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The CFO’s Essential Role in Managing GST, TDS, and Income Tax

Tax Compliance: Understanding the essential roles of compliance in business with a digital interface showcasing law, transparency, regulations, and audit
Uttarayan
September 5, 2025
7:04 am

The Importance of Timely Tax Compliance

For growing businesses, especially startups and SMEs, Tax Compliance with GST, TDS, and Income Tax laws is not just a legal requirement it’s a foundation for financial stability. Neglecting compliance can lead to:

  • Failed due diligence during audits or investor scrutiny

  • Frequent and costly government notices or penalties

  • Disrupted operations and loss of credibility with stakeholders

A CFO serves as the anchor of financial integrity. Ensuring timely filing of GST returns, accurate TDS deductions and returns, and correct Income Tax submissions safeguards both your reputation and your balance sheet.

The CFO’s Compliance Checklist

1. GST Compliance

Goods and Services Tax (GST) requires businesses to comply with multiple obligations such as:

  • Periodic filings: Monthly/quarterly returns like GSTR-1, GSTR-3B, and annual returns

  • E-invoicing: Mandatory for businesses with turnover above ₹5 crore

  • Reconciliation of input tax credits (ITC): To prevent mismatches and notices

Non-compliance can result in hefty penalties, blocked ITC, or interest charges that strain cash flows. For example, if a business fails to reconcile ITC correctly, it may lose legitimate credits and face inflated tax liabilities.

2. TDS Compliance

Tax Deducted at Source (TDS) is another key area of statutory responsibility:

  • Deduction on salaries, professional fees, rent, or contractor payments

  • Timely deposit with the government

  • Quarterly returns using the correct forms (24Q for salaries, 26Q for others)

Failure here can cause expense disallowance (increasing taxable income) and attract penalties. Imagine paying your contractors but forgetting to deposit TDS the cost of non-compliance quickly adds up.

3. Income Tax Compliance

Annual Income Tax filings are essential for every business. In addition, startups recognized under DPIIT can claim tax incentives such as 100% profit exemption under Section 80-IAC. But missing filing deadlines or errors in reporting can disqualify them from these benefits. Timely filing is not only about avoiding penalties but also about maximizing legitimate tax savings.

Why a CFO Should Own Compliance

A full time CFO or even a Shared/Virtual CFO adds significant value in this area. Their role goes beyond just ticking boxes:

  • Strategic oversight – Monitoring compliance calendars and ensuring no deadlines are missed.

  • Proactive planning – Forecasting tax obligations and aligning resources for timely payments.

  • Audit preparedness – Keeping documentation organized to ensure smooth audits and investor due diligence.

Modern CFOs also integrate automation and digital tools such as GST reconciliation software or TDS compliance platforms to reduce human error, save time, and enhance reporting accuracy.

Turning Compliance Into a Strength

Too often, compliance is seen as a burden. In reality, when managed properly, it becomes a competitive advantage. A CFO who ensures strong Tax Compliance contributes to:

  • Investor confidence: Well maintained records and timely filings assure investors of governance strength.

  • Operational continuity: Avoiding notices and penalties prevents unnecessary disruptions.

  • Financial governance: Accurate tax reporting reinforces trust with banks, regulators, and stakeholders.

  • Growth readiness: A compliant business is better positioned for expansion, funding, or even IPOs.

For instance, when a startup seeks venture funding, investors typically conduct thorough due diligence. Any lapses in GST, TDS, or Income Tax filings can derail the investment process. On the other hand, a company with robust compliance practices demonstrates maturity and financial discipline, strengthening its case.

Why Tax Compliance Matters for Every Business

Regulatory compliance isn’t red tape it’s a cornerstone of financial stability and credibility. Mishandling GST, TDS, or Income Tax obligations creates cascading risks: failed audits, financial penalties, and reputational damage.

That’s why a CFO’s role must include making sure compliance obligations are not only met but strategically managed. Whether through in-house leadership or a Virtual CFO, businesses that prioritize compliance protect themselves from risk while unlocking long-term opportunities.

In today’s fast changing regulatory environment, timely tax compliance is not optional it’s a strategic necessity.

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How To Claim Full Interest Benefit On House Property

interest on Home loan
Sachin Gupta
September 25, 2024
11:03 am

Here is a comparison of Section 24 and Section 48 of the Income Tax Act:

1. Section 24 – Deductions from Income from House Property

  • Applicability: This section applies to individuals earning income from house property.
  • Purpose: It allows certain deductions while computing the taxable income under the head “Income from House Property.”
  • Key Deductions:
    • Standard Deduction: 30% of the Net Annual Value of the property (after deducting municipal taxes) is allowed as a deduction for repair and maintenance costs.
    • Interest on Home Loan: Deduction is allowed for interest paid on loans taken for the purchase, construction, or repair of house property. The maximum deduction for a self-occupied property is ₹2 lakh per annum.

2. Section 48 – Mode of Computation of Capital Gains

  • Applicability: This section applies to individuals who have earned capital gains from the sale of a capital asset.
  • Purpose: It specifies how capital gains are calculated by adjusting the cost of acquisition, cost of improvement, and expenses incurred during the transfer of the asset.
  • Key Provisions:
    • Cost of Acquisition and Improvement: Capital gains are computed by deducting the cost of acquisition, the cost of improvements, and any expenses related to the transfer from the full value of the consideration.

Indexed Cost: For long-term capital assets, the cost of acquisition and improvement is indexed to adjust for inflation, which lowers the taxable gain.

Key Differences:

Aspect

Section 24 (Income from House Property)

Section 48 (Capital Gains)

Head of Income

Income from House Property

Capital Gains

Purpose

Provides deductions from income earned through house property

Specifies the method for calculating taxable capital gains

Type of Deductions

Standard deduction and interest on home loans

Adjustments to the cost of acquisition, improvement, and transfer expenses

Indexed Adjustments

Not applicable

Applicable for long-term capital gains through indexation

Applicable to

Property owners earning rental income or owning self-occupied property

Sellers of capital assets (property, stocks, etc.)

In summary, Section 24 deals with deductions available to individuals earning income from house property, whereas Section 48 focuses on how to calculate capital gains for those selling capital assets.

Additional content of Section 48 and why it is important.

While Section 48 of the Income Tax Act does not explicitly allow for the inclusion of interest paid on loans as part of the “cost of acquisition” or “cost of improvement” when computing capital gains, some judicial rulings have given differing interpretations. In specific circumstances, some taxpayers have successfully claimed the interest paid on a loan as part of the cost of acquisition under Section 48 if it was not claimed under other sections like Section 24.

Alternative Views on Interest as Cost of Acquisition under Section 48:

  1. Judicial Precedents:
    • There have been instances where courts and tribunals have allowed the interest on a loan taken for acquiring an asset to be considered as part of the cost of acquisition for the purpose of calculating capital gains, provided that the interest was not already claimed as a deduction under Section 24 (for income from house property).
    • Case Law Example: In cases like Amitabh Bachchan v. DCIT (2006), it was held that interest paid on loans used for the acquisition of a capital asset, and which was not claimed as a deduction under any other provisions (like Section 24), could be considered as part of the cost of acquisition for the purpose of capital gains.
  2. Interest as a Capital Expenditure:
    • Some judicial interpretations suggest that the interest paid on a loan could be seen as a capital expenditure, especially when the loan was directly used to finance the acquisition of the asset. This would allow the interest paid over the period of ownership (until the asset was sold) to be included in the cost of acquisition, thus reducing the capital gains.
    • This approach is often based on the view that the loan’s interest was a necessary cost for acquiring and holding the asset, similar to other expenses related to the acquisition or improvement of the asset.
  3. Interest after Acquisition:
    • The courts have generally not allowed interest paid after the acquisition of the asset to be included as part of the cost of acquisition under Section 48. This is because such interest is considered a recurring financial cost, not directly related to the acquisition or improvement of the capital asset.
    • However, interest accrued during the construction or pre-acquisition period is sometimes argued to be a legitimate addition to the cost of acquisition.
  4. Not Claimed Under Other Sections:

A critical condition in these interpretations is that the interest must not have been claimed as a deduction under any other provisions of the Income Tax Act, such as Section 24 (for house property income) or Section 36(1)(iii) (for business income). If the interest is claimed elsewhere, it cannot be added to the cost of acquisition under Section 48 to avoid a double deduction.

Key Considerations for Including Interest as Part of Cost of Acquisition:

  • The interest on a loan must directly relate to the acquisition of the capital asset.
  • It must not have been claimed as a deduction under any other section, such as Section 24.
  • The courts and tribunals have varied views, and interpretations might differ based on specific circumstances, making it essential to review judicial precedents and tax laws applicable in the specific case.

The capital nature of the expenditure must be established to justify the inclusion of the interest as part of the cost of acquisition.

Summary:

While Section 48 does not explicitly mention interest on loans, there are cases where courts have allowed it to be treated as part of the cost of acquisition for capital gains, if the interest is not claimed under other provisions like Section 24. This view has been upheld in some judicial decisions, especially for interest accrued before the acquisition or during the construction phase of a property. However, it is essential to understand that this is not the default approach and may require specific factual support and legal backing based on case law.

Fore more info follow CFOAngle.com

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Shaping Success: The Influence of My Life Mentors

mentors
Uttarayan
March 9, 2024
9:28 am

We all have mentors who keep teaching us the good, bad, and ugly during our lifetime. We don’t have to find mentors on Google; it is there around us; we have to identify and give them importance for what they are. In this article, I will share how some of my mentors impacted my life from time to time.

My first mentor was “The Parents.”

Each kid is different, and so am I. I have always been independent, flamboyant, aggressive, confident, lively, and naughty. My parents have never tried controlling this habit by saying don’t do this, and essentially, they left me alone. A good part of that was to date, I make my own decisions and never regret what I do, and the bad part is that I don’t like critics.

I got failed in 9th Standard.

My second mentor came when I failed the ninth class. I had a recent shift of school and was a backbencher, did all wrong things, including smoking, chewing tobacco, and whatnot; bad habits lead to failure and then school change. So, my next mentor was my decision to not sit in the last row and always be in the front.

My father, my mentor again

We are a middle-class family and cannot afford such failure. You have to succeed, or else I can open a tea shop, and you have to earn a livelihood with that. A good life, money, wife, and other reputation would be based on what you earn. Some of these golden words have never left me to date.

My mentor laid my foundation in Accounting.

My failure made me think and decide that if I didn’t get all this, life would be difficult, so I started focusing on my studies, leading to my joining my first education mentor. He laid my accounting foundation by teaching the golden principles without looking back. Secured marits in two board exams after that.

Life became my mentor due to the past.

Had fights with the class teacher and principal for not sitting at the back and choosing to sit on the ground. Stand firm in learning and slowly develop principles to continue for the rest of my life so I do not get let down again.

Friends, my teenage mentors

I believed that a friend in need is a friend indeed, and I always felt like there would be someone in life who would ring the bell, and I would be friends with him always. I got one in 10th, and he is still a lifelong friend. We have been together for 36 years now. He has always taught me to keep smiling and laughing even when you have the worst situation, and time will overcome everything.

At the start of my entrepreneurship journey, talking to him daily will energise me to do something new. I have seen him selling medicine and bedsheets, doing small projects, brokering insurance, and becoming one of the most significant mutual fund advisors.

Life has been a rollercoaster for him, but his laugh has increased then coming down. We learn from these mentors.

The idea of starting this series is to consolidate some life lessons to help us improve and see life’s positive side.

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Your strengths and how to leverage in business

Business
Uttarayan
8:38 am

I remember the famous epic Ramayan, where Lord Ram, Hanuman, and the Vanar Sena searched for Maa Sita. Eventually, they reached the South Eastern coast and found Jamwant. He informed them that Ravan had taken Maa Sita to Lanka. While attempting to reach there, Jamwant helped Hanuman rediscover his powers and taught him how to fly and find Maa Sita in Lanka. The rest, as they say, is history.

So why reference this epic? Our strengths resemble Hanuman’s powers- we often only use some of them, so we must develop them to their full potential. However, most of us have managed to navigate complex situations throughout our professional lives, even if we didn’t realise it then.

Utilizing your present experience: In my previous job, I managed a multi-country project that helped me develop skills to work with global clients such as LEGO. This experience gave me the confidence to manage international clients, and I have a few of them today.

Network is Networth: Networking is crucial to business success. Keep your contacts informed without expecting immediate returns. It’s a slow process, but building a solid network pays off in the long run. Two of my largest customers came through my past network after 2 years of consulting. Remember, “network is net worth”.

Leveraging CXO Capabilities: When working at a high level in a large organisation, you gain insight into the business needs. This knowledge can be applied to consulting or product-based businesses.

Confidence, integrity, and trust: A traditional consultant takes longer to establish trust with clients, but our extensive corporate experience is ingrained into our culture.

New Technology Exposure: The latest software and processes are readily available during our corporate life, which allows us to offer our clients immediate business solutions. Therefore, take advantage of this as you enter the market.

Managing Large Volumes: The USP of managing large transaction volumes in India and globally can be effectively utilised to generate business and deliver in consulting.

Working under pressure: Meeting deadlines and working under pressure is essential for job success and can be leveraged for quick business success. Customers appreciate committed individuals.

Commitment vs Delivery: As we learn in our job, it’s better to commit if you can deliver. It instantly builds credibility with the customer.

Discover and leverage your internal strengths to build a solid business patiently.

Visit: CFOAngle.com

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