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Partner, Direct Tax
Every company needs to undertake a thorough analysis of the laws applicable to it & ensure timely & accurate compliance to avoid penalties & contravention.
India is becoming one of the most favoured destinations to do business. Along with a large number of foreign companies setting up in India, several domestic companies are expanding their existing business lines. There has also been a sudden spurt in the number of start-ups.
Owing to its separate legal identity & structure, a Private Limited Company incorporated under the Companies Act 2013 is one of the preferred business vehicles. However, depending on the object & purpose, a Public Limited Company, a One Person Company, or a Section 8 Company may also be incorporated.
After the formation & registration of a company, there are certain legislations & laws that need to be adhered to. These could be sector-specific or could be dependent upon the achievement of certain turnover thresholds etc. For the sake of convenience, we have enumerated certain major legislations which are generally applicable to an organization in India:
Enumerated here below are the major legislations that need to be adhered to:
The Companies Act 2013 regulates the incorporation of companies, their functioning & dissolution in India. The Companies Act 2013 enumerates certain events which may be event-based or annual and need to be complied with. Similarly, the Companies Act 2013 also provides the duties & responsibilities that a director of the company needs to act in accordance with. In case of contravention of applicable laws/regulations, the directors of a company may also be held liable for a violation based on the relevant law.
FEMA is an official Act that consolidates and amends the law, which regulates foreign exchange in India in tune with Foreign Trade policy. It empowers the Reserve Bank of India (‘RBI’)/Central Government to regulate the flow of payments to & from a person situated outside India.
The Income Tax Act 1961 is a comprehensive statute that governs/provides for the levy, administration, collection & recovery of tax in India. A company incorporated in India is required to file its income tax return, pay its taxes & also adhere to other compliances as mandated by the Income Tax Act 1961.
The Goods & Service Tax Act came into effect on 1st July 2022. GST as it is commonly referred to as is a comprehensive, multistage, destination-based tax that has subsumed into itself almost the indirect taxes. GST is levied on the sale & consumption of goods and services.
The scheme is a welfare scheme that secures a better future for employees. This is a statutory benefit that is available to employees post-retirement or when they leave the services. Under the scheme, both – the employer & employee are required to contribute 12% of the basic salary + DA.
Here, also it would be appropriate to mention that India is in the process of adopting the new Wage Code. Under the new Wage Code 29, labor laws have been combined into four new codes. The implementation of the new Wage Codes is pending implementation.
The Indian Contracts Act 1972 deals with various aspects of contracts viz. formation of a contract, the validity of a contract, breach/revocation of a contract, etc. It provides/outlines the rights, duties, and liabilities of parties to the contract.
Here, it’s imperative to mention that the above-mentioned legislations are the most common legislations which become applicable to an entity incorporated in India. There are several other laws that become applicable to certain industries & may not be applicable to certain industries.
Every company needs to undertake a thorough analysis of the laws applicable to it & ensure timely & accurate compliance to avoid penalties & contravention.
