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Regulatory Compliances In India

Any business entity in India has to abide by Indian Regulations. This article will help in understanding the regulatory compliances in India for Companies, Liason Offices, Project Offices, and Branch Offices.

Accounting and Payroll

i) All organizations in India need to keep up accounting records that adhere to the Indian Generally Accepted Accounting Policies. A business organization may choose their accounting year as Financial, Calendar or differently in line with their Global Reporting Norms. Be that as it may, under the Indian Income Tax laws it is compulsory to close the books of records on a Financial year premise, that is from April 1 to March 31.

ii) Businesses are required to draft suitable employment contracts while keeping in mind employment regulations and income tax laws. Furthermore, organisations need to pay a monthly salary, generate pay slips and ensure regulatory compliances under labor laws.


i) Statutory Audit

Under the Indian Companies Act, it is compulsory for businesses to have their accounts audited by an Indian firm of chartered accountants. These audited accounts are to be filed with the Registrar of companies (‘ROC’) and, in some cases, with the Reserve Bank of India.

ii) Tax Audit

A taxpayer is required to have a tax audit carried out if the sales, turnover or gross receipts of business exceed Rs 1 crore in the financial year. However, a taxpayer may be required to get their accounts audited in certain other circumstances.

iii) Each listed company and every unlisted company with paid-up capital exceeding INR 500 million in the previous year or outstanding borrowings of INR 1 billion requires to have an internal audit system in place.

Direct Tax

i) Corporate Tax

Corporation tax is a tax imposed on the net income of the company. Both private and public companies which are registered in India under the Companies Act 1956, are liable to pay corporate tax.  Businesses have to determine their annual tax payment and ensure its deposit under an installment plan commonly observed as Advance Tax. Delays, deferment or incorrect calculations attract penal provisions. At the year-end, an annual return along with audited accounts and the tax audit report must be submitted e.g. just in case of the economic Year 2016-17, advance taxes need to be deposited by June 15 (15%), September 15 (45%), December 15th (75%) and March 15 (100%). The Annual Return for this year is to be submitted by September 30, 2017, / November 30, 2017.

ii) Transfer Pricing

In taxation and accounting, transfer pricing specifies the foundations and methods for pricing transactions within and between enterprises under common ownership or control. Organizations having transnational dealings with related concerns fall inside of Indian Transfer Pricing guidelines. This requires the upkeep of documentation and accreditation by an Indian firm of

chartered accountants affirming that the company’s dealings with related concern were at a safe distance, and the benefits were fittingly detailed by the Indian business organisation.

Indirect Tax

i) Customs duty: Customs Duty is levied when goods are transported across borders between countries. It is the tax that the Government imposes on export and import of goods.

ii) GST: The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. In effect, GST provides revenue for the government.

Secretarial Compliance

Businesses in India need to comply with secretarial matters specified under the Indian Companies Act and report to the concerned ROC. This may include Office shifting, Change in director / authorized representative, maintaining board minutes, statutory registers and an annual return to ROC.

Labour Laws in India

An employer must consider the impact of the Provident Fund, government-regulated retirement plan scheme. Furthermore, an outgoing employee, who has exceeded 5 years of service, is to be paid Gratuity calculated as per specified scales.

Miscellaneous: Certain regulatory compliances are State-specific and are applicable to the organisation in that particular state.

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