Due Diligence on Telangana Businesses: State Taxes, Land and Incentive Conditions

Financial and tax due diligence follows the same approach everywhere in India. But when the target is a Telangana business, some state-specific areas deserve a closer look: its state tax history, the land it operates from, and any incentives it has received under state industrial policy. This guide covers them.

State Tax History

• GST: returns and reconciliations for each Telangana GSTIN, and whether the business is administered by the state Commercial Taxes Department or the central GST authorities, which affects where any disputes are pending.
• Legacy taxes: businesses operating before GST may still have VAT, CST or entry tax assessments or disputes pending with the state.
• Professional Tax: whether enrolment and employer registration are in place, and deductions and payments are up to date.

Land and Premises

For businesses with factories, warehouses or offices they own or hold on long lease, diligence should confirm:

• Title and registration: sale or lease deeds registered with the Telangana Registration and Stamps Department, and encumbrance certificates.
• Land records: the position shown in the state's land records systems.
• Industrial allotments: for plots allotted by TGIIC (formerly TSIIC) or other agencies, the allotment terms, including restrictions on transfer, mortgage or change in the company's control.
• Building and occupancy approvals from GHMC or the relevant local body.

A change in control of a company holding an industrial allotment can itself need the allotting agency's approval, which can affect deal timing.

State Incentives

Many Telangana businesses have received incentives under the state's industrial policies — capital subsidies, power cost reimbursements, stamp duty reimbursements or tax reimbursements. These often come with conditions, such as continuing production or employment for a set period. Diligence should check:

• What incentives have been received and are still due.
• The conditions attached, and whether they've been met.
• Whether the transaction could trigger a claw-back.

Labour and Operational Approvals

Factory licences, Shops and Establishments registrations, pollution control consents and fire approvals should be in place and current for each location.

A Checklist for Telangana Targets

1. Review GST, legacy state taxes and Professional Tax history.
2. Confirm land title, registration and encumbrances.
3. Review industrial allotment terms, including change of control.
4. List incentives received and their conditions.
5. Confirm operational licences for each site.

Getting Help

Think Filing performs financial, tax and compliance due diligence on Telangana businesses, working alongside legal advisors on land and title.