Running a business means working in sync with the laws of the land. Laws come in various forms – Tax Laws, Labour Laws, Environmental Laws, Consumer Protection Laws, etc. When you run a business depending on the nature of the business different laws apply to you and it is your responsibility as the business owner to comply with the law.
Ignorance does not absolve you from non-compliance. Hence, Compliance is a necessary evil that all business need to deal with.
Most of the compliances are related to direct and indirect taxation and reporting of the same. Others are to do with Employee Welfare and compensation.
Other compliances are related to reporting to the government so that they are aware of the things that are happening in the organisation.
Different compliance becomes applicable to organisations depending on the size of the organisation in terms of employees and the turnover of the company.
There are two governments that any business gets taxed by – The Central Government and the State Government.
The Income Tax that the business pays is directly given to the Central Government. Most Indirect Taxes such as GST, are split between the Central as well as the State Government. There are some that go directly to the State Government. The indirect taxes as well as the number of them vary based on the nature of business being engaged in.
GST stands for Goods and Service Tax that was introduced by the Govt of India in July 2017. Prior to the GST there were separate taxes for services (ST) and for goods (VAT). This got merged into one single tax that all business with a turnover greater than 20 Lacs must pay.
There are three components to GST –
CGST – Central GST – Paid to the central government when business is carried out within the state
SGST – State GST – Paid to the state government where you are based if business is carried out within.
IGST – Integrated GST – Paid to the central government when the business being carried out is inter-state.
Not all compliances apply to all types of organisations. Based on the size, turnover and number of employees different compliances may apply and you are required to adhere to them accordingly. Below are some of the most basic compliances.
Tax Filing – Tax filing applies to all organisations irrespective of size or turnover. This is a mandatory requirement that all companies must adhere to. Just like personal income tax filing, this must be done once a year.
Shops and Establishment Certificate – This is the most basic of certification that you can get for any business establishment and helps to serve as proof of address for your business. Also, it is mandatory to display this at the place of business irrespective of what kind of company you may be running. Some of you may choose to get this instead of the GST because you have not crossed the threshold that requires you to pay GST.
Goods and Service Tax Certificate – Every business in India that has a turnover greater than 20 Lacs in a financial year is required to pay and file GST. This also makes it possible for you to take advantage of the GST that being paid by your company in the form of GST credits.
Professional Tax Certification – Every company employs people in India is required to pay professional tax on behalf of each employee that it has hired. One needs to register with the competent authority for Professional Tax and pay the same every month.
MSME Certificate – If you intend to take advantage of tax rebates and loans that the government gives away to MSME(Micro, Small and Medium Enterprises) in India it is important to register as an MSME and get the appropriate certificate for the same. There are a host of advantages that you get if you are especially embarking on businesses that involve initial capital outlay such as manufacturing. This applies to companies that have turnover lower than 20 Lacs.
Employee Provident Fund – Employee Provident Fund Or EPF as it is more commonly known applies to companies that have more than 20 employees on its payrolls. This is computed as a component of the salary and needs to be paid to the government by both the company as well as the employee.
Registrar of Companies Filing – The RoC filings are meant to keep the registrar aware of the decisions being taken in the company. This applies only to LLP and Pvt. Ltd. Filings have to be made as per the schedule prescribed by the RoC.
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