Tax Advisory

Compliance records what has already happened. Advisory looks ahead at transactions you are considering: an acquisition, a fundraise, a restructuring, entry into a new state or country, or a change in business model. These decisions fix your tax position before a single return is filed, and an unfavourable structure is difficult to reverse later. We assess the tax consequences of a proposed step while the structure can still be shaped, so the outcome is understood before you commit.

The Income Tax Act 2025 replaced the Income Tax Act 1961 with effect from 1 April 2026, the start of Tax Year 2026-27. It reorganised the law into 536 sections and renumbered almost every provision, while keeping the rates, slabs, and core principles largely unchanged. Advice on a current transaction now cites the 2025 section numbers, though matters relating to Financial Year 2025-26 and earlier continue under the 1961 references. We track both, since most planning today straddles the two regimes.

Tax planning uses deductions, exemptions, and structures that the law deliberately provides, and is legitimate. Tax evasion conceals income or facts and is an offence. Tax avoidance sits between the two: arrangements that follow the letter of the law but lack commercial substance and exist mainly to obtain a tax benefit. India's General Anti-Avoidance Rule, Sections 95 to 102 [ITA 2025: ss. 178-184], allows the tax authority to disregard such arrangements. Sound advisory keeps planning on the right side of that line.

Tax due diligence examines a target's tax history before you buy: open assessments and litigation, TDS and GST defaults, transfer pricing exposure, and contingent liabilities that could become the buyer's problem. It also tests whether the target's carry-forward losses survive the deal, since a change in shareholding can restrict them under Section 79 [ITA 2025: s. 119]. The findings feed the price, the indemnities, and the deal structure, so you know what you are taking on before signing.

A merger that meets the statutory definition of amalgamation, Section 2(1B) [ITA 2025: s. 2], can be tax-neutral. The transfer of assets to the amalgamated company is not treated as a transfer, so no capital gains arise, under Section 47 [ITA 2025: s. 70], read with the capital gains charge that is governed by Section 45 [ITA 2025: s. 67]. Accumulated losses of the amalgamating company may carry forward under Section 72A [ITA 2025: s. 116], where the continuity conditions are met. The amalgamated company must be Indian.

A demerger that satisfies the definition formerly in Section 2(19AA) [ITA 2025: s. 2], transfers an undertaking at book value with proportionate shareholding, and is tax-neutral under Section 47 [ITA 2025: s. 70]. No lump sum price is paid, and shareholders of the demerged company receive shares in the resulting company. A slump sale is different: an undertaking is sold for a lump sum and the gain is taxable. The choice between them depends on the commercial objective and the tax cost of each route.

A slump sale is the transfer of a business undertaking as a going concern for a single lump sum, without assigning values to individual assets. The gain is taxed as capital gains under Section 50B [ITA 2025: s. 77], computed as consideration minus the net worth of the undertaking, with no indexation. It is long-term where the undertaking was held for more than 36 months, taxed at 12.5% for transfers on or after 23 July 2024, and otherwise short-term at normal rates. A chartered accountant's report on the net worth is required under Rule 6H [ITR 2026: r. 54] in Form 3CEA [ITR 2026: Form 28].

Transfer pricing requires that transactions between associated enterprises be priced at arm's length, as if between unrelated parties. It applies to cross-border transactions between related entities, and to specified domestic transactions where the aggregate exceeds Rs 20 crore in a year. The provisions sat in Sections 92 to 92F [ITA 2025: ss. 161-173]. An accountant's report is mandatory in Form 3CEB [ITR 2026: Form 48]. For tax year 2026-27 onward, Rule 10E [ITR 2026: r. 85] requires the report at least one month before the 30 November return due date, making 31 October the report deadline.

The arm's length price is the price unrelated parties would have agreed for the same transaction. The taxpayer selects the most appropriate prescribed method: comparable uncontrolled price, resale price, cost plus, profit split, transactional net margin, or another prescribed method. The determination provision is governed by Section 92C [ITA 2025: s. 165]. An Advance Pricing Agreement under Section 92CC [ITA 2025: s. 168] may apply for a period not exceeding five consecutive tax years. Safe-harbour rules under Section 92CB [ITA 2025: s. 167] define circumstances in which the tax authorities accept the declared transfer price or attributed income.

A permanent establishment is a taxable presence that gives India the right to tax a foreign company's business profits connected to India. Indian domestic law works through the concept of business connection under Section 9 [ITA 2025: s. 9], while tax treaties define a permanent establishment in their Article 5. It commonly arises through a fixed place of business, a dependent agent who habitually concludes contracts, or the supply of services in India beyond a threshold period. Only the profits attributable to the Indian activity are taxed.

Significant economic presence extends the idea of a taxable connection to businesses that earn from India without a physical presence, such as digital and remote operations. It treats a foreign enterprise as having a business connection in India where its transactions with Indian persons cross a prescribed value, or where it interacts with a prescribed number of Indian users. The provision sits within Section 9 [ITA 2025: s. 9]. A permanent establishment generally needs a physical or agency presence, whereas significant economic presence can apply without one.

A Double Taxation Avoidance Agreement allocates taxing rights between India and another country, so the same income is not taxed in full twice. Where a treaty applies, the more-beneficial treaty rule is applied through Section 90 [ITA 2025: s. 159]; unilateral relief where no treaty applies is addressed separately in Section 91 [ITA 2025: s. 160]. To claim treaty benefits a non-resident provides a Tax Residency Certificate from its home country along with the prescribed information, Form 10F [ITR 2026: Form 41]. Foreign tax credit is claimed in Form 67 [ITR 2026: Form 44].

An eligible startup can claim a deduction of 100% of profits from its eligible business for any three consecutive years within its first ten years, under Section 80-IAC [ITA 2025: s. 140]. It must be a company or LLP incorporated on or after 1 April 2016 and before 1 April 2030 and hold the prescribed Inter-Ministerial Board certificate. The turnover ceiling is period-specific: Rs 100 crore under Section 80-IAC [ITA 2025: s. 140] for a claim governed by the 1961 Act, and Rs 300 crore under Section 80-IAC [ITA 2025: s. 140] for tax year 2026-27 onward. For claims governed by the 1961 Act, Rule 18BBB [ITR 2026: r. 66] prescribes Form 10CCB [ITR 2026: Form 32]; for tax year 2026-27 onward, Rule 18BBB [ITR 2026: r. 66] prescribes Income-tax Rules 2026 Form 32.

A qualifying Special Economic Zone unit may continue its profit-linked deduction for the remaining eligible period under Section 10AA [ITA 2025: s. 144]. For claims governed by the 1961 Act, Rule 16D [ITR 2026: r. 66] prescribes the audit report in Form 56F [ITR 2026: Form 32] and Rule 16DD [ITR 2026: r. 67] prescribes the particulars in Form 56FF [ITR 2026: Form 33]. For tax year 2026-27 onward, Rule 18BBB [ITR 2026: r. 66] prescribes Income-tax Rules 2026 Form 32, while Rule 16DD [ITR 2026: r. 67] prescribes Form 56FF [ITR 2026: Form 33]. A qualifying International Financial Services Centre unit, such as a GIFT City unit, may claim its eligible-income deduction under Section 80LA [ITA 2025: s. 147]. Both benefits remain subject to the location, activity, commencement, and other conditions in the governing provisions.

Timing changes tax in several ways. The tax year runs April to March, so completing a transaction shortly before or after 31 March can move income into a different year and change when tax falls due. Holding periods decide whether a gain is long-term or short-term: more than 12 months for listed shares, more than 24 months for immovable property and unlisted shares, and more than 36 months for an undertaking sold in a slump sale. The date a payment is made also decides whether the 1961 or 2025 references apply. We build these dates into the structure rather than treating them as afterthoughts.