What are the Different Types of Compliance?

Compliance means adhering to a rule. In the business environment, every company has to work following a set of policies and standards and follow specific rules and regulations to maintain decency or morality. The present article briefs the different types of Compliance.

Importance of Compliances

Timely Compliance with all the relevant laws and regulations can benefit the company by keeping things running smoothly, reducing fines and penalties, and maintaining its position in the industry. Giving importance to Compliance can help the organization with the following benefits:

Maintain a clear standard on what you can and cannot do and how your business should operate.
Avoid paying fines or facing potential lawsuits due to negligence.
Become a trustworthy business.
Make every employee feel that they work in a secure and professional environment.

Different types of Compliance

Compliance becomes increasingly essential as a business expands and is exposed to various challenges and audits. Several compliance regulations exist in health, security, data privacy, finance, environmental concerns, and more to avoid unfair or substandard business operations.

External Compliance

External Compliance refers to following the rules, laws, and standards set by the Government to avoid any negative impact on the organization's goodwill. The state in which the firm is incorporated is concerned with defining these compliances. These laws help an organization build public relations and trust and bring transparency to its business. Complying with all the rules ensures any unnecessary duplication of efforts of resources. Some of the compliances are submitting annual reports, filing tax requirements, and requirements under labor law. Registering your business name is an act of practicing external Compliance. External Compliances are further segmented into two types:

Statutory Compliances

These are the laws and rules passed by the state or central Government. The list of Statutory Rules in India that a company must adhere to

Shops and Commercial Establishments Act (S&E)
The Employees Provident Funds and Miscellaneous Provision Act – 1952 (EPF)
The Employees State Insurance Corporation Act – 1948 (ESIC)
The Professional Tax Act (PT) 1975
The Labour Welfare Fund Act (LWF) 1965
The Contract Labour (Regulation & Abolition) Act – 1970 (CLRA)
The Child Labour (Prohibition & Regulation Act), 1986
The Minimum Wages Act-1948
The Payment of Wages Act-1936
The Payment of Bonus Act 1965
The Maternity Benefit Act of 1961
The Payment of Gratuity Act 1972
The Equal Remuneration Act-1976
The Industrial Establishment (N&FH) ACT 1963
The Employment Exchange (Compulsory Notification of Vacancies) ACT-1959
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013
The Employees Compensation ACT-1923
The Industrial Employment (Standing Orders) ACT 1946 Model Standing Order Only
The Industrial Disputes ACT of 1947
The Apprentice ACT, 1961
The Interstate Migrant Workmen (Regulation of Employment and Conditions of Services) ACT, 1979
The Factories ACT of 1948
The Trade Unions Act of 1926

Regulatory Compliances

These are the laws and rules passed by some regulatory bodies set up by the state or central Government. Some of them are listed as follows. Accounting & Payroll

Accounting
Employee Payroll

Assurance

Statutory Audit
Tax Audit
Internal Audit

Direct Tax

Corporate Tax
Transfer Pricing
Withholding Tax
Expatriate Taxation

Indirect Tax

Secretarial Compliance Businesses in India must comply with secretarial matters specified under the Indian Companies Act and report to the concerned ROC. Labour Laws An employer needs to consider the impact of the Provident Fund, a government-regulated Pension Plan scheme. Miscellaneous

Specific state-specific regulations, e.g., Professional Tax and the Shop and Establishment Act, prevail in Indian states like Karnataka, Maharashtra, Tamil Nadu, etc.

Corporate Law

Board Meeting
Annual General Meeting ('AGM') (adoption of financials)
Annual Return with the ROC

Tax

Corporate Tax Return
Tax Audit Report
Transfer Pricing Report
TDS Returns (Tax Withholding)
Individual tax return
GST Return - Turnover > ` 50 million) - Turnover < ` 50 million)

Compliance

Deposit of TDS
Deposit of GST - Turnover > ` 50 million) - Turnover < ` 50 million)

Internal Compliance

Internal Compliance refers to an internally designed set of rules and regulations that the owners, employees, traders, and customers follow to maintain the quality of the services or products provided by the organization. These are created and sanctioned by senior professionals and are followed by everyone in the company. Some internal compliance is setting up a Board of Directors, Conducting regular meetings, and distributing stocks to shareholders. Other internal compliance rules you can include: