Starting a business is an exciting venture, but it also comes with a set of statutory and regulatory obligations that must be fulfilled diligently. For startups in India, staying compliant not only helps avoid penalties but also builds credibility with stakeholders. As we enter the financial year 2025, this checklist provides an updated overview of the mandatory compliances that startups need to adhere to—from incorporation formalities to tax filings.
1. Company Law Compliances
After incorporating a startup under the Companies Act, 2013, a series of filings and registers are required to be maintained.
- Board Meetings and Registers: As per the Act, at least four Board meetings must be held annually (with not more than 120 days between two meetings), unless exempted for small companies or OPCs. Statutory registers such as Register of Members, Register of Directors and KMP, and Register of Loans and Investments must be properly maintained.
- ROC Filings: Annual filings with the Registrar of Companies (ROC) are crucial. These include:
- Form AOC-4: For filing financial statements within 30 days of the AGM.
- Form MGT-7: For filing the annual return within 60 days of the AGM.
- Form DIR-3 KYC: For directors to update their KYC annually.
- Form MSME-1 (if applicable): Half-yearly reporting of outstanding dues to MSMEs.
Startups registered under the DPIIT Startup India Scheme may also need to update their status and compliance record on the Startup India portal.
2. Income Tax Compliances
Startups must ensure timely compliance with income tax regulations to avoid interest and penalties.
- PAN and TAN: Obtain and quote Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) wherever required.
- Advance Tax: Estimate tax liability and pay advance tax if applicable. While eligible startups under Section 80-IAC enjoy tax exemptions, other startups must budget for regular tax outgo.
- TDS Deduction and Filings: Deduct tax at source for payments such as salaries, rent, contract payments, etc., and deposit the same within the due dates. Quarterly TDS returns (Form 24Q/26Q) must be filed on time.
- Form ITR Filing: File Income Tax Return (ITR-6 for companies, ITR-4 or ITR-5 for LLPs/partnerships, as applicable) by the due date. Startups claiming deductions under Section 80-IAC must ensure proper documentation and eligibility.
3. Goods and Services Tax (GST) Compliances
If the startup is registered under GST, monthly or quarterly filings are essential.
- GSTR-1 and GSTR-3B: File outward supply details and summary returns respectively.
- Annual Return (GSTR-9) and Reconciliation Statement (GSTR-9C): Mandatory for registered entities meeting turnover thresholds.
- E-Invoicing: Required for entities exceeding prescribed turnover limits. Startups should check applicability annually.
4. Labour Law and Other Compliances
Depending on employee strength and nature of business, various labour laws may apply, such as:
- Provident Fund (PF) and Employees’ State Insurance (ESI) registrations and filings.
- Professional Tax (PT) registration in applicable states.
- Shops and Establishment registration and periodic renewals.
Maintaining salary registers, issuing payslips, and timely remittances of statutory dues are essential for labour law compliance.
5. RBI and FEMA Compliances (for Startups with Foreign Investment)
Startups that have received foreign investment must comply with FEMA regulations including:
- FC-GPR filing within 30 days of share allotment.
- Annual Return on Foreign Liabilities and Assets (FLA Return).
- ODI/FDI reporting, where applicable, using RBI’s FIRMS portal.
Timely and accurate disclosures are essential to avoid penalties or scrutiny.
6. DPIIT and Tax Holiday Compliance
Eligible startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) may apply for a tax holiday under Section 80-IAC. To avail of this benefit:
- File Form 1 with the DPIIT online.
- Ensure that the startup meets criteria relating to turnover, innovation, and incorporation timeline.
- Once approved, claim deduction in ITR for any three consecutive years out of the first ten years.
7. Other Annual Obligations
- Audit under Companies Act or Income Tax Act: Startups must determine whether audit is applicable based on turnover, nature of business, and other thresholds.
- Maintenance of Books: As per Section 128 of the Companies Act and Income Tax provisions, books of accounts must be maintained for at least eight years.
- Data Privacy and IT Compliance: With evolving regulatory landscape, startups handling user data should follow data protection practices and IT security norms.
Final Thoughts
For startups aiming to scale sustainably, regulatory compliance is not a burden but a backbone. Non-compliance can invite penalties and impact investor trust. It’s advisable to consult with a Chartered Accountant or Company Secretary to regularly review compliance status and automate processes where possible. With digital tools and government portals simplifying submissions, startups can now stay compliant with greater ease in FY 2025 and beyond.
