Business Compliance Laws in India

5 Must Know Business Compliance Laws in India

India has proved itself to be a fast-growing economy, generating a thriving hive mind of ideas, innovation, and enterprises. Moreover, the government’s initiatives like Make in India, Digital India, and others are providing spirited entrepreneurs the opportunities to develop whatever idea they want to build upon. Against this backdrop, India is a gold mine of business expansion and company subsidiary formation. If you operate a foreign corporation and want to expand your business to India, now is the right time. However, before you can make your business operational, you need to be well-versed with certain business compliance laws in India.

Knowing these laws will help you pass Indian regulations for running a business, and will not divert your attention from day-to-day business operations, PEO Services in India will help you achieve your goal.

  1. The New Companies Act

Companies in India are mainly regulated by the New Companies Act, 2013. This Act declares in detail the provisions for business qualification, activities and by-laws for the company’s directors including appointment, remuneration, and retirement. Additionally, the New Companies Act elaborates upon the business compliance practices for conducting board and shareholders meetings, passing resolutions, partner and 3rd party transactions, accounting, and reporting.

After all the business compliance laws are addressed, the company can be formally incorporated. Now, you get the certificate of incorporation for your company. Hereafter, your company is considered as a separate legal entity.

Business Compliance Laws You Need to Address

  1. Company Identification Number

Displaying your CIN on your office premises is mandated by the New Companies Act. Typically displayed on a company board right outside your registered company location, the CIN should contain the following details to be compliant:

  1. Incorporated company’s name
  2. Registered office address
  3. Corporate Identity Number (CIN)
  4. Contact number, email ID
  5. Website address and fax number (if applicable)

The same details should reflect across all your stationary / letterheads used for physical or digital communication.

Failing to officially declare your CIN can incur you a fine of up to 1000 INR for each day your business is non-compliant.

  1. Applying for a PAN and TAN Certificate

Since your incorporated company is a separate legal entity, business compliance laws in India state that your business should have its own PAN and TAN certificate. Once you have these certificates, you automatically get registered under the Income Tax Act, 1961 as well. You can register for a TAN certificate by filling out Form 49B. Because of digitization, you can also apply for a PAN certificate online.

  1. The First Board Meeting

A director of the company should call the first board meeting in under 30 days of company incorporation. Business compliance laws in India state that the director should issue a notice and agenda for the meeting a week prior to the meeting. Among other matters, the meeting attendees must plan for subsequent periodical board meetings.

  1. Maintaining a statutory register

Compliance laws state that a company must maintain a list of certain statutory registers from the time it is formally incorporated. The statutory register holds specific records containing information about a company’s shareholders, directors, and board meetings (including the minutes of the meeting). Along with a mandatory compliance law, the statutory register also helps you in maintaining organized records and tracking board meeting agendas.

  1. Corporate Taxes

Indian law differentiates entities owning and running the company from the company itself. On getting a certificate of incorporation, your business has a separate legal existence for taxation. As such, companies have to file annual corporate tax returns with the Income Tax Department. Moreover, companies that engage in both international and domestic transactions with related parties are also required to file an annual transfer pricing audit.

  1. Additional yearly compliance practices
  1. Drafting and filing directors’ disclosures of interest
  2. Drafting and filing the approval of financials and directors
  3. Drafting and filing the minutes of board meetings for the appointing auditor
  4. Preparing and filing your annual corporate tax return
  5. Drafting and filing the notice and financials of your company
  6. Drafting the notice, minutes, and attendance sheets for the Annual General Meeting (AGM)

Besides, owing to the digital presence of a business (websites, social media, etc.), a business also has to comply with user data collection and privacy policy mandates. Some of the business compliance activities are one-time while there are others that you have to undertake periodically. Non-compliance is an unnecessary headache, especially considering how an experienced team can easily handle these needs for you.

Why get caught up in legal and financial complications of non-compliance?

At Remunance, we have a team of experienced professionals that can help you incorporate your business within time bounds, such that your business is 100% compliant. Focus on your core business activities and leave business compliance to us!