compliance: Ensure timely payment of GST under RCM and avail ITC, if eligible.

Income Tax Compliance

Income Tax compliance involves accurately calculating your income, claiming eligible deductions and exemptions, and filing your Income Tax Return (ITR) within the prescribed deadlines. Ignoring these can lead to penalties and scrutiny from the Income Tax Department. Consider Tax Preparation Outsourcing: Top 7 Benefits [2026] to streamline this.

1. Tax Audit:

• Applicability: If your turnover exceeds ₹10 crore (subject to certain conditions) or your professional receipts exceed ₹50 lakhs, you are required to get your books of accounts audited under Section 44AB of the Income Tax Act, 1961.
• Deadline: The deadline for filing the tax audit report is September 30th of the assessment year.

2. Advance Tax:

• Liability: If your estimated tax liability exceeds ₹10,000, you are required to pay advance tax in installments as per the prescribed schedule.
• Installment Dates: The due dates for advance tax installments are June 15th (15%), September 15th (45%), December 15th (75%), and March 15th (100%).
• Interest: Failure to pay advance tax or underpayment attracts interest under Sections 234B and 234C of the Income Tax Act, 1961.

3. Filing Income Tax Return (ITR):

• Deadline: The deadline for filing ITR is July 31st for individuals and non-audit cases and October 31st for audit cases.
• Forms: Choose the appropriate ITR form based on your income sources and residential status. Common forms include ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7.
• Verification: Verify your ITR using Aadhaar OTP, Electronic Verification Code (EVC), or by sending a signed physical copy to CPC, Bengaluru.
• Penalties: Late filing of ITR attracts penalties under Section 234F of the Income Tax Act, 1961. The penalty is ₹5,000 if filed after the due date but before December 31st, and ₹10,000 if filed after December 31st. However, if your total income does not exceed ₹5 lakhs, the penalty is limited to ₹1,000.

4. TDS Compliance:

• Deduction: Deduct Tax Deducted at Source (TDS) on specified payments as per the rates prescribed under the Income Tax Act, 1961.
• Deposit: Deposit TDS within the prescribed time limits. The due date for deposit is the 7th of the following month (except for March, where the due date is April 30th).
• Filing TDS Returns: File TDS returns (Form 24Q, 26Q, 27Q, 27EQ) quarterly within the prescribed deadlines.
• Issuing TDS Certificates: Issue TDS certificates (Form 16, 16A) to the deductees within the prescribed time limits.
• Penalties: Failure to deduct TDS, deposit TDS, file TDS returns, or issue TDS certificates attracts penalties under various sections of the Income Tax Act, 1961.

5. Tax Planning:

• Deductions: Plan your investments and expenses to maximize deductions under Sections 80C to 80U of the Income Tax Act, 1961.
• Exemptions: Claim eligible exemptions such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and other applicable exemptions.

MCA Compliance

Compliance with the Ministry of Corporate Affairs (MCA) is essential for companies and Limited Liability Partnerships (LLPs) registered in India. Timely filing of statutory returns and adherence to corporate governance norms are critical to avoid penalties and maintain good standing with the MCA. Post Incorporation Compliance Checklist (2026-27) is vital for new businesses.

1. Annual Filing:

• AOC-4 (Financial Statements): File AOC-4 within 30 days from the date of the Annual General Meeting (AGM).
• MGT-7 (Annual Return): File MGT-7 within 60 days from the date of the AGM.
• XBRL Filing: Certain companies are required to file their financial statements in XBRL format.
• Additional Fees: Late filing of AOC-4 and MGT-7 attracts additional fees as per Section 403 of the Companies Act, 2013. The additional fee increases with the delay in filing. Directors may face disqualification for non-compliance.

2. Event-Based Compliance:

• Changes in Directors: File Form DIR-12 for any changes in the board of directors (appointment, resignation, or removal).
• Changes in Registered Office: File Form INC-22 for any change in the registered office address.
• Allotment of Shares: File Form PAS-3 for allotment of shares.
• Charge Creation/Modification/Satisfaction: File Form CHG-1 for the creation, modification, or satisfaction of charges on the company's assets.

3. Conducting Board Meetings and General Meetings:

• Board Meetings: Hold at least four board meetings in a year, with a maximum gap of 120 days between two consecutive meetings.
• AGM: Hold the AGM within six months from the end of the financial year.
• Compliance: Comply with the provisions of the Companies Act, 2013 and Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) for conducting board meetings and general meetings.

4. Maintaining Statutory Registers:

• Registers: Maintain statutory registers such as the register of members, register of directors, register of charges, and register of contracts.
• Compliance: Ensure these registers are updated and maintained as per the requirements of the Companies Act, 2013.

5. LLP Compliance:

• Form 11 (Annual Return): File Form 11 within 60 days from the end of the financial year.
• Form 8 (Statement of Account & Solvency): File Form 8 within 30 days from six months from the end of the financial year.

blockquote "Many businesses struggle with MCA compliance due to a lack of awareness of the specific requirements and deadlines. It's crucial to maintain accurate records and proactively track upcoming filing deadlines to avoid penalties and maintain good standing with the MCA." - Seasoned Company Secretary

Labour Law Compliance

With the recent Labour Law Reforms: India Compliance AY 2025-26, you need to stay updated on the latest changes. Failing to comply with labour laws can result in significant penalties and legal repercussions. Ensure you're aware of the following:

1. EPF and ESI Compliance:

• Registration: Register your establishment with the Employees' Provident Fund Organisation (EPFO) and the Employees' State Insurance Corporation (ESIC) if you meet the eligibility criteria.
• Contribution: Deduct and deposit EPF and ESI contributions within the prescribed time limits.
• Filing Returns: File EPF and ESI returns within the prescribed deadlines.

2. Minimum Wages Act:

• Compliance: Pay wages to your employees not less than the minimum wages prescribed under the Minimum Wages Act, 1948.

3. Payment of Wages Act:

• Compliance: Ensure timely payment of wages to your employees as per the provisions of the Payment of Wages Act, 1936.

4. Gratuity Act:

• Compliance: Pay gratuity to eligible employees as per the provisions of the Payment of Gratuity Act, 1972.

5. Contract Labour Act:

• Registration: If you engage contract labour, ensure you comply with the provisions of the Contract Labour (Regulation and Abolition) Act, 1970.

Data Privacy Compliance

The Digital Personal Data Protection (DPDP) Act, 2023 introduces significant obligations for businesses handling personal data. Understanding and implementing these requirements is crucial to avoid hefty penalties. Read more about DPDP Act Compliance: AY 2025-26 Accountability.

1. Data Protection Officer (DPO): Appoint a DPO if you are classified as a Significant Data Fiduciary.

2. Consent Management: Obtain explicit consent from individuals before collecting and processing their personal data.

3. Data Security: Implement appropriate technical and organizational measures to protect personal data from unauthorized access, loss, or destruction.

4. Data Breach Notification: Notify the Data Protection Board of India (DPBI) and affected individuals in case of a data breach.

5. Compliance Framework: Develop and implement a comprehensive data privacy compliance framework to ensure adherence to the DPDP Act, 2023.

Comparison Table: Key Compliance Areas

Staying compliant requires a proactive approach. By understanding the specific requirements and deadlines for each area, you can minimize the risk of penalties and ensure your business operates smoothly and within the bounds of the law. Remember to consult with qualified professionals for specific advice tailored to your business needs. Consider adopting AI in Accounting: India Compliance Guide for 2026 to automate and streamline processes.

FAQs

What is the penalty for late filing of GSTR-3B?

The penalty for late filing of GSTR-3B is ₹50 per day (₹25 under CGST and ₹25 under SGST), subject to a maximum of ₹5,000. For nil returns, the late fee is ₹20 per day (₹10 under CGST and ₹10 under SGST), subject to a maximum of ₹500. You can also review the ICICI Bank GST Order: Impact & Compliance AY 26 for updates.

What is the penalty for late filing of Income Tax Return (ITR)?

The penalty for late filing of ITR under Section 234F of the Income Tax Act, 1961 is ₹5,000 if filed after the due date but before December 31st, and ₹10,000 if filed after December 31st. However, if your total income does not exceed ₹5 lakhs, the penalty is limited to ₹1,000.

What is the due date for filing AOC-4 and MGT-7?

The due date for filing AOC-4 is within 30 days from the date of the AGM, and the due date for filing MGT-7 is within 60 days from the date of the AGM. Filing on time is a crucial aspect of Banco Products Compliance: CS Resignation AY 26.

What is the threshold limit for GST registration?

The threshold limit for GST registration is ₹20 lakhs (₹10 lakhs for specified special category states) in a financial year. However, certain businesses are required to register for GST regardless of turnover.

What are the key changes introduced by the DPDP Act, 2023?

The DPDP Act, 2023 introduces several key changes, including the appointment of a Data Protection Officer (DPO), obtaining explicit consent for data processing, implementing data security measures, and notifying the Data Protection Board of India (DPBI) in case of a data breach.

What is e-invoicing and who is required to comply with it?

E-invoicing is the electronic authentication of invoices by the Invoice Registration Portal (IRP) of the GST Network. Businesses with an aggregate turnover exceeding ₹5 crore in any preceding financial year from 2017-18 onwards are required to comply with e-invoicing. You can also explore AI Accounting Skills: India AY 2025-26 Impact to see how this technology can help.

What are the consequences of non-compliance with labour laws?

Non-compliance with labour laws can result in significant penalties, legal repercussions, and damage to your company's reputation. It's essential to stay informed about the latest labour law reforms and ensure your business adheres to all applicable provisions.

By diligently following this compliance checklist, you can navigate the complexities of the Indian regulatory landscape and ensure your business remains compliant throughout AY 2025-26. Remember to seek professional advice when needed and stay updated on the latest regulatory changes.

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Disclaimer

This article is for educational purposes only and does not constitute professional legal, tax, or financial advice. Consult a qualified professional for specific advice.