The word statutory signifies “of or related to statutes” which involves rules and regulations. Compliance signifies adherence. Therefore, Statutory in the most basic terms, means adhering towards rules and regulations.
So as to deal with the demanding regulatory environment, it is important that the companies in India obey to different specified laws. The organizations are required to look for efficient and effective ways to carry on in complying with these laws and minimize any legal risk.
However, non- compliance could result into heavy punitive damages imposed on the company as well as their key personnel if required.
The advantages of having statutory compliance in the business are that:
It would help the firm to increase awareness regarding the compliance which allows the management to lessen the risks involved in non-compliance and check any setbacks.
The firm could have a competitive advantage as they have a proven track record of being completely compliant and results in good reputation as well as goodwill
The danger of adverse events is lowered. In case if any such adverse incidents take place, the gravity of the situation is decreased, owing to the compliance system being in place.
Security of Personal information of consumers and workers are addressed in the regulations as well as when addressed properly, it gives rise to employee and customer loyalty.
Therefore, it is evident that companies which undertake an active approach towards compliance management have a safer, well-organized and more trustworthy business.
Risk of non-compliance:
If the organizations in India that do not follow the rules and regulations as stated by the concerned authorities then it would lead towards the risk of non-compliance and this might have heavy implications on the business of the company.
Few of the risks a company might have due to the non-compliance of statutory compliances are;
· Penal actions and financial losses towards the company
· Loss of status and reputation as well as business integrity
· Customer loyalty is severely impacted
Advantages of Statutory Compliance
The advantage of statutory compliance to workers is that it makes sure fair treatment is given to the laborers. It stops workers from being exploited or being made to work for unmanly working hours or in any inhuman circumstances. It also makes certain that the employees are being remunerated fairly in consistent with the work that they do, and that employers conform with the minimum wage rate.
The advantage to employers given by the Statutory Compliance is the timely payment of taxes, which helps them to avoid a lot of legal issues like penalties and fines. A predefined rule makes it simple for the Government of India to collect revenue and for employers to organize their finances. Companies could be penalized monetarily and also they could be tried in a court of law, reliant on the scale of non-compliance.
Statutory compliance for a partnership firm, private limited company, LLP, or any kind of company remains the same. Any company which employs workers or employees and pays them salary or wages should obey with labour laws relating to the monetary compensation, payment of taxes, protection and safety of workers, and fairness of labour.
Some of the Labour Acts in India that needs statutory compliance by the companies are;
· The Workmen’s Compensation Act, 1923
· The Trade Unions Act, 1926
· The Payment Of Wages Act, 1936
· The Industrial Employment Standing Orders Act, 1946
· The Industrial Disputes Act, 1946
· The Employees’ State Insurance Act, 1948
· The Minimum Wages Act, 1948
· The Factories Act, 1948
· The Employees Provident Fund & Miscellaneous Provisions Act, 1952
· The Employment Exchanges(Compulsory Notification Of Vacancies) Act, 1959
· The Apprentices Act, 1961
· The Payment Of Bonus Act, 1965
· The Contract Labour (Regulation & Abolition) Act, 1970
· The Payment Of Gratuity Act, 1972
· The Equal Remuneration Act, 1976
· Inter State Migrant Workmen (Regulation of Employment and conditions of service) Act, 1979.
· The Child Labour (Prohibition and Regulation Act), 1986
The tax compliances that the Indian companies must give importance to are;
· The companies must maintain books of accounts that present a comprehensive and fair overview of the fiscal position of the business. These books should be maintained in compliance with the pertinent accounting standards and should be audited through a certified auditor or Chartered Accountant.
· The companies must deposit advance taxes and TDS on time, and filing returns as per the norms. This varies according to the nature of the corporation.
· The companies must conduct a statutory audit as as well as when the law demands it.
· Also all the other relevant paper works as well as documentation concerning the formation and registration of the company, amongst others, is required to be in place.
Statutory compliance is very vital, and should be given due consideration by the employers and employees. And therefore, each and every of such laws should be abided by as they are compulsory for every company in India.
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