Strategic Matrix Solution

Statutory & Tax Audit for Startups & IT Companies Industries

Professional Chartered Accountant frameworks for Startups & IT Companies operations, covering tax planning, audit preparation, and corporate governance.

Service Scope: Statutory & Tax Audit

Under our corporate finance advisory division, we implement specialized auditing systems and structured compliance protocols. Our team ensures that all direct tax filings, TDS records, and GST declarations match the exact provisions of the relevant financial acts.

Objective Audit & Assurance Services

Financial auditing plays a fundamental role in corporate governance, building trust for shareholders, bankers, and tax regulators. As registered Chartered Accountants in Maharashtra, we perform objective, independent audits in compliance with the Standards on Auditing (SAs) issued by the ICAI.

Our audit philosophy combines technical testing with an understanding of client operational risk. We verify transaction trails, review ledger balances, test internal controls, and check compliance with disclosure requirements under Indian accounting frameworks.

Statutory Corporate Audits u/s 139

Under the Companies Act, 2013, every incorporated company must appoint an independent auditor to examine and report on their annual financial statements:

  • Financial Statement Audit: Examining balance sheets, profit & loss statements, and cash flow records to state whether they present a true and fair view of the company's financial position.
  • CARO 2020 Compliance: For eligible companies, we prepare the detailed Companies (Auditor's Report) Order (CARO 2020) disclosures, covering inventory valuation, fixed asset physical checks, loan defaults, and statutory dues deposits.
  • AS & Ind AS Adherence: Verifying that accounting estimates, revenue recognition methods, and lease reporting comply with applicable Accounting Standards (AS) or Indian Accounting Standards (Ind AS).
Income Tax Audits u/s 44AB

Under the Income Tax Act, 1961, businesses and professionals exceeding specified turnover thresholds must undergo a tax audit to verify direct tax compliance:

  • Filing Form 3CA/3CB and 3CD: We conduct detailed checks on capital expenditures, personal expenses debited to business accounts, depreciations claimed, and payments to related parties, compiling these into the Form 3CD statement.
  • Section 43B Verification: Auditing and certifying that statutory payments like GST, Provident Fund (PF), and Employee State Insurance (ESI) are deposited before the ITR filing due date.
  • Section 40A(3) Compliance: Examining transaction ledgers to identify and disallow cash payments exceeding ₹10,000 made to a single person in a single day.
    • Internal Audits & Financial Control Reviews

    Internal audits are designed to evaluate internal governance and protect companies from fraud and operational inefficiencies:

    • Internal Financial Controls (IFC): Under Section 134(5)(e) of the Companies Act, we test the adequacy and operating effectiveness of the company's internal financial control systems, helping prevent transaction leakages.
    • Stock & Debtors Audits: Conducting physical verification of inventories and reviewing accounts receivable ages to provide compliance certificates required by commercial banks for CC/OD credit facilities.

    Industry Challenges for Startups & IT Companies

    Every industry carries unique risk profiles and regulatory reporting frequencies. Our advisory models adapt to accounting methods (like inventory valuation or revenue recognition) that are specific to the Startups & IT Companies vertical.

    Corporate Structuring & Tax Planning for Startups

    Hinjewadi, Baner, and Pimpri-Chinchwad have evolved into prominent tech startup hubs in Maharashtra. Rapidly scaling startups require compliance setups that can handle venture capital injections, employee share pools, and international expansion. We provide startup consulting services, guiding founders through incorporation, tax exemptions, and seed-round compliance.

    Our startup team acts as external financial controllers, setting up cloud accounting pipelines, designing ESOP models, and managing international transactions while protecting corporate eligibility for government tax incentives.

    DPIIT Startup India Recognition & Exemptions

    Registering under the Startup India Initiative by the Department for Promotion of Industry and Internal Trade (DPIIT) unlocks significant legal and financial benefits:

    • Income Tax Exemption u/s 80-IAC: Eligible startups incorporated on or after April 1, 2016, can apply for 100% tax exemption on profits for three consecutive financial years out of the first ten years of operation.
    • Angel Tax Exemption u/s 56(2)(viib): DPIIT-recognized startups are exempt from tax on capital raised from angel investors above the fair market value of shares, subject to filing declarations and maintaining asset restrictions (not purchasing luxury vehicles or real estate).
    • Self-Certification & Compliance Fast-track: Startups can self-certify compliance under environmental and labor laws, reducing inspection audits.
    Share Structuring & ESOP Valuations

    Attracting talent and investors requires clean equity plans:

  • ESOP Scheme Design: Drafting employee stock option plans (ESOP), managing vesting schedules, option pools, and computing perquisite values. We provide merchant banker valuation certificates for options.
  • Venture Debt & Convertible Notes: Advisory on issuing Convertible Notes under the Companies Act rules, and managing FDI reporting on the RBI FIRMS portal.

    • Taxation & Auditing FAQs

    Q When is a Tax Audit under Section 44AB mandatory?

    For businesses, a tax audit is mandatory if the total turnover or gross receipts exceed ₹10 Crores (subject to cash transaction limits of 5%). For professionals, the threshold is ₹50 Lakhs.

    Q What is the role of Internal Financial Controls (IFC) in statutory audits?

    Under Section 134(5)(e) of the Companies Act, auditors of listed and large companies must report on the adequacy and operating effectiveness of the company's internal financial controls.

    Q What is CARO 2020 and which companies are exempt?

    CARO 2020 is a reporting order requiring auditors to disclose specific compliance checks. Exempt entities include One Person Companies (OPCs), small companies (turnover under ₹40 Cr and capital under ₹4 Cr), and private companies meeting specific criteria regarding borrowing and turnover.

    Q How can a startup get exemption from Income Tax under Section 80-IAC?

    To get tax exemption, a DPIIT-recognized startup must apply to the Inter-Ministerial Board (IMB). Exemption is granted for any 3 consecutive years out of the first 10 years of incorporation.