Resource Center 
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| Resource Center |
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| Regulation & Taxation |
Regulation:
An entrepreneur has to take into account the basic regulatory requirements of the country in order to ensure sustainability of the profits and productivity of his/her business. The most important regulation relates to the environment. The environmental regulatory requirements envisage a wide legislative framework covering every aspect of environment protection. Broadly, it includes the emission standards for air, noise, water, etc. Separate set of laws for emission of hazardous wastes have also been enacted. Every industry has to abide by these guidelines and parameters for environmental protection.
An organization, for its smooth and effective functioning, must ensure health and safety of its employees. The major legislations relating to Occupational Health and Safety in India are:- the Factories Act, 1948; the Mines Act, 1952 and the Dock Workers (Safety, Health & Welfare) Act, 1986. The Directorate General of Mines Safety (DGMS) and the Directorate General of Factory Advice Service and Labour Institutes (DGFASLI) are the two field organisations of the Ministry of Labour and Employment in the area of occupational safety and health in mines, factories and ports.
Besides, the Government of India has taken steps like, announcing a competition policy, enacting Competition Act, 2002 and setting up of Competition Commission of India, in order to ensure a healthy and fair competition in the market economy. These aim to prohibit the anti-competitive business practices, abuse of dominance by an enterprise as well as regulate various business combinations like mergers and acquisitions.
For regulation of the export and import of goods and services an entrepreneur has to abide by the Foreign Trade (Development and Regulation) Act, 1992 and the EXIM policy announced by the Government from time to time. The Ministry of Commerce and Industry is the most important organ concerned with the promotion and regulation of the foreign trade in India. The Ministry has an elaborate organizational set up to look after the various aspects of trade. Within the Ministry, the Department of Commerce is responsible for formulating and implementing the foreign trade policy.
Taxation:
India has a well developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government, in accordance with the provisions of the Indian Constitution. The main taxes/duties that the Union Government is empowered to levy are:-
- Income Tax (except tax on agricultural income, which the State Governments can levy),
- Customs duties,
- Central Excise
- Sales Tax
- Service Tax.
The principal taxes levied by the State Governments are:-
- Sales Tax (tax on intra-State sale of goods),
- Stamp Duty (duty on transfer of property),
- State Excise (duty on manufacture of alcohol),
- Land Revenue (levy on land used for agricultural/non-agricultural purposes),
- Duty on Entertainment and
- Tax on Professions & Callings.
The Local Bodies are empowered to levy tax on properties (buildings, etc.), Octroi (tax on entry of goods for use/consumption within areas of the Local Bodies), Tax on Markets and Tax/User Charges for utilities like water supply, drainage, etc.
In the wake of economic reforms, the tax system in India has under gone a radical change, in line with the liberal policy. Some of the changes include:- rationalization of tax structure; progressive reduction in peak rates of customs duty; reduction in corporate tax rate; customs duties to be aligned with ASEAN levels; introduction of value added tax; widening of the tax base; tax laws have been simplified to ensure better compliance. Tax policy in India provides tax holidays in the form of concessions for various types of investments. These include incentives to priority sectors and to industries located in special area/ regions. Tax incentives are available also for those engaged in development of infrastructure. |
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