Direct & Corporate Tax Advisory

Filing a tax return reports what already happened in the financial year. Corporate tax advisory works on the decisions made before and during the year that determine what the return will ultimately show — which tax regime to elect, how to structure a transaction, how to price a related-party transaction, when to pay advance tax instalments, and how to structure director remuneration and dividends. It is a proactive, ongoing engagement rather than a once-a-year filing exercise.

The Income Tax Act, 2025 has received presidential assent and will take effect from 1 April 2026 (Assessment Year 2026-27). Until then, the Income-tax Act, 1961 continues to govern — including for the current and immediately preceding financial years' filings, assessments, and advisory work. The new Act substantially reorganises and renumbers provisions while carrying forward most of the underlying tax policy, so section references you see in current advisory material (44AB, 115BAA, 194C, 194J, and so on) remain valid until the transition date.

Section 115BAA offers domestic companies a concessional tax rate of 22% (effective approximately 25.17% including surcharge and cess), in exchange for giving up specified deductions and incentives — including additional depreciation and certain investment-linked deductions — and exemption from Minimum Alternate Tax (MAT). The decision is largely irreversible once exercised for a year. Whether it makes sense depends on how much value your company currently derives from the deductions and incentives you would be forfeiting, and your multi-year profitability outlook.

No — not for shares issued now. Section 56(2)(viib), the provision informally known as 'angel tax', which taxed share premium in excess of fair market value as income when shares were issued to resident investors, was abolished with effect from 1 April 2025 (Assessment Year 2025-26 onwards) by the Finance (No. 2) Act, 2024. It no longer applies to fresh share issuances, whether the investor is resident or non-resident. Older assessments relating to share issuances before that date can still be subject to the provision if under dispute.

Transfer pricing rules (Sections 92 to 92F of the Income-tax Act) require that transactions between related parties — including group companies, and cross-border related entities — be priced at 'arm's length', as if the parties were unrelated. This applies to intercompany loans, management fee arrangements, royalty payments, cost allocations, and goods/services transactions between related entities. Once specified thresholds are crossed, the company must obtain an accountant's report (Form 3CEB) and maintain contemporaneous documentation justifying the pricing.

The Transfer Pricing Officer can make a transfer pricing adjustment — increasing the taxable income of the Indian entity to reflect an arm's-length price. This can trigger a secondary adjustment requiring the excess amount to be treated as a deemed loan and repatriated (with notional interest) if not brought into India within the prescribed period. Penalties can apply for under-reporting or misreporting of income arising from the adjustment, and interest accrues on the additional tax demanded.

Companies must pay advance tax in four instalments during the financial year — by 15 June (15%), 15 September (45% cumulative), 15 December (75% cumulative), and 15 March (100% cumulative) of the estimated tax liability for the year. Shortfall in the overall advance tax paid attracts interest under Section 234B at 1% per month from April of the assessment year until payment. Shortfall in any individual instalment attracts interest under Section 234C, also at 1% per month, computed on the shortfall for that instalment.

Minimum Alternate Tax (MAT), under Section 115JB, requires companies to pay tax on a minimum percentage of their book profit (broadly 15%, plus surcharge and cess) where the tax computed under normal provisions is lower — ensuring profitable companies with large deduction claims still pay some tax. MAT does not apply to companies that have opted for the concessional regime under Section 115BAA or 115BAB. It remains relevant for companies on the standard tax regime that continue to claim deductions and incentives.

Budget 2025 revised several TDS thresholds to reduce compliance burden on smaller payments, effective from 1 April 2025. The threshold for TDS on rent under Section 194-I and on fees for professional or technical services under Section 194J was raised to ₹50,000 in aggregate for the financial year (from the earlier, lower thresholds). Payments below the revised threshold in the relevant financial year are not subject to TDS deduction under these sections; payments at or above the threshold require TDS to be deducted at the applicable rate.

Section 40(a)(ia) disallows 30% of an expense (such as rent, professional fees, contractor payments, or commission) as a deduction for the payer if TDS was required to be deducted but was not deducted, or was deducted but not deposited with the government within the prescribed time. This is a direct hit to the company's taxable income — the expense itself may be entirely legitimate and business-related, but the TDS lapse converts 30% of it into non-deductible expenditure, increasing taxable profit and tax payable.

Director remuneration is a deductible expense for the company (reducing corporate tax) and is taxed in the director's hands as salary income at their applicable slab rate. Dividends are not deductible to the company (paid out of after-tax profit) and are taxed in the shareholder's hands at their applicable slab rate, with no separate dividend distribution tax since FY 2020-21. The optimal mix depends on the company's tax regime, the director's other income and slab, TDS and withholding mechanics, and cash-flow considerations such as PF/ESI obligations that attach to salary but not dividends.

Section 94B limits the tax deductibility of interest paid by an Indian company (or permanent establishment of a foreign company) to an associated enterprise, where such interest expense exceeds ₹1 crore and represents more than 30% of the company's EBITDA. Interest in excess of this limit is disallowed in the year it is incurred, though it can be carried forward for a limited number of subsequent years and set off against permitted interest deduction limits in those years. This is India's implementation of thin-capitalisation / base erosion rules.

A merger structured and approved under Sections 230–232 of the Companies Act 2013, and meeting the specific conditions in Section 2(1B) of the Income-tax Act, qualifies as a tax-neutral 'amalgamation' — meaning the transfer of assets to the resulting company and the issue of shares to shareholders of the merging company do not themselves trigger capital gains tax, and carried-forward losses of the amalgamating company may be permitted to carry forward in the resulting company subject to specified conditions (particularly stringent for certain categories such as manufacturing companies under Section 72A). Structuring the merger to meet these conditions requires careful drafting of the scheme.

A slump sale is the transfer of an entire business undertaking (or a defined part of it) as a going concern, for a lump-sum consideration, without assigning individual values to specific assets and liabilities. Under Section 50B, capital gains on a slump sale are computed as the difference between the sale consideration and the 'net worth' of the undertaking (broadly, book value of assets less liabilities), taxed as long-term or short-term capital gains depending on how long the undertaking has been held. An itemised asset sale, by contrast, computes gains separately for each asset class, which can produce a very different — sometimes higher — tax outcome depending on the assets involved.

Form 3CEB is an accountant's report certifying the international transactions and specified domestic transactions a company has entered into with related/associated parties, and confirming the arm's-length nature of the pricing applied. It must be filed by companies whose related-party transactions cross the prescribed thresholds — for international transactions, essentially any material related-party cross-border transaction; for specified domestic transactions, above the threshold set out in Section 92BA. It is filed alongside the return, generally by 31 October, and requires a chartered accountant's certification distinct from the statutory or tax audit.

The local file is entity-specific documentation justifying the pricing of a particular company's related-party transactions — this is the core documentation most Indian companies with related-party transactions need to maintain. The master file (required where consolidated group revenue and the value of international transactions cross prescribed thresholds under Section 92D) provides a group-wide overview of the multinational's business, its transfer pricing policies, and its global allocation of income and economic activity. The Country-by-Country Report (CbCR), required only for very large multinational groups above a much higher consolidated revenue threshold, reports revenue, profit, tax paid, and headcount by tax jurisdiction.

PNPC operates from Chennai, Bangalore, and Hyderabad in India and from Dubai in the UAE. For groups with an Indian company and a UAE entity — whether an Indian company with a UAE subsidiary, or a UAE group setting up an Indian operating or holding company — we coordinate the India-side corporate tax planning (transfer pricing, withholding tax on cross-border payments, DTAA application) with the UAE-side corporate tax and VAT position under one engagement, rather than handing off between disconnected advisors in each jurisdiction.

A Tax Residency Certificate is a document issued by the tax authority of a foreign jurisdiction certifying that a person or entity is a tax resident of that jurisdiction for a given period. Under Section 90(4)/90A(4) of the Income-tax Act, a non-resident payee must furnish a TRC (along with Form 10F and other prescribed particulars) to claim the benefit of a lower withholding tax rate under a Double Taxation Avoidance Agreement, rather than the higher rate that would otherwise apply under the Income-tax Act.

Yes — PNPC offers dedicated TDS compliance and Form 15CA/15CB service lines that integrate with the corporate tax advisory retainer. Many clients combine all three, since the underlying data (payment ledgers, cross-border remittance details, related-party transaction records) overlaps substantially. Clients who only need one of these can also engage them as standalone services.

Most clients engage PNPC on an ongoing retainer basis — a fixed periodic fee covering scheduled reviews (regime election, quarterly advance tax planning, annual pre-year-end review) plus availability for transaction-specific advisory as it arises (a fundraise, a restructuring, a new related-party arrangement). Some clients engage us project-by-project for a specific transaction instead. The right model depends on how frequently your company's tax position changes and how much ongoing complexity (related-party transactions, cross-border flows, multiple entities) is involved.

A scrutiny or reassessment notice requires a documented, technically sound response defending the position originally taken — supported by the underlying rationale, contemporaneous documentation (such as transfer pricing benchmarking or a merger scheme's tax analysis), and relevant case law. Responses assembled after the notice arrives, without contemporaneous documentation from when the position was originally taken, are significantly weaker than responses built on documentation prepared at the time.

Section 79 restricts the carry-forward and set-off of losses for closely-held companies (companies in which the public are not substantially interested) where there is a change in shareholding beyond prescribed limits, subject to specific exceptions (such as changes arising from certain amalgamations, demergers, or transfers between group companies meeting prescribed conditions). A restructuring, fundraise, or share transfer that changes the shareholding pattern without checking this provision can inadvertently forfeit valuable carried-forward losses.

Corporate tax advisory as PNPC scopes it focuses on direct/income tax — corporate tax rate elections, transfer pricing, TDS, capital gains, and transaction structuring. GST advisory (rate classification, input tax credit optimisation, GST implications of a restructuring) is a related but distinct service line, since GST operates under the CGST Act 2017 with its own rate structure — rationalised in September 2025 into a simplified slab structure — and procedural framework. For transactions with both direct tax and GST implications (such as a slump sale or an asset transfer), PNPC coordinates both advisory streams together.

For any material tax position — a regime election, a related-party pricing decision, a restructuring's tax-neutrality claim, a large deduction claimed — retain the underlying business rationale memo, board approvals, valuation or benchmarking reports relied upon, correspondence with advisors at the time, and the specific provisions and any professional opinion relied upon. Indian tax law generally allows reassessment for several years after the relevant assessment year (the exact period depends on the nature and quantum of the alleged escapement of income), so documentation retention needs to extend well beyond the filing year itself.

It applies to any company making structural or transactional tax decisions — regime election, related-party transactions, financing structure, or a planned transaction — regardless of size. A smaller private company making its first regime election, taking its first related-party loan from a group entity, or planning its first fundraise faces exactly the same structuring decisions as a larger company, just at a smaller scale. The value of getting these decisions right the first time is proportionally just as significant for a smaller company's cash flow and tax burden.

Tax evasion is illegal — concealing income, falsifying documents, or deliberately misreporting facts to reduce tax liability. Tax avoidance, in the pejorative sense often used by tax authorities, refers to artificial or contrived arrangements structured mainly or solely to obtain a tax benefit without genuine commercial substance — India's General Anti-Avoidance Rule (GAAR) under Chapter X-A targets such 'impermissible avoidance arrangements'. Legitimate tax planning uses the choices and reliefs Parliament has deliberately built into the law — regime elections, tax-neutral restructuring provisions, DTAA benefits, timing of expenditure — applied to arrangements that have genuine commercial substance.

At minimum, annually — as part of a pre-year-end review, since profitability, deduction utilisation, and business plans change year to year. More frequent review is warranted whenever a material event occurs: a significant new investment or capital expenditure, a fundraise, a new related-party arrangement, a change in group structure, or a legislative change (such as the transition to the Income Tax Act 2025) that could affect the numbers underlying an earlier decision.

Gains from the sale of shares held as a capital asset by a company are taxed as capital gains — long-term or short-term depending on the holding period (generally over 24 months for unlisted shares to qualify as long-term, though listed equity shares have their own shorter threshold and STT-linked rate structure). The applicable rate and indexation benefit depend on the classification and the specific type of security. This is distinct from gains on the sale of shares held as stock-in-trade (taxed as business income) — the classification itself is a fact-specific determination based on the company's intent and pattern of dealing.

Yes. PNPC represents clients in assessment proceedings, responds to scrutiny notices, and prepares submissions and appeals before the appellate authorities, working from the advisory positions and documentation built up through the engagement. Where litigation reaches the Tribunal or higher courts, we coordinate with tax counsel while continuing to manage the underlying technical and documentary preparation.

A company planning an IPO faces additional tax considerations — SEBI disclosure requirements around tax contingencies and litigation, the tax treatment of any pre-IPO restructuring (such as converting preference shares or consolidating group entities), and heightened scrutiny of historical tax positions during due diligence. A privately held company without near-term listing plans has more flexibility in timing certain elections and less immediate pressure to resolve every open tax position, though the underlying discipline of accurate reporting applies equally.

Corporate tax advisory and the statutory or tax audit are related but distinct functions, and independence requirements under the Companies Act 2013 and ICAI's Code of Ethics restrict a firm from simultaneously providing certain services to the same client where independence could be compromised — particularly for listed and larger companies. For many private companies, PNPC can provide both tax advisory and tax audit services, but we assess independence requirements on a case-by-case basis and will recommend a separate auditor where the rules or good governance practice require it.

The initial diagnostic review maps your current tax regime election, deduction and incentive utilisation, group structure, all related-party transactions, carried-forward losses and MAT credit position, and outstanding TDS or compliance gaps — essentially a full picture of where tax risk and opportunity currently sit. From this, we build specific, prioritised recommendations rather than a generic checklist, and agree the ongoing advisory scope with you based on what the diagnostic actually surfaces.

Fees are agreed in writing before the engagement begins and depend on the complexity of your structure — number of related entities, volume and nature of related-party transactions, and whether the engagement is retainer-based or project-specific for a single transaction. We are not the lowest-cost option in the market; the value is in the specificity of the modelling and the ongoing availability through the year, not a generic annual filing fee.

An internal accounts team is well placed to handle routine bookkeeping and return preparation, but corporate tax planning decisions — regime elections, transfer pricing exposure, transaction structuring, GAAR-sensitive arrangements — carry professional judgment, technical depth, and independence considerations that benefit from a practising CA firm's ongoing exposure across many similar situations. PNPC has advised businesses across India and the UAE since 1986, and brings pattern recognition from a breadth of client situations that an internal team focused on one company cannot replicate.