A Practical Guide for Indian Companies
As businesses in India navigate ever-evolving tax and regulatory frameworks, one common thread I see across industries — from startups to large corporate — is this:
👉 Many companies are unknowingly leaving money on the table — in the form of missed tax deductions, underclaimed export incentives, and avoidable compliance errors.
Here’s a practical guide to some of the most common “missed-out” benefits under Indian tax laws, GST, Provident Fund, and Export Incentive schemes. If you’re a business owner, CFO, or tax professional — this might just help you save real money.
🚀 1️⃣ Income Tax Deductions Often Forgotten
✅ Section 80JJAA – A powerful deduction for creating new employment: You can claim an extra 30% deduction on wages of new employees hired (above a threshold) for 3 years. Yet many companies forget to file Form 10DA or don’t maintain required records — deduction lost.
✅ Scientific Research Deductions (Section 35): You can claim 150% or even 100% deductions for in-house R&D, approved donations to scientific institutions, and capital spend on research. Often not claimed due to lack of DSIR approvals or misclassification of R&D costs.
✅ Section 10AA – SEZ Units: A phased tax holiday on export profits of SEZ units — 100%, 50%, and 50% (subject to reinvestment). Missed if you fail to maintain separate books or delay export realization.
✅ Section 35AD – 100% capital deduction: Specified businesses (cold chain, warehousing, hotels, hospitals, infrastructure) can deduct 100% of capital investment. Ignored by companies defaulting to normal depreciation.
✅ Timing under Section 43B: PF/ESI, GST, interest — if not paid on time, deduction is lost or delayed. The Supreme Court now strictly disallows late employee PF/ESI payments — an expensive compliance mistake.
🛡 2️⃣ Provident Fund (PF), ESIC & Payroll Lapses
✅ Misclassification of employees: Classifying regular employees as consultants to avoid PF/ESI backfires — when corrected, delayed payments lose tax benefit.
✅ Late PF/ESI deposits: Even a 1-day delay on employee contributions = permanent disallowance. Timely compliance is key to protecting deductions.
✅ Missed NPS benefits: Employer contributions to NPS (10% of salary) are fully deductible — many companies miss this opportunity to enhance employee benefits and save tax.
✅ Voluntary PF for small firms: Firms below 20 employees can opt for voluntary PF registration — missed by many startups and SMEs.
💰 3️⃣ GST – Input Tax Credits and Compliance Misses
✅ Capital goods ITC missed: Many businesses forget to claim input tax credit on capital machinery — leaving large sums unutilized.
✅ Input credit on office expenses: GST paid on rent, travel, marketing — perfectly creditable if for business use. Frequently missed due to poor documentation.
✅ Reverse charge mechanism errors: Import of services, legal fees, certain freight charges — you must pay GST under RCM and claim input credit. Many firms either miss the payment or forget to claim the credit.
✅ Blocked credit confusion: Certain “blocked” credits (vehicles, food, club memberships) are allowed if specific exceptions apply. Too often, companies take a conservative approach and forgo valid credits.
✅ LUT filing for exports: Exporters who forget to file an LUT have to unnecessarily pay IGST and then claim refunds — tying up working capital.
👉 A mindset point: GST input credit is as good as cash. Many companies still don’t treat their GST Input Ledger with the same attention and reconciliation discipline as they treat their bank account — but they should! An unreconciled GST credit is locked working capital and a real cash loss if deadlines pass or documentation is incomplete.
🌎 4️⃣ Export Incentives – The Most Underrated Area
✅ Duty Drawback: Refund of import duties on exported goods — unclaimed by many due to lack of process.
✅ RoDTEP: The current export rebate scheme — many miss claiming it simply by not ticking the right box in the shipping bill.
✅ MEIS/SEIS (older schemes): Thousands of exporters missed out due to late filing or lack of awareness.
✅ Advance Authorization: Duty-free import of inputs for export production — underused by SMEs who incorrectly assume it’s “complex.”
✅ EPCG: Zero-duty import of capital goods against export obligation — frequently underutilized or compliance obligations missed.
💡 Final Thought: Why Does This Happen?
In my experience, these benefits are legally available — but the reasons they get missed are surprisingly simple:
🔹 Lack of awareness 🔹 Poor internal processes 🔹 Inadequate documentation 🔹 Fear of compliance complexity 🔹 “We’ve always done it this way” mindset
The result? Lost deductions, higher tax outflows, lower margins.
📋 What Can You Do?
✅ Conduct a tax and compliance health-check — internally or with an advisor ✅ Review Section 80JJAA, R&D deductions, SEZ benefits ✅ Audit your GST credit utilization — with as much discipline as you reconcile your bank accounts ✅ Revisit your export incentive filings — even for past years ✅ Tighten payroll compliance for PF/ESI/NPS ✅ Implement an RCM checklist for services and imports
✋ Want to Explore This Further?
A more detailed article for each section above is available on personal request. Feel free to contact us if you’d like a deep dive into any specific matter, or for a customized review for your company.
⚖️ Disclaimer:
This article is intended for general informational purposes only and does not constitute professional tax, legal, or compliance advice. Each business situation is unique — please consult your tax advisors or legal counsel for advice tailored to your specific circumstances.
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