India’s tax system is complex, with businesses required to comply with multiple tax laws, including Goods and Services Tax (GST) and Income Tax. While GST is an indirect tax applied to the sale of goods and services, Income Tax is a direct tax levied on profits and earnings.

For businesses in Pune, understanding these taxes is essential to ensure compliance, optimize tax benefits, and avoid legal complications. Whether you run a small startup, an established company, or a service-based firm, having a clear grasp of GST and Income Tax can help you make better financial decisions.  

Understanding GST and Income Tax

What is GST?

Goods and Services Tax (GST) is an indirect tax imposed on selling goods and services. It replaces multiple previous indirect taxes like VAT, Excise Duty, and Service Tax, creating a unified tax structure across India.

• GST is collected at every stage of the supply chain but is ultimately paid by the end consumer.
• Businesses must register for GST if their annual turnover exceeds ₹40 lakh (₹20 lakh for service providers).
• GST return filing is mandatory, and companies must submit returns on a monthly, quarterly, or annual basis.
• GST rates vary based on the product or service category, with slabs of 5%, 12%, 18%, and 28%.

Latest GST Updates (2025)

• No changes in the GST rate slabs for now.
• Small businesses and startups can benefit from simplified GST return filing processes.
• GST exemption for businesses with an annual turnover of up to ₹40 lakh remains unchanged.
• Strict penalty measures for non-compliance, including higher late fees and interest on unpaid taxes.

What is Income Tax?

Income tax is a direct tax levied on the income of individuals, businesses, and other entities. While individuals pay tax on their salary or professional earnings, businesses pay tax on their profits.

• Companies and firms must file income tax returns annually based on their total revenue and expenses.
• Businesses with a turnover above ₹10 crore must undergo a tax audit to ensure compliance.
• The tax rate for domestic companies under the new regime is 22%, while new manufacturing companies pay a 15% corporate tax rate.

Latest Income Tax Updates (2025)

• The new tax regime remains in place, offering lower tax rates but fewer exemptions and deductions.
• Corporate tax for domestic companies is 22% (without exemptions), while new manufacturing companies pay 15%.
• Businesses with revenue exceeding ₹10 crore must undergo a mandatory tax audit.

Key Differences Between GST and Income Tax

• Nature of Taxation: GST is an indirect tax applied on the sale of goods and services, while Income Tax is a direct tax applied on the income or profits of businesses and individuals.
• Who Pays the Tax: GST is collected by businesses from consumers and then paid to the government. Income tax is paid directly by individuals or businesses based on their earnings.
• Applicability: Every sale of goods or services above the GST exemption limit is subject to GST. Income tax applies to individuals and businesses earning above a specified income threshold.
• Filing Requirements: Businesses must file GST returns regularly (monthly, quarterly, or annually), while income tax returns are filed annually. Additionally, businesses with higher turnover must go through a tax audit.
• Impact on Business: GST affects product pricing and consumer costs, while Income Tax directly affects net profit margins and overall business financial planning.

Why do Businesses in Pune Need a Tax Consultant?

With Pune emerging as a business hub for startups, IT firms, and manufacturing companies, handling tax compliance efficiently has become more crucial than ever. The complexities of GST filing, income tax planning, corporate taxation, and tax audits require specialized knowledge. Hiring a business tax consultant in Pune ensures that companies stay compliant, minimize their tax liabilities, and avoid hefty penalties.

Here is why businesses in Pune should consider professional tax consultancy services:

• GST Compliance and Return Filing: Incorrect GST filing can lead to penalties, delayed refunds, and legal issues. A tax consultant ensures your GST compliance is handled smoothly, including registration, return filing, and input tax credit claims.
• Income Tax Planning: With the new tax regime (2025) offering lower tax rates but eliminating many exemptions, businesses need expert guidance on choosing the right tax structure to minimize tax liability.
• Tax Audit Assistance: Companies with turnover above ₹10 crore require a mandatory tax audit. A tax consultant helps in preparing financial records, avoiding compliance errors, and ensuring smooth audit procedures.
• Corporate Tax Optimization: Business owners often miss out on legal tax-saving strategies. A tax consultant can guide companies in optimizing their corporate tax payments, reducing overall liabilities.
• Regulatory Updates and Compliance: Tax laws change frequently. A consultant ensures businesses stay updated with the latest GST and income tax amendments, reducing the risk of non-compliance.

For businesses in Pune, having a trusted tax consultant can make the difference between seamless tax management and financial headaches.

Final Thoughts

Understanding the distinction between GST and Income Tax is essential for every business in Pune. While GST impacts transactions and product pricing, Income Tax affects profit margins and overall financial planning. Businesses need to comply with both taxes efficiently to avoid penalties and maximize tax benefits.

With the introduction of the 2025 tax regime, choosing the right tax structure has become even more crucial. Companies need to analyze whether the old or new income tax regime is more beneficial, ensure GST compliance, and prepare for audits if applicable.

Given the complexities of Indian taxation, hiring a business tax consultant in Pune is a smart decision. A professional consultant helps navigate legal requirements, ensures accurate tax filing, and guides tax-saving opportunities. This allows business owners to focus on growth and profitability instead of getting caught up in tax regulations.

For businesses looking to streamline their tax obligations and optimize their tax savings, seeking professional assistance is the best approach. For expert guidance on GST and Income Tax or to gain deeper insights into the above topic, you can contact CA Pratik S Kothari.