#FounderWoes: Keeping up with tax compliance

With business identity numbers like TAN and PAN used by almost every single business entity, what is the need for filing papers repeatedly?

In the ‘Founder Woes’ series, we talk to different entrepreneurs to highlight the common issues they face while running a startup in India.

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Even as India has leapfrogged from the 142nd position in the Ease of Doing Business rankings in 2015 to 63rd in 2020, the reality on the ground remains far more complex. 

Indian founders, and consumers, are rapidly embracing virtual means of conducting business, but regulations have not upgraded to the virtual world. 

In part two of the ‘Founder Woes’ series, we delve into the various taxation compliance issues faced by founders in India.

The process-heavy nature of the regulations and the fact that entrepreneurs need the support of a CA/ company secretary or lawyer for help makes India’s compliance framework challenging to navigate.

“You have to file your balance sheet and other company-related compliance documents. Then you have income tax, GST and all of these need to be done again and again regularly. Unless you have the capacity to hire professionals who can handle this for you, doing it as an individual or a small company is a nightmare,” said Varun Krishnan, founder of Chennai-based mobile phone and gadgets focused website FoneArena. “It takes up all your energy, when do you do your actual business of creating value?

With business identity numbers like TAN and PAN used by almost every single business entity, what is the need for filing papers repeatedly?

Rules being open to interpretation is yet another challenge.

“Under GST, even the CA needs to check what gets exempted under what law. If you go to two different CAs with the same problem, the solution will be completely different,” according to Tony Paul, co-founder of data-as-a-service startup DataHut.

To share your own experiences, write to amanat@adif.in or leave a comment.