Tax Risk Assessment & Health Check

It is an independent, comprehensive review of your tax position — income tax, TDS/TCS, and GST — conducted proactively, not in response to a notice or a specific transaction. The output is a structured list of findings: what's exposed, how likely it is to become a real problem, roughly how much it could cost if it does, and what to do about it. Think of it as a diagnostic check-up for your tax function, done on your schedule rather than the department's.

A Section 44AB tax audit (now renumbered under the Income Tax Act 2025 for future years) is a mandatory, narrowly defined audit for one financial year, applicable once turnover or gross receipts cross prescribed thresholds, resulting in a signed Form 3CD filed with the department. A health check is voluntary, spans multiple years, covers a broader set of tax heads including TDS and GST, and produces an internal risk register — not a document filed with any authority.

Tax due diligence is scoped tightly around a specific transaction — an acquisition, investment round, merger, or restructuring — and is usually commissioned by the buyer, investor, or lender on the other side of that transaction. A health check is broader, not transaction-specific, and is typically commissioned by the entity or individual itself, proactively, independent of any deal in progress.

No. In fact, a health check is most valuable precisely when there is no active notice or crisis — because that is when remediation options (revised returns, updated returns, documentation fixes) are still fully available. Once a scrutiny notice or reassessment has already been issued, the engagement shifts to representation and defence rather than proactive remediation.

This is scoped at the outset, but a common starting point is the years still within the department's reassessment window — ordinarily 3 years from the end of the relevant assessment year, extending up to 10 years where escaped income represented as an asset is ₹50 lakh or more. For TDS and GST, we typically review the years for which records are readily available and the statute of limitations for corrective filings has not yet closed.

No. A health check is an internal diagnostic exercise — its findings are not automatically reported to any authority. What we do is walk you through the finding, the realistic range of exposure, and the available remedies, including the option to proactively address it through a revised or updated return, a rectification application, or improved documentation going forward. The decision on how to act is yours, made with full information rather than in the dark.

It depends on timing. A revised return under Section 139(5) can be filed up to 3 months before the end of the relevant assessment year (or before assessment is completed, whichever is earlier) — a relatively short window from the original filing. An updated return under Section 139(8A) extends the window further — up to 48 months from the end of the relevant assessment year, subject to additional tax payable under Section 140B and certain exclusions (for example, it generally cannot be used to reduce a previously reported tax liability or claim a fresh refund). Once both windows have closed, the only route to correct a position is typically through the department's own assessment or reassessment process, or a rectification application under Section 154 for apparent errors.

It can, and for most businesses we recommend it does — TDS and GST exposures often correlate (for example, a vendor payment classification error can affect both TDS deduction and GST input tax credit eligibility). The exact scope — income-tax-only, income-tax plus TDS, or a full review including GST — is agreed at the scoping stage based on your priorities and budget.

We reconcile your internal TDS deduction registers against TRACES-generated Form 26AS/AIS and default reports, payment category by payment category — rent, professional fees, contractor payments, interest, salary. This surfaces short-deduction, non-deduction, and short-payment patterns that often don't appear on anyone's radar until a formal TDS default notice arrives, by which point interest has been accruing under Sections 201(1A) and possibly disallowance exposure under Section 40(a)(ia) has built up.

Following Budget 2025 changes effective 1 April 2025, TDS thresholds for several common payment categories were revised upward, including the annual threshold for TDS on rent under Section 194-I and on professional/technical fees under Section 194J, both raised to ₹50,000 per year (from the earlier lower thresholds). A health check verifies which threshold version applied for each year under review, since thresholds for earlier years must be assessed against the rules in force at that time, not the current ones.

For share issuances made on or after 1 April 2025, no — Section 56(2)(viib), the provision informally known as angel tax, was abolished by the Finance (No. 2) Act, 2024 with effect from Assessment Year 2025-26, for both resident and non-resident investors. For share issuances made before that date, however, the provision may still be relevant to older, open assessment years, and a health check reviewing those years will assess whether the historical valuation and consideration received can withstand scrutiny under the rule as it stood at the time.

Yes — reviewing whether the concessional regime under Section 115BAA (or 115BA for certain manufacturing companies) remains the optimal election, given current profitability, available deductions, MAT credit position, and incentive eligibility, is a standard part of a company-level health check. The right regime can change over time as a company's profile changes, and the election, once made in certain cases, has conditions around switching back.

Yes. Following the Budget 2025 revision to the new regime's slab structure — nil tax up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh, and 30% above ₹24 lakh, along with a Section 87A rebate that makes income up to ₹12 lakh effectively tax-free under the new regime for eligible taxpayers — the comparison between old and new regime has shifted meaningfully for many individuals compared to earlier years. A health check for an individual client includes this comparison based on actual income composition and eligible deductions.

Under Section 149 as amended by the Finance Act 2021 (as further modified since), a reassessment notice under Section 148 can ordinarily be issued within 3 years from the end of the relevant assessment year. This extends up to 10 years where the escaped income represented in the form of an asset (including expenditure on a transaction or event, or an entry in books) is ₹50 lakh or more. A health check maps every year under review against this window to identify which years remain genuinely open to departmental action versus which are effectively time-barred.

Yes, where applicable. For entities with domestic or international related-party or intercompany transactions, we review Form 3CEB filings and supporting transfer pricing documentation for consistency with arm's-length pricing expectations under Section 92C, and flag whether the existing benchmarking study or documentation would hold up if the transaction were selected for scrutiny by the Transfer Pricing Officer.

Where an exposure is genuinely calculable — for example, a specific TDS short-deduction amount plus applicable interest — we provide a precise figure. Where the exposure depends on how the department or an appellate authority would ultimately view a debatable position, we provide a realistic range and a likelihood assessment rather than false precision. Manufacturing a single confident number for a genuinely uncertain position does you a disservice — it either understates your risk or causes you to over-remediate something that was never a real threat.

Yes. The engagement is governed by client confidentiality as with any CA engagement, and where the review is specifically ahead of a fundraise, exit, or sale process, we execute a separate non-disclosure agreement covering the additional sensitivity of that context. The risk register and findings are shared only with those you authorise.

Both, depending on your instruction. The core health check engagement delivers the risk register and remediation recommendations. Where you instruct PNPC to execute — filing a revised or updated return, submitting a Section 154 rectification, filing a TDS correction statement, or tightening documentation for a specific position — that work is scoped and billed separately, since the depth of remediation work varies enormously by finding.

The fee depends on scope — how many years, how many tax heads (income tax only, versus income tax plus TDS plus GST), entity complexity, and whether related-party/transfer pricing review is included. PNPC agrees the scope and fee in writing before work begins, and does not expand scope or add fees mid-engagement without a fresh conversation.

Yes. Individual health checks are common for NRIs (residency status determination, foreign asset disclosure under Schedule FA, DTAA claims), high-net-worth promoters and family members (capital gains history, related-party transactions with their own companies, gift and inheritance tax positions), and professionals with complex income (multiple income heads, foreign income, significant capital gains activity).

Yes. A clean health check is itself valuable — it gives you (and, where relevant, your board, investors, or lenders) documented assurance that the tax position has been independently reviewed and found sound, rather than simply assumed to be fine because no notice has arrived yet. Absence of a notice is not the same as absence of exposure; a clean, documented health check is a materially stronger form of assurance.

Where capital gains transactions form part of the review — property sales, listed or unlisted share transfers, mutual fund redemptions — we verify the computation methodology (indexation where applicable, holding period classification as short-term or long-term, exemption claims under Sections 54/54EC/54F), cross-check against the actual transaction documents and bank flows, and flag any computation approach that appears aggressive or inconsistent with the underlying documentation.

Where a business has entered into a complex restructuring, a series of related transactions, or an arrangement whose primary purpose could be questioned as tax avoidance, we assess whether GAAR under Chapter X-A of the Income-tax Act could apply, and whether the arrangement has independent commercial substance that would support it if challenged. This is typically a targeted assessment for specific flagged transactions rather than a blanket check across routine business activity.

PNPC's Dubai office coordinates directly with the India team so the review considers both sides together — Indian income tax and GST exposure, UAE Corporate Tax and VAT position, permanent establishment risk arising from cross-border activity, and the India-UAE DTAA treatment of cross-border payments and withholding. This is reviewed as one coordinated exercise rather than two disconnected reports from unrelated firms.

A finding is a backward-looking item — an exposure from a position already taken or a compliance gap that already exists. A planning opportunity is forward-looking — a legitimate structuring or election choice available to you going forward that could improve your tax efficiency, such as a regime election, a restructuring of director/partner remuneration, or better use of an available deduction or incentive. A health check surfaces both, and keeps them clearly distinguished in the report.

Yes. While a comprehensive multi-head review is the most common engagement, a narrowly scoped health check — TDS-only, or GST-only, or a specific concern such as related-party transaction pricing — is a reasonable and often faster, lower-cost engagement where you already have a specific concern and don't need the full-scope review.

There's no single universal answer, but a reasonable starting cadence for most growing businesses is annually, timed around the financial year-end close, with an additional targeted check triggered by any major event — new states of GST registration, a significant new related-party arrangement, headcount crossing a compliance threshold, or a planned fundraise. Stable, low-complexity businesses may find a health check every 2-3 years sufficient.

Yes, where applicable. We verify that eligibility conditions for presumptive taxation under the erstwhile Sections 44AD (business) and 44ADA (specified professionals) were genuinely met for each year the scheme was claimed — including turnover/gross receipts thresholds and the specific eligibility exclusions — and that the declared income meets or exceeds the prescribed presumptive percentage. Incorrect eligibility claims under these sections are a common source of later scrutiny.

Where relevant to your broader compliance profile (Udyam classification affects payment-timeline compliance under the MSME Act and eligibility for certain schemes, though it is not itself an income tax provision), we will flag if your Udyam classification appears inconsistent with the current thresholds — Micro up to ₹2.5 crore investment / ₹10 crore turnover, Small up to ₹25 crore / ₹100 crore, and Medium up to ₹125 crore / ₹500 crore, effective from 1 April 2025 — since misclassification can affect scheme eligibility and, in some structures, related compliance obligations.

The biggest time cost in a health check is usually reconstructing scattered records. Businesses that maintain a running compliance file — filed returns, TRACES data pulled quarterly, GST reconciliation done as each period closes, board resolutions for major tax decisions, and a simple log of any department correspondence — make every future health check materially faster and cheaper, because most of the source data is already assembled.

It can still add real value, for two reasons. First, a health check deliberately takes a step back and looks across years and tax heads together, rather than the year-by-year, form-by-form lens of routine compliance work. Second, an internal second look by a senior reviewer — distinct from whoever prepares the routine filings — catches things that day-to-day filing work, done well but under its own deadlines, can miss. Many of our own existing compliance clients specifically request a periodic health check for exactly this reason.

Yes. Lenders increasingly request an independent tax compliance review as part of credit appraisal or as a condition precedent to sanctioning a facility, particularly for larger exposures. A health check completed ahead of the loan application gives you a documented, independent position to present, rather than scrambling to assemble one once the lender's own diligence team asks for it.

We present our professional view with the reasoning and any relevant case law or departmental practice behind it, but the client's own risk appetite and business judgment factor into the final decision on how to act. Where a client reasonably disagrees on likelihood or materiality after hearing our view, that is documented in the engagement record — we aim for an honest, collaborative risk conversation, not a unilateral pronouncement.

An automated tool or a compliance-only accountant is generally built to check whether a filing was completed correctly and on time — a useful but narrow lens. A health check requires professional judgment about likelihood, materiality, and remediation options across multiple, sometimes ambiguous tax positions — the kind of judgment that comes from having represented clients through actual assessments, appeals, and search proceedings, not just having filed returns on their behalf. PNPC has been doing exactly this work, across India and the UAE, since 1986.

Scoping consultation and engagement letter defining years, tax heads, and entities covered. Data request and collation support. Direct tax assessment-year-by-year review. TDS/TCS reconciliation against TRACES data. GST reconciliation against books and GSTR-2B, where in scope. Regime and structure suitability review. Related-party/transfer pricing screening, where applicable. Documentation adequacy assessment for material positions. Advance tax payment discipline review. A compiled, ranked risk register with quantified exposure ranges and recommended remediation paths. A findings presentation walkthrough. Recommendation for the next periodic re-check.