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.

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• 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.

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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.).

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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).

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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.

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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.

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6. Professional & Service Expenses

• Agreements / engagement letters with consultants.

• Tax invoice with GST (if registered).

• TDS deducted & Form 16A issued.

• Payment proof (bank transfer).

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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)).

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8. Fixed Assets

• Tax invoice with GST (if eligible).

• Proof of payment.

• Asset register (with depreciation details).

• Installation/AMC records.

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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.

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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.

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

• Internal voucher + approval trail,

• Payment proof,

• Business justification note.