Indian entrepreneurship is thrilling but is accompanied by legal issues. While entrepreneurs worry about profitability and growth, they forget about crucial business laws. Non-compliance can result in ginormous fines, litigations, or even business closure.
To safeguard you legally, here are 10 crucial business laws Indian entrepreneurs ought to know and adhere to.
1. The Companies Act, 2013 – The Pillar of Business Incorporation
The Companies Act, 2013 prescribes incorporation, operation, and winding-up of Indian firms. Whether one is forming a Private Limited Company (Pvt Ltd), Limited Liability Partnership (LLP), or One Person Company (OPC), all are subject to this act.
Major Compliance Pre-requisites:
Registration of company with the Ministry of Corporate Affairs (MCA) within schedule. Filing of annual return and balance sheet.
Maintenance of board meetings and account books.
Adherence to corporate governance procedures.
Non-adherence can attract harsh penalties or disqualification of directors.
2. Goods and Services Tax (GST) Act, 2017 – Integrated Tax Regime of India
The GST Act will be one of the biggest tax acts for Indian companies. It replaced several indirect taxes such as VAT, Service Tax, and Excise Duty and implemented a one-nation, one-tax policy.
Who should be registered for GST?
Turnover of business organisations in excess of ₹20 lakh (₹40 lakh in case of business involving goods).
Inter-state businesses and e-commerce operators.
Businesses carrying out taxable supply.
Why is GST compliance required?
Monthly and quarterly GST returns (GSTR-1, GSTR-3B, GSTR-9, etc.) must be filed.
Interest, penalty, and even cancellation of registration will be triggered if delayed.
Business organisations must maintain valid invoices and input tax credit books.
Default may result in 100% of the tax payable!
3. Income Tax Act, 1961 – Taxation of Business Income
All businessmen are required to abide by the Income Tax Act, which puts business income under direct taxation.
Key Points to Note:
Filing of Income Tax Return (ITR) within time limits.
Adherence to Tax Deducted at Source (TDS) on payment of salaries, professional fees, or rents.
Tax audit under Section 44AB in the case of a particular company with a particular turnover.
Tax evasion can lead to penalty, interest on arrears of taxes, and legal notice by the Income Tax Department.
4. Food Safety and Standards Act, 2006 (FSSAI) – A food business requirement
If your business is food manufacturing, processing, packaging, or selling, you will need an FSSAI license.
Why is FSSAI Compliance Necessary?
Ensures foods are of quality, hygienic, and safe standards.
Avoids adulteration as well as misleading information.
Restaurant, food delivery, packaged food units, and online food selling are bound by law to comply.
Non-compliance with FSSAI specifications may result in product recall, license revocation, and a fine of up to ₹10 lakh.
5. Shops and Establishments Act – Regulating Employee Rights
This state legislation is applicable to all firms operating in commercial premises like offices, restaurants, shops, and banks.
Major Provisions:
Working hours, weekly offs, and overtime.
Salary of employees, leave policy, and termination grounds.
Attendance registers and salaries to be maintained.
Registration of the firm under this act by all businessmen is compulsory to prevent violation of labor laws.
6. Labour Laws (EPF, ESI, Gratuity, and Bonus Act) – Employee Welfare Rules
If you have workers in your organization, you have to follow some labor laws:
Important Labor Laws to Follow:
Employees’ Provident Fund (EPF) Act – For organizations with 20 or more employees, with savings contribution to the employees.
Employees’ State Insurance (ESI) Act – Offers medical and sickness benefits to employees earning up to ₹21,000/month.
Payment of Gratuity Act – Pays gratuity to employees on completion of 5 or more years of service.
Bonus Act – Requires payment of bonus to deserving staff on yearly basis.
Defaulting leads to lawsuits, penalties, and even business closure.
7. Intellectual Property (IP) Laws – Protecting Your Business Identity
Secure your brand name, logo, products, or inventions. Such laws do not allow others to copy your work:
Major IP Laws:
Trademark Act, 1999 – Protects brand names, logos, and slogans.
Patent Act, 1970 – Provides exclusive rights for inventions.
Copyright Act, 1957 – Protects creative work such as books, music, and software.
Without IP protection, others can legally reproduce or exploit your brand!
8. Indian Contract Act, 1872 – Regulation of Business Transactions
All businessmen have to cope with contracts—either with suppliers, customers, or employees. The Indian Contract Act legalizes these contracts.
Why It’s Important?
Saves business organizations from contract breach lawsuits.
Specifies rights and obligations of the parties.
Settles conflicts in a lawful way rather than expensive litigations.
A well-drafted agreement will protect you from loss of money and legal issues!
9. Consumer Protection Act, 2019 – Anti-Unfair Trade Practices
This legislation shields consumers against imitated, untrue, and inferior products/services. Business owners should ensure:
Accurate product names and prices.
No misleading promotions or misleading messages.
Effective mechanisms of redressal of customer grievances.
Offence may entail huge fines, recalls, and litigations.
10. Information Technology (IT) Act, 2000 – Regulation of Online Businesses
As online businesses and e-commerce have gained momentum, the IT Act has never been more pertinent than it is today.
Key Areas of Compliance:
Protection of data and cybersecurity to avoid breaches.
Legally enforceable electronic contracts.
Antis to cyber fraud and identity theft.
Non-compliance will attract hefty penalties and even ban on the business.
Final Thoughts – Stay Compliant, Stay Successful!
Many Indian entrepreneurs focus on scaling their businesses but ignore legal compliance—until problems arise! Understanding and following these 10 crucial business laws can help you:
Avoid fines and legal troubles
Build credibility and trust
Ensure smooth business operationsTo stay ahead, consult a legal expert and keep yourself informed about new laws. A legally correct business is a successful business
