How to reduce your company's tax liability legally

Tax planning for an established Indian company is not about tricks — it's about using the provisions in the Income Tax Act that already exist for businesses like yours. Most SMEs overpay tax because they don't plan ahead and don't use available deductions systematically.

Key deductions most SMEs underutilise: Section 37(1) allows deduction of all business expenses that are wholly and exclusively for the business — make sure every legitimate business expense is documented and claimed. Section 35 covers R&D expenditure with weighted deduction. Section 80JJAA gives a 30% additional deduction on new employee salaries for 3 years. Section 32 (accelerated depreciation) can significantly reduce taxable income if you're investing in assets.

Timing matters. If you're expecting a large income in a year, consider deferring non-critical expenses to that year. If you're expecting a loss year, plan asset purchases accordingly.

For founders personally: structure your compensation carefully. Salary, perquisites, and dividends are taxed differently. A tax-efficient founder compensation structure can save lakhs per year.

GST reconciliation: many companies pay excess GST because their ITC reconciliation isn't clean. Ensure your GSTR-2B is matched monthly and all eligible input tax credit is claimed.

Work with a CA who does proactive tax planning — not just compliance. Most SME CAs are reactive (they file, they don't plan). If your CA has never had a tax planning conversation with you, find one who will.

TBC's finance advisory team works with founders on integrated tax planning — corporate tax, GST, and founder-level structuring. If you haven't had a tax planning review this year, book one with us.