India's cashew capital — Kollam processes the majority of India's cashew nuts for export, is home to major chemical manufacturers including Travancore Titanium, and is a major coir products hub. For IT companies, software development firms, SaaS businesses, tech startups, and IT service providers in Kollam, Kerala — accounting and tax compliance has unique complexities not found in traditional industries. Revenue recognition under IndAS/IGAAP for multi-year contracts, GST on domestic vs export clients, e-invoicing with IRN generation, multi-stream TDS management (salary, contractors, professionals, and the new Section 194T for partner payments in LLPs), ESOP/RSU perquisite accounting, and ROC compliance — all must run in parallel with your product development and client delivery. TaxAMC's CA team provides dedicated accounting, GST, TDS, payroll, and income tax compliance services for IT companies across Kollam — so your finance and compliance run as efficiently as your codebase.
💡 IT company in Kollam? Our CA team manages your complete accounting and compliance stack — GST, TDS, payroll, e-invoicing, audit, ROC. Monthly retainer, annual engagement, or project-based. WhatsApp Us Now →
1. GST for IT Companies in Kollam — 18% Domestic, Zero-Rated Exports
IT services attract 18% GST — unchanged by GST 2.0 (effective September 2025). This is the standard rate for all IT and technology services under SAC Code 9983. Key GST rules for Kollam IT companies:
| Type of Supply | SAC / HSN | GST Rate | Invoice Treatment |
|---|---|---|---|
| Custom software development for Indian client | SAC 9983 | 18% GST | 18% CGST+SGST on invoice (or IGST for interstate) |
| SaaS / cloud subscription — Indian users | SAC 9983 | 18% GST | 18% on subscription amount |
| IT consulting / technical support — Indian clients | SAC 9983 | 18% GST | 18% CGST+SGST or IGST (interstate) |
| Software export to foreign client (custom or SaaS) | SAC 9983 | 0% (Zero-rated) | Raise invoice without GST — quote LUT reference number. File LUT annually in April. |
| Packaged software — physical media (CD/USB) | HSN 8523 | 18% GST (goods rate) | 18% GST — treat as supply of goods, not services |
| Supply to Special Economic Zone (SEZ) | SAC 9983 | 0% (Zero-rated) | Treat as export — zero-rated with LUT or IGST + refund |
| IT services to foreign subsidiary in India (deemed export) | SAC 9983 | 18% GST — not zero-rated unless conditions met | Place of supply is India — IGST applies. Not zero-rated unless foreign client genuinely outside India. |
| OIDAR services to foreign B2C users (SaaS to individuals outside India) | SAC 9983 | 0% for services delivered outside India; special rules if delivered within India | Complex place of supply rules — TaxAMC assesses each scenario. |
GST registration threshold for IT companies in Kollam:
If your total turnover exceeds ₹20 lakh (services threshold) in a financial year — GST registration is mandatory. Even below ₹20 lakh, if you have any interstate supply or export transactions, registration may be required or advisable. For export-only IT companies below ₹20 lakh — registration is optional but recommended above ₹10 lakh to enable LUT filing and ITC claims on inputs.
ITC for IT companies (significant advantage vs many other sectors):
- Software licenses and subscriptions (AWS, Azure, GitHub, Jira, Slack, Notion) — 18% ITC claimable
- Office rent — 18% GST on commercial rent claimable as ITC
- Professional services (lawyers, CAs, recruiters) — 18% ITC on GST paid
- Office equipment (laptops, servers, networking equipment) — 18% ITC on GST paid
- Internet and telecom services — 18% ITC claimable
- Training and conferences — 18% ITC on GST paid
- Employee cab services contracted by company — ITC may be available if mandatory for business
IT company in Kollam with both Indian and export clients? Our CA team sets up the correct GST structure — domestic invoicing at 18%, LUT filing for exports, monthly ITC maximisation.
Set Up My IT Company GST →2. E-Invoicing for IT Companies in Kollam — Latest Thresholds & April 2025 Rules
E-invoicing is one of the most important recent compliance changes for IT companies of any significant scale. The rules are more stringent from April 2025 — non-compliance directly affects your clients' ITC claims.
| AATO (Annual Aggregate Turnover) | E-Invoicing Required? | Time Limit to Upload to IRP | Effective Since |
|---|---|---|---|
| Below ₹5 crore | ❌ Not yet mandatory | N/A — voluntary adoption recommended | Future expansion expected |
| ₹5 crore to ₹10 crore | ✅ Mandatory for all B2B invoices + exports | No strict per-invoice deadline — upload before filing GSTR-1 | Since 1 August 2023 |
| Above ₹10 crore | ✅ Mandatory — same as above | 30 days from invoice date — IRP rejects after 30 days | 30-day rule: Since 1 April 2025 |
What e-invoicing means for an IT company in Kollam on a day-to-day basis:
- Every tax invoice raised to a GST-registered Indian client must be uploaded to the IRP before or immediately after sending it to the client
- The IRP generates an Invoice Reference Number (IRN) — a unique hash of the invoice data — and a QR code. Both must appear on the physical/digital invoice.
- Your ERP, billing software, or accounting tool must integrate with the IRP API or GSP (GST Suvidha Provider). Zoho Books, Tally Prime, QuickBooks, and most major accounting platforms support this natively.
- For IT companies above ₹10 crore AATO: Raise invoice → Upload to IRP within 30 days → Send to client. If the invoice is uploaded after 30 days, the IRP rejects it — the invoice cannot be used by the client for ITC.
- Export invoices (to foreign clients) are also subject to e-invoicing — the IRN must be generated even for zero-rated invoices
- 2FA mandatory from 1 April 2025: Two-factor authentication is now compulsory for all taxpayers on the GST portal for e-invoice and e-way bill generation — ensure your team has this set up
- B2C invoices (if any — for direct individual consumers using your SaaS or digital product) are exempt from e-invoicing for now
⚠️ For IT companies in Kollam with large enterprise clients: If you miss the 30-day IRP upload window (for AATO above ₹10 crore), your client loses ITC on your invoice — potentially damaging the business relationship. TaxAMC monitors e-invoice generation for all IT company clients and flags any invoices approaching the 30-day deadline.
IT company in Kollam not yet on e-invoicing? Our CA team sets up your e-invoicing infrastructure — IRP integration, IRN generation workflow, 30-day monitoring. Done in days.
Set Up My E-Invoicing →3. TDS Compliance for IT Companies in Kollam — All Sections in One Place
IT companies are among the highest TDS-compliance-burden businesses in India — with multiple payment types each attracting different sections, rates, and thresholds:
| Payment Type | Section | TDS Rate | Threshold | Return Form |
|---|---|---|---|---|
| Employee salary (Indian residents) | 192 | As per tax slab (0–30%) | Above basic exemption limit (₹3L new / ₹2.5L old regime) | Form 24Q |
| Contractor / sub-contractor payments (work contracts) | 194C | 1% individual / 2% others | ₹30,000 per payment or ₹1,00,000 aggregate | Form 26Q |
| Freelancer / consultant fees (professional services) | 194J | 10% | ₹30,000 aggregate per year | Form 26Q |
| IT maintenance / AMC / technical support (technical services) | 194J | 2% | ₹30,000 aggregate per year | Form 26Q |
| Office rent (land, building, furniture) | 194I | 10% | ₹2,40,000 aggregate per year | Form 26Q |
| Commission to sales agents, referral partners | 194H | 2% (reduced from 5%, effective Oct 2024) | ₹20,000 aggregate per year (increased from ₹15,000, effective April 2025) | Form 26Q |
| Interest on business loans, inter-company loans | 194A | 10% | ₹40,000 per year (₹50,000 for senior citizens) | Form 26Q |
| Partner payments — salary, bonus, commission, interest (firms/LLPs) | 194T (New — FY 2025-26) | 10% | ₹20,000 aggregate per year per partner | Form 26Q |
| Goods purchase from resident seller above ₹50L/year | 194Q | 0.1% | ₹50,00,000 per seller per year | Form 26Q |
| Payments to non-residents / foreign companies | 195 | As per DTAA / 20–40% | Any amount — all foreign payments | Form 27Q |
Key Section 194H change (effective October 2024 and April 2025):
Budget 2024 reduced the 194H TDS rate from 5% to 2% (effective 1 October 2024). Budget 2025 raised the 194H threshold from ₹15,000 to ₹20,000 (effective 1 April 2025). IT companies paying referral commissions, channel partner fees, or reseller commissions benefit from both changes — lower TDS rate and higher threshold before deduction is required.
Managing TDS across 6–8 sections simultaneously for your Kollam IT company? Our CA team handles every TDS stream — deduction, deposit by 7th, quarterly returns, and Form 16/16A issuance.
Manage All My IT Company TDS →4. New Section 194T — TDS on Partner Payments for IT Firms & LLPs in Kollam (FY 2025-26)
Many IT companies in Kollam operate as LLPs — which combine limited liability with partnership tax benefits. The new Section 194T, effective 1 April 2025, significantly changes LLP compliance by adding a TDS obligation on partner payments.
What Section 194T means for IT LLPs and firms in Kollam:
- The LLP must deduct TDS at 10% on all payments to designated partners — salary, bonus, commission, remuneration, and interest on capital — if aggregate payment to a partner exceeds ₹20,000 in the financial year
- This TDS must be deposited by the 7th of the following month (30th April for March)
- Reported in Form 26Q quarterly (same return as vendor TDS)
- Form 16A issued to each partner quarterly — partners use this to claim TDS credit in their personal ITR
- Firms that fail to deduct 194T TDS face 30% expense disallowance (Section 40(a)(ia)) on the partner payment — a devastating tax consequence for LLPs
Practical example for a Kollam IT LLP with 3 partners:
| Partner | Monthly Partner Salary (₹) | Annual Salary (₹) | 194T TDS (10%) (₹) | Monthly TDS Deposit |
|---|---|---|---|---|
| Partner A | 1,50,000 | 18,00,000 | 1,80,000 | ₹15,000 by 7th of each month |
| Partner B | 1,00,000 | 12,00,000 | 1,20,000 | ₹10,000 by 7th of each month |
| Partner C | 75,000 | 9,00,000 | 90,000 | ₹7,500 by 7th of each month |
IT LLP or firm in Kollam paying partner salaries? Our CA team has already set up Section 194T compliance for all LLP clients — deduction, deposit, Form 26Q, Form 16A. Contact us to start.
Set Up My LLP 194T TDS →5. Payroll Accounting for IT Companies in Kollam — Salary Processing, TDS, PF, ESIC
IT companies in Kollam typically have a structured payroll with multiple components — and managing tax, PF, and ESIC correctly on each component is critical for both employee satisfaction and compliance.
Typical IT company salary structure in Kollam and tax treatment:
| Salary Component | Taxable? | Notes |
|---|---|---|
| Basic Salary | Fully taxable | Basis for PF computation (12% of basic) |
| HRA (House Rent Allowance) | Partially exempt | Least of: actual HRA, 40%/50% basic (non-metro/metro), rent paid minus 10% of basic |
| Special Allowance / Performance Bonus | Fully taxable | No exemption — included in salary income fully |
| Leave Travel Allowance (LTA) | Exempt twice in 4 years (old regime only) | Exemption only for domestic travel for employee and family — with supporting bills |
| Medical Reimbursement (up to ₹15,000) | Old regime: exempt under specific conditions; New regime: taxable | New regime employees cannot claim this exemption |
| Employer PF contribution | Exempt up to 12% of basic (employer portion) | Employer PF above 12% or above ₹7.5L per year becomes taxable perquisite |
| Gratuity (on resignation/retirement) | Exempt up to ₹20 lakh (if covered under Gratuity Act) | For IT companies above 10 employees — Gratuity Act applies |
| ESOP / RSU perquisite (on vesting) | Fully taxable as perquisite in salary | FMV on vesting date − exercise price = perquisite value. Employer must compute and deduct TDS in that month's payroll. |
| Food coupons / meal vouchers (up to ₹50/meal) | Exempt up to ₹50 per meal per working day | Sodexo, Zeta, and similar platforms — exempt up to threshold |
| Work from Home reimbursements — internet, equipment | Exempt if structured as reimbursement with bills | Must be actual reimbursement against bills — not a fixed allowance |
PF and ESIC compliance for Kollam IT companies:
- EPF mandatory: For all IT companies with 20 or more employees. Employee contributes 12% of basic+DA; employer matches 12% (8.33% to EPS, 3.67% to EPF). Deposit by 15th of following month.
- ESIC mandatory: For IT companies with 10 or more employees. Applicable to employees earning up to ₹21,000/month. Employee: 0.75% of gross salary; Employer: 3.25%. Deposit by 15th of following month.
- Professional Tax: Applicable in Kerala — deducted monthly from employee salary and deposited with the state government.
- TDS on salary (Section 192): Computed monthly based on projected annual income, investment declarations (Form 12BB), and regime choice. TDS deposited by 7th of following month.
Monthly payroll processing for your Kollam IT company — salary computation, TDS, PF, ESIC, professional tax — fully managed by TaxAMC. Zero payroll errors.
Manage My IT Company Payroll →6. ESOP & RSU Accounting for IT Companies in Kollam
ESOPs (Employee Stock Option Plans) and RSUs (Restricted Stock Units) are standard talent retention tools in Kollam's IT sector. Their tax treatment involves two stages — and the employer has a TDS obligation at the first stage.
Stage 1 — Vesting / Exercise (Employer's TDS responsibility):
- Perquisite value = FMV on exercise date (or vesting date for RSUs) − Exercise price paid by employee
- This perquisite is taxable as salary income in the year of exercise/vesting
- The employer must compute this amount and deduct TDS in that month's payroll — including it in Form 16
- For listed company shares: FMV = closing price on stock exchange on exercise date
- For unlisted company shares: FMV determined by a SEBI-registered merchant banker (or using the prescribed formula in Rule 3(8) of the Income Tax Rules)
- Startups eligible under Section 80-IAC: ESOP perquisite tax is deferred — employees pay tax only at the earlier of: (a) sale of shares, (b) 5 years from allotment, or (c) leaving the company. Startup employer issues Form 26Q with deferred perquisite value.
Stage 2 — Sale of shares (Employee's capital gains tax):
- Cost of acquisition = FMV on vesting date (same as the perquisite value base)
- Capital gains = Sale price − FMV on vesting date
- Holding period (for LTCG vs STCG classification): Counted from vesting/exercise date
- Listed company shares: LTCG above ₹1.25 lakh at 12.5% (held >12 months); STCG at 20% (held ≤12 months)
- Unlisted company shares: LTCG at 12.5% (held >24 months); STCG at slab rate
IT company in Kollam running an ESOP or RSU plan? Our CA team handles the complete ESOP accounting, FMV determination, payroll TDS, Form 16 reporting, and employee ITR support.
Set Up My ESOP Compliance →7. Books of Accounts — What IT Companies in Kollam Must Maintain
IT companies must maintain proper books of accounts as required by both the Income Tax Act and the Companies Act. Since FY 2023-24, the Income Tax Department has significantly increased scrutiny of book-to-return reconciliation.
- Mandatory books: Cash book (if cash transactions), journal, ledger, sales register (revenue recognised), purchase register (expenses booked), payroll register
- Revenue recognition: For IT companies with multi-year contracts, revenue must be recognised as per the contract terms — percentage of completion or milestone-based. Incorrect revenue recognition creates both accounting and tax issues
- Accounting software: Use cloud-based accounting — Zoho Books, QuickBooks, Tally Prime, or similar. Ensure GST module is integrated for auto-population of GSTR-1 data from invoices
- GST reconciliation: Monthly reconciliation of books (sales register) vs GSTR-1 declared turnover — must match. Annual reconciliation required for GSTR-9/9C
- AIS/26AS reconciliation: Annual Information Statement from the income tax portal shows all payments received (TDS deducted by clients, GST-reported transactions). Books must reconcile with AIS — unexplained differences attract scrutiny
- Fixed assets register: Computers, servers, office furniture — with depreciation at applicable rates (computers at 60% WDV for tax purposes)
- Foreign currency transactions: All export invoices in foreign currency must be booked at the exchange rate on invoice date. Revaluation at year-end creates forex gain/loss that must be accounted for
📄 Documents Required for IT Company Annual Accounting and Compliance in Kollam
- All sales invoices (India and export) — with GST amounts, IRN numbers (for e-invoiced invoices), LUT reference (for export invoices), and payment received status.
- All purchase invoices — vendors and contractors — with GST breakdown, HSN/SAC codes, and GSTIN of vendor. Used for ITC reconciliation with GSTR-2B.
- Bank statements — all accounts (12 months) — including foreign currency accounts for export receipts. FIRC for each foreign remittance above USD 10,000.
- Payroll data — 12 months — salary register, PF/ESIC challans, TDS computation, Form 16 for all employees.
- Contractor payment records — invoices, TDS deducted and deposited, Form 16A issued.
- Investment declarations (Form 12BB) — from all employees — for correct payroll TDS computation throughout the year.
- ESOP grant letter and exercise/vesting records — grant date, vesting schedule, exercise prices, FMV on exercise dates — for perquisite computation.
- Loan and capital details — shareholder loans, director loans, external loans — for interest computation and Section 194A TDS.
- Fixed asset purchase invoices — computers, servers, office equipment, furniture — for depreciation schedule maintenance.
- Form 26AS and AIS (Annual Information Statement) — from income tax portal — for reconciliation with books and ITR preparation.
- Previous year's ITR and audited financial statements — for continuity of depreciation, carried forward losses, and deferred tax computation.
- Board meeting minutes — for Pvt Ltd companies — at least two board meetings per year, statutory minutes maintained.
Ready for monthly accounting management for your Kollam IT company? TaxAMC handles everything from invoice booking to reconciliation to return filing.
Start My IT Company Accounting →8. Statutory Audit for IT Companies in Kollam
Who needs a statutory audit:
- All Pvt Ltd and Public Ltd companies: Mandatory statutory audit under the Companies Act 2013 — regardless of turnover. TaxAMC conducts statutory audits for IT companies in Kollam.
- LLPs with turnover above ₹40 lakh or contribution above ₹25 lakh: Statutory audit mandatory.
- Tax audit under Section 44AB: Mandatory if business turnover exceeds ₹1 crore (or ₹10 crore if 95% of transactions are digital). IT companies crossing this threshold need Form 3CD tax audit by a CA.
- Transfer pricing audit: If your IT company has international transactions with related parties (foreign parent, subsidiary, or associated enterprise) exceeding ₹1 crore, a Transfer Pricing (TP) study and accountant's report (Form 3CEB) is required.
9. Areas We Serve in Kollam
TaxAMC provides services across all localities in Kollam, including:
- Polayathode Industrial Area
- KINFRA Kollam
- Asramam
- Chavara Chemical Industrial Area
- Kundara
- Punalur
Also serving nearby cities: Thiruvananthapuram, Alappuzha, Pathanamthitta, Kottayam.
10. Frequently Asked Questions — IT Company Accounting in Kollam
Q: What GST rate does my IT company in Kollam charge to Indian clients?
18% GST on all IT services (SAC 9983). This rate was unchanged by GST 2.0 (September 2025). Exports to foreign clients are zero-rated — file LUT annually in April before raising foreign invoices.
Q: My IT company's AATO is ₹12 crore — what are my e-invoicing obligations from April 2025?
All B2B invoices must be uploaded to the IRP within 30 days of the invoice date. An invoice uploaded after 30 days is rejected by the IRP — your client cannot claim ITC on it. 2FA is now mandatory for all portal operations. TaxAMC monitors your invoice upload timeline and ensures zero rejections.
Q: My IT LLP pays ₹1.5 lakh/month salary to each partner — what is my Section 194T obligation from April 2025?
Deduct 10% TDS (₹15,000) before crediting each partner's account every month. Deposit by 7th of following month. File Form 26Q quarterly. Issue Form 16A quarterly to each partner. TaxAMC has set this up for all LLP clients from April 2025.
Q: Our IT company gives employees ESOPs — what TDS do we need to deduct?
At vesting/exercise: Compute perquisite value (FMV − exercise price). Include in that month's salary and deduct TDS at the employee's applicable slab rate. Report in Form 16. For eligible startups under 80-IAC: TDS is deferred — TaxAMC advises on the deferred perquisite mechanism.
Q: Do I need a statutory audit for my IT company in Kollam?
Yes — if incorporated as Pvt Ltd or Public Ltd, statutory audit is mandatory regardless of turnover. LLPs with turnover above ₹40 lakh need audit. Tax audit required if business turnover exceeds ₹1 crore. TaxAMC conducts all types of IT company audits in Kollam.
Q: My IT company buys software licenses from foreign vendors (AWS, Microsoft) — is TDS applicable?
Payments to non-resident companies (AWS US, Microsoft Ireland) attract TDS under Section 195 at rates as per the India-US or India-Ireland DTAA. The domestic company paying must obtain Form 15CA/15CB from a CA before remitting. TaxAMC manages all foreign remittance TDS compliance for IT companies in Kollam.
Complete Accounting & Compliance for IT Companies in Kollam — GST, TDS, Payroll, E-Invoicing, Audit
Software development firms, SaaS companies, IT consulting firms, tech startups, IT LLPs — our CA team provides complete accounting, GST, TDS (including new Section 194T), payroll, e-invoicing, ESOP, and annual audit services for IT companies in Kollam, Kerala. Serving Polayathode Industrial Area, KINFRA Kollam, Asramam, Chavara Chemical Industrial Area.
Start My IT Company Compliance →Disclaimer: This article is for general informational purposes only and represents our professional views as Chartered Accountants. GST rates, thresholds, and income tax provisions are subject to change via GST Council decisions, CBDT notifications, and Finance Acts. All rates mentioned are as per notifications effective at the time of writing. Please consult our CA team for current, situation-specific guidance before acting on any information herein.