Tax Compliance Checklist for MSMEs in India

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in India’s economic development, contributing nearly 30% to GDP and accounting for 48% of exports (Source: Ministry of MSME Annual Report 2022-23). Yet, compliance with India’s complex tax system remains a persistent challenge.

Non-compliance not only invites penalties but also hampers the ability to raise funds, participate in tenders, or receive government subsidies. As a Chartered Accountant in Mumbai offering pan-India CA services, we at Makwana Sweta & Associates have compiled this comprehensive tax compliance checklist for MSME

1. GST Registration & Filing

Who Must Register?

If turnover exceeds ₹40 lakhs (for goods) or ₹20 lakhs (for services), registration is mandatory.
In special category states, the threshold is ₹10 lakhs.
Voluntary registration is also allowed for credit benefits.

Monthly/Quarterly Filing

GSTR-1 (Outward supplies): Monthly/quarterly, depending on turnover.
GSTR-3B (Summary return): Monthly for all.
GSTR-9 & 9C: Annual return and audit (if turnover exceeds ₹5 crore).

Tip: File on time to avoid late fees of ₹50–₹100 per day and interest on unpaid tax.

2. Income Tax Return (ITR) Filing

Applicability:

ITR-3 or ITR-5: For partnerships and LLPs.
ITR-6: For companies not claiming exemption under Section 11.
ITR-4 (Sugam): For those under presumptive schemes (44AD, 44ADA).

Due Dates:

July 31 for non-audited entities.
October 31 for tax audit cases.

3. Tax Audit Compliance

Under Section 44AB, tax audits are mandatory if:

Business turnover exceeds ₹1 crore (₹10 crore if 95% transactions are digital).
Professional income exceeds ₹50 lakhs.

Tax audit reports must be submitted using Form 3CA/3CB and Form 3CD.

4. TDS Compliance

When TDS is Required:

Payments to contractors, professionals, rent, commission, etc., above specified thresholds.

Key Forms:

Form 24Q & 26Q: Quarterly TDS returns.
Form 16/16A: Certificates to deductees.

Penalty: ₹200 per day for late filing, plus interest on delayed deduction/payment.

5. Advance Tax Payments

Applicable if total tax liability exceeds ₹10,000 in a financial year.

Payment Schedule:

Due Date	Amount Payable
June 15	15% of total tax
September 15	45% of total tax
December 15	75% of total tax
March 15	100% of total tax

6. Maintenance of Books of Accounts

Who Must Maintain:

Companies, LLPs, and firms with turnover above ₹25 lakh or income above ₹2.5 lakh.
Required under Section 44AA of the Income Tax Act.

Books should include:

Cash book
Journal
Ledgers
Invoices
Expense receipts

Note: Even if not mandatory, maintaining basic records helps in financial decision-making and audit preparedness.

7. Presumptive Taxation Scheme

Sections Applicable:

44AD: For businesses with turnover ≤ ₹2 crore.
44ADA: For professionals with receipts ≤ ₹50 lakh.

Presumptive taxation reduces compliance by:

Eliminating need to maintain books.
Avoiding tax audit.
Declaring a flat % of income as taxable.

8. ROC Filings (For LLPs & Pvt Ltd Companies)

Annual compliance with the Ministry of Corporate Affairs (MCA) is mandatory.

Important Forms:

Form AOC-4: Filing financial statements.
Form MGT-7: Annual return.

Due dates vary but usually fall between October–December post-AGM.

Penalties for non-filing start from ₹100 per day per form.

9. Professional Tax

Applicable in states like Maharashtra, Karnataka, Gujarat, etc.

Payable monthly or annually based on slabs.
Employers must register and deduct from employee salaries.

10. Employee-Related Compliances

Provident Fund (PF): Mandatory if 20+ employees.
ESI: Applicable if 10+ employees and salaries below ₹21,000.
TDS on Salary: Deduct and deposit as per applicable tax slabs.

11. Compliance Under MSMED Act

The MSME Development Act, 2006 mandates:

Payment to MSMEs within 45 days.
Disclosure of pending dues in financial statements (for buyers).

Buyers failing this can face disallowance of expenses under Income Tax Act.

12. Other Relevant Compliances

Import/Export Code (IEC): For businesses involved in international trade.
Digital Signature Certificate (DSC): For company-related filings and tenders.
Filing MSME returns (Form MSME-1): For companies having outstanding dues to MSMEs.

Final Thoughts

For MSMEs, tax compliance is not just about avoiding penalties. It’s about building credibility, unlocking government benefits, and accessing institutional finance.

As seasoned Chartered Accountants in Mumbai, we at Makwana Sweta & Associates help MSMEs across India manage their tax compliance efficiently. From GST filing to audit services, our tailored support ensures you’re always on the right side of the law.

Want Help With MSME Tax Compliance?

Reach out to Makwana Sweta & Associates, trusted Tax Consultants in Mumbai, offering pan-India Chartered Accountant services tailored for MSMEs.