safely discharge the burden of proof under Income Tax & GST laws.

comprehensive checklist that a small/medium business in India should maintain to safely discharge the burden of proof under Income Tax & GST laws.

  • The department does not have to prove that the expense is false — it’s the assessee who must prove that it is genuine.

⚖️ Judicial Support

  • CIT v. Calcutta Agency Ltd. (1951) – The Supreme Court held that the onus is on the assessee to prove the claim of expenditure.

📑 Checklist of Documents to Justify Expenses

1. Purchases & Raw Materials

  • Tax Invoices from suppliers (with GSTIN, HSN/SAC, description).

  • E-way bills for movement of goods (if applicable).

  • Goods receipt notes, delivery challans.

  • Payment proof → bank transfer/cheque/UPI records.

  • Supplier agreements / purchase orders.

2. Sales & Revenue

  • Sales tax invoices with GSTIN.

  • E-way bills for dispatch.

  • Customer agreements / work orders.

  • Proof of receipt of payment (bank statement, UPI, etc.).

3. Labour & Wages

  • Wage register (Form D in some states).

  • Attendance/biometric records.

  • Salary slips.

  • EPF/ESI challans (if applicable).

  • Payment proof (bank transfer preferred; if cash → wage register signed/thumb impression).

4. Transport & Travel

  • Lorry receipts / consignment notes.

  • Vehicle number details, GPS logs (if available).

  • Toll receipts, fuel bills.

  • Tickets, boarding passes, hotel bills.

  • Internal travel claims → attach self-made voucher + reason + approval + mode of payment.

5. Rent, Repairs, Utilities

  • Rent agreement with landlord + PAN of landlord (if TDS applicable).

  • Rent receipts.

  • Electricity/water/telephone bills.

  • AMC contracts, repair bills with GST.

6. Professional & Service Expenses

  • Agreements / engagement letters with consultants.

  • Tax invoice with GST (if registered).

  • TDS deducted & Form 16A issued.

  • Payment proof (bank transfer).

7. Petty Cash / Self-Made Vouchers

  • Maintain Petty Cash Register (date-wise).

  • Each voucher must have:
    ✅ Date, Amount, Purpose, Name & Signature of recipient, Approval of manager.

  • Attach any available supporting slip (parking ticket, small bill, etc.).

  • Limit cash expenses to ₹10,000/day per party (as per Sec. 40A(3)).

8. Fixed Assets

  • Tax invoice with GST (if eligible).

  • Proof of payment.

  • Asset register (with depreciation details).

  • Installation/AMC records.

9. GST-Specific

  • GSTR-2B reconciliation with purchase invoices.

  • GSTR-1 & GSTR-3B returns filed on time.

  • Proper HSN/SAC coding.

  • ITC availed only on eligible invoices.

10. Income Tax-Specific

  • TDS deducted & deposited (Form 26Q).

  • Proof of statutory payments (PF, ESI, GST, Income Tax, Professional Tax).

  • Form 26AS & AIS reconciliation with books.

  • Loan/interest agreements with banks/creditors.

✅ Golden Rule:
If an expense does not have third-party evidence, strengthen it with:

  • Internal voucher + approval trail,

  • Payment proof,

  • Business justification note.


Comments

Post a Comment

Popular posts from this blog

Capital Gains Tax on Sale

  1. Capital Gains Tax on Sale of House Property vs. Land Criteria House Property (Building & Land) Vacant Land (Plot of Land) Holding Period for LTCG More than 24 months (Long-Term) More than 24 months (Long-Term) Holding Period for STCG ≤ 24 months (Short-Term) ≤ 24 months (Short-Term) STCG Tax Rate As per Slab Rate As per Slab Rate LTCG Tax Rate 20% with Indexation 20% with Indexation Indexation Benefit ✅ Available ✅ Available Exemptions Available Section 54 (Reinvestment in house) & Section 54EC (Bonds) Only Section 54F (Reinvestment in house) & Section 54EC (Bonds)   🔹 Key Difference in Exemptions House Property: Eligible for Section 54 , allowing reinvestment in another re...
Read more

What Is Incriminating Material in Income Tax Law?

  What Is Incriminating Material in Income Tax Law? Incriminating material refers to any document, record, statement, digital evidence, or seized item during a search or survey that directly indicates undisclosed income, transactions, or assets of the taxpayer, and can justify an addition in assessment or reassessment. 📚 Judicially Recognized Definition “Incriminating material” is any evidence unearthed during a search which: Relates to a specific assessment year , and Reveals income not disclosed in the original return or books of account 📂 Examples of Incriminating Material Type Examples 💵 Cash / Jewellery Unexplained cash or jewellery without proper source 📝 Documents Unaccounted invoices, promissory notes, loan ledgers 🖥️ Digital evidence Files/emails showing black money, hawala, or bogus transactions 📒 Books of account Parallel books of accounts 📄 Agreements Benami transactions, property undervaluation 💼 Diaries / slips Unrecorded business transac...
Read more

EEE Savings Scheme typically refers to tax-saving investment options that offer exemptions at three stages

Image
  In India, the EEE Savings Scheme typically refers to tax-saving investment options that offer exemptions at three stages: 1. Exemption at Investment Stage (Section 80C): Contributions to eligible schemes are deductible from taxable income. 2. Exemption from Interest or Dividend (Section 10): Interest or dividend earned on these investments is exempt from tax. 3. Exemption at Maturity or Withdrawal (Section 10): Maturity proceeds or withdrawals from these schemes are tax-free. Some popular EEE Savings Schemes in India: 1. Public Provident Fund (PPF): A long-term savings scheme with a lock-in period of 15 years. 2. National Savings Certificate (NSC): A fixed-income investment with a lock-in period of 5 or 10 years. 3. Life Insurance Corporation (LIC) Policies: Certain LIC policies, such as the LIC Jeevan Lakshya Plan, offer tax benefits. 4. Equity-Linked Savings Scheme (ELSS): A mutual fund scheme with a lock-in period of 3 years. 5. Unit-Linked Insurance Plan (ULIP): A life insura...
Read more