FOR MANUFACTURING:

What are the compliance requirements for a company? There are several legislations brought by the Ministry of Corporate Affairs or otherwise which require healthy operations by the corporations. Some of those important laws have been briefly explained below:

• Factories Act, 1948: An Act dedicated to the occupational safety, health and welfare of workmen employed at factories or manufacturing units.
• Employees Provident Fund (EPF) Act, 1952: Provisions dedicated for the security of an employee after retirement from service.
• Employees’ State Insurance (ESI) Act, 1948: An Act containing health safety provisions to grant security to employees against risks during employment.
• Professional Tax Act (State Laws): Some states in India like Telangana, Maharashtra have imposed tax on certain professions including trades and employment.
• Labour Welfare Fund Acts (State Laws): States like Haryana, Punjab, Maharashtra etc. have this legislation to finance certain activities dedicated for the welfare of the labour.
• Maternity Benefit Act, 1961: The legislation protects the employment of a woman during her maternity period through certain benefits.
• Contract Labour (Regulation and Abolition) Act, 1970: An Act to protect contract labour and to ensure safe work conditions for them.
• Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013: A legislation to protect women against any sexually colored acts or remarks at the workplace and ensure a safe work environment.
• Minimum Wages Act, 1948: An Act dedicated to fixation of minimum wage rates in certain occupations.
• Payment of Wages Act, 1936: Provisions for regulation of period of wages and to provide remedy against unexplained or unauthorised deductions.
• Payment of Gratuity Act, 1972: An Act that requires certain industries or employers to pay their retiring employees a one time gratuity amount.
• Payment of Bonus Act, 1965: Based on the profits of a company, the Act obliges employers to designate the minimum and maximum bonus percentage.
• Equal Remuneration Act, 1976: A legislation to prevent any discrimination at the workplace based on gender.
• GST Act 2017: Tax on supply of goods or services or both.
• Income Tax Act 1961: An Act dedicated to tax assesses falling under taxable income.

FOR TRADING:

Starting a trading business requires a lot of initial research related to the product to be traded. What should be traded, what’s the market availability, what’s the competition level, what’s the expected durability of the product in the market, what will be the cost, what will be the profit margin, what will be the customer satisfaction, etc. Apart from all this, the effects of various laws and regulations applicable to the trading business should be evaluated. To start a trading business in India, you are required to comply with some legal formalities which are discussed below:

1. Incorporation

A trading business can be carried out by any form of entity, i.e., by sole proprietorship, partnership, limited liability partnership (LLP), company, etc. Depending upon the type of entity, incorporation is to be done. A sole proprietorship concern does not require any specific legal incorporation under any law. However, it may require to obtain a few licences under different laws which we will discuss in point no.5.

Specific incorporation is required for partnership registration, LLP registration, company registration, etc. The incorporation of partnership concern is governed by the Indian Partnership Act, 1932; LLPs by the LLP Act, 2008, companies by the Companies Act, 2013 and so on.

So, what are the basic requirements for incorporation as a legal entity?

• Digital signature certificate (DSC)
• Designated Partner Identification Number (DPIN), Director Identification Number (DIN), etc.
• Unique trade name (different from the existing ones)
• Identity proof of the owner (like Voter id, Passport, Driving Licence)
• Residential address proof of the owner (like Bank statement, Electricity bill, Telephone bill, not older than 2 months)
• Official address proof of the legal entity in the name of the owner (like Electricity bill, Telephone bill, Gas bill, not older than 2 months)
• No Objection Certificate (NOC) from the owner of premises to be used as the official address
• PAN (Permanent Account no.) and Aadhar card
• Written consent of the designated partners or directors to act as such under the legal entity

Once the above-mentioned requirements are made available, fill up the latest incorporation form available and submit for approval along with the prescribed fee. After approval, file the LLP agreement or Memorandum of Association (MOA) and Articles of Association (AOA), as per the type of legal entity formed.

2. Trademark/ brand name or patent registration

Trademark is basically a sign, phrase, word, symbol that denotes a specific product or service (known as service mark) and legally differentiates it from the products or services of it’s kind. It belongs to a specific legal entity. It is legally recognized as intellectual property. It identifies the brand owner. So, the owner of the business may apply for trademark registration to protect the product or service from being used without permission. The owner can sue a person who infringes a trademark.

Similarly, there’s a patent which is also a form of intellectual property and gives the owner legal and exclusive right for an invention. So, owner of the business may apply for patent registration to prevent others from commercially exploiting the patented invention’s use, sale, import, distribution, etc. without permission. The owner can sue a person who infringes on a patent.

Both trademark and patent registrations can be obtained by submitting respective registration applications along with the prescribed fee. Once, the application is approved, the business can be carried out under such name.

3. Registrations under tax laws

Every trading business in India attracts taxes, both direct tax and indirect. The direct tax covers income tax while Indirect tax covers GST (Goods and Service Tax).

Under the Income Tax law, a business entity is required to pay the tax liability in the form of advance tax, TDS (Tax deducted at source), TCS (Tax collected at source), self-assessment tax, etc. The tax is paid by sole proprietorship concern as per slab rates while tax is paid by partnership concerns, companies, etc. as per fixed rates as provided under the Income-tax Act, 1961. For the purpose of TDS and TCS, the entity deducting or collecting tax is required to obtain TAN (Tax Deduction and Collection Account Number).

Under the GST law, a business entity is required to first obtain GSTIN (Goods and Service Tax Identification Number) based on its turnover limit. The turnover threshold limit for GST registration in case of a supplier of goods is ₹40 lakhs, except some specified states and ₹20 lakhs for specified states, and in case of a supplier of services, it is ₹20 lakhs, except some specified states and ₹10 lakhs for specified states.

Please note that, obtain PAN of the entity before proceeding further to GST registration, because GST registration is based on PAN. Also, registration is to be obtained for every state where the business extends.

GST registration can be obtained voluntarily also, in case the business entity wants to avail the benefit of ITC (Input tax credit).

4. Business Contracts

A trading business also gives rise to contracts between the parties involved in trading. A written contract is important to avoid any kind of disputes in the future since the legal terms and conditions in the contract are binding on both the parties. Business contracts can be in the form of MOU (Memorandum of Understanding), Vendor Agreement, Lease Agreement, Insurance Agreement, Financial Agreement, etc.

5. Other miscellaneous requirements

Apart from the above mandatory compliances, following are some of the other requirements that need to be considered:

• Open a current account in a bank.
• Register under the MSME Act (Micro, Small & Medium Enterprises Act) or the Shops and Establishment Act, etc.
• Obtain licenses for specified categories of trading businesses like IEC (Import- Export Code), FSSAI (Food Safety and Standards Authority of India), etc.
• Obtain clearance under the Environmental laws for dealing with goods that may affect the environment, like hazardous goods, chemicals, etc.

6. Conclusion

The above-mentioned compliances help a person to establish a business entity for trading in India. Once, the trading activity starts, other legal formalities emerge which need to be complied with by the entities. These legal compliances depend on the laws applicable to a particular type of entity and also on the concerned trading activity.

FOR IT INDUSTRY:

• Registration: Identity creation thru Sole Prop, LLP, Pvt Limited, OPC or Partnership.
• GST Registration
• Trade Mark Registration to protect your brand
• Patent registration for technology
• Software License agreements
• Labour law compliances, if applicable.

FOR BANKING/NBFC:

RBI Act

The RBI Act was enacted to establish and set out functions of the RBI. It grants the RBI powers to regulate the monetary policy of India and lays down the constitution, incorporation, capital, management, business and functions of the RBI.

BR Act

The BR Act provides a framework for supervision and regulation of all banks. It also gives the RBI the power to grant licences to banks and regulate their business operation.

FEMA

FEMA is the primary exchange control legislation in India. FEMA and the rules made thereunder regulate cross-border activities of banks. These are administered by the RBI.

The other key statutes include:

• The Negotiable Instruments Act 1881;
• The Recovery of Debts Due to Banks and Financial Institutions Act 1993;
• The Bankers Books Evidence Act 1891;
• The Payment and Settlement Systems Act 2007;
• The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002; and
• The Banking Ombudsman Scheme 2006.

Public sector banks are regulated by the BR Act and the statute pursuant to which they have been nationalised and constituted. These include:

• Banks constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 or the Banking Companies (Acquisition and Transfer of Undertaking Act) 1980; and
• The State Bank of India and subsidiaries and affiliates of the State Bank of India constituted and regulated by the State Bank of India Act 1955 and the State Bank of India (Subsidiary Banks) Act, 1959 respectively.

Unless otherwise specified, this chapter focuses on the regulatory regime governing private sector banks.

FOR HOSPITAL/HEALTH CARE INDUSTRY:

Health is considered as a state of complete physical, mental, spiritual and social well-being and not merely the absence of disease or infirmity.

With his words, it is clear that health is one of the imperative parameters of a nation’s development. Obviously, the Healthcare industry is highly responsible for society and the environment.

In India, the Ministry of health and family welfare is an authoritative body that regulates the healthcare industry. The Directorate General of Health Services is an attached organization that acts as a technical knowledge repository concerning Public Health, Medical Education and Health Care.

The healthcare industry in India is growing rapidly, as it is ranked 145 among many countries in terms of quality and accessibility of healthcare. At the same time, it paves the way for civil and criminal liability as a threat to healthcare firms. Owing to no access to updated knowledge of the compliance laws and regulations that keep evolving and time constraints make compliance difficult.

So, for better healthcare compliance management, we at Aparajitha perfectly guide you to comply with complete industry-specific compliances.

Here is a list of some of the mandatory compliance laws regarding healthcare:

Laws related to governing the Hospital

• Society registration act
• Companies Act
• Clinical Establishments Bill
• Fire Safety Rules

Laws Governing the Qualifications / Practice and Conduct of Professionals

• Indian Medical Council Act
• Indian Nursing Council Act
• The Dentists Act

Law Governing Storage / Sale of Drugs and Safe Medication

• Drugs and Cosmetics Act
• VAT Act
• Pharmacy Act
• Blood bank regulations under Drugs and Cosmetics rules

Law Governing Biomedical Research

• Breeding and Experiments on Animals Amendment Rules

Law Governing Medico-Legal Aspects

• Consumer Protection Act
• Protection of Human Rights Act
• IPC section 52

Law Governing the Safety of Patients, Public and Staff within the Hospital Premises and Environmental Protection

• Indian Boilers Act
• Gas Cylinder Rules
• Arms Act
• Vaccination Act

Laws Governing the Employment of Manpower

• Child Labour Act
• Bonus & Gratuity Act
• ESI Acts, Rules
• Industrial Disputes Act

Healthcare industry being the largest and fast-growing industry in India and the world, it is necessary to abide and be completely compliant by the Laws of the land. Besides, it helps to avoid the various liabilities and penal litigations leading to financial, prosecution and reputation risks.

FOR REAL ESTATE/CONSTRUCTION INDUSTRY:

Following are Legal Compliance

• Shop Act Registration
• Professional Tax Registration
• GST Registration
• Rera Registration
• Income Tax Return filing
• GST Return Filing