In a transformative step towards promoting responsible corporate behavior, the Central Board of Direct Taxes (CBDT) has announced that companies’ compliance grading will now play a key role in determining their eligibility for government tenders and contracts. This new framework ties tax compliance history, such as timely return filing, TDS payments, and disclosure accuracy, to a formal grading system that procurement authorities can reference during bid evaluations. The initiative aims to reward consistently compliant businesses with preferential treatment in public sector engagements, while discouraging lax financial governance.

Under the proposed model, grades will be assigned based on multiple parameters, including timely ITR and audit report submissions, response to tax notices, accuracy of disclosures, and GST and TDS consistency. Companies falling into lower grades due to repeated defaults or under-reporting may face restrictions or disqualification from certain tenders, especially those involving critical infrastructure, defense, or public utility services. The Income Tax Department will maintain a secure digital repository of compliance records, accessible to authorized government procurement platforms.

To help companies adapt, the CBDT is expected to launch a “Compliance Report Card” feature on the e-filing portal, allowing corporate entities to self-assess their standing before bidding. Officials have stressed that this system will not replace financial qualifications, but will serve as an additional layer of due diligence. This shift marks a broader push to embed financial discipline into India’s public procurement process, ensuring that only tax-compliant, transparent, and ethically governed companies benefit from government contracts.