India has a fairly developed tax regime with a clearly demarcated authority between Central Government, State Governments and Local bodies. Central Government levies taxes on income (except tax on agricultural income, which the State Governments can levy), customs duty, central excise and service tax.
Many State Governments have substituted Sales Tax with Valued Added Tax (VAT). The VAT ( or Sales tax in some states where VAT has not been implemented),State Excise, Stamp duty, Land Revenue, and Professional Tax are levied by State Governments. Local State bodies are given the power to levy tax on properties,water supply, drainage/sewerage, etc.
The taxation system in India has undergone many reforms over the last 15 years where tax rates have been stabilized and simpler tax laws implemented for compliance ease of tax payment and enforcement.Central Government Taxes
India has a financial system that is regulated by independent regulators in the sectors of banking, insurance, capital markets, competition and various services sectors. In a number of sectors the Government plays the role of regulator. Ministry of Finance, Government of India looks after financial sector in India. Finance Ministry every year presents annual budget on February 28 in the Parliament. The annual budget proposes changes in taxes, changes in government policy in almost all the sectors and budgetary and other allocations for all the Ministries of Government of India. The annual budget is passed by the Parliament after debate and takes the shape of law.
Reserve Bank of India established in 1935 is the Central bank. RBI is regulator for financial and banking system, formulates monetary policy and prescribes exchange control norms. The Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934 authorize the RBI to regulate the banking sector in India.
India has commercial banks, co-operative banks and regional rural banks. The commercial banking sector comprises of public sector banks, private banks and foreign banks. The public sector banks comprise the State Bank of India and its seven associate banks and nineteen other banks owned by the government and account for almost three fourth of the banking sector. The Government of India has majority shares in these public sector banks.
India has a two-tier structure of financial institutions with thirteen all India financial institutions and forty-six institutions at the state level. All India financial institutions comprise term-lending institutions, specialized institutions and investment institutions, including in insurance. State level institutions comprise of State Financial Institutions and State Industrial Development Corporations providing project finance, equipment leasing, corporate loans, short-term loans and bill discounting facilities to corporate.
In Assam, apart from lending’s from the public sector banks there are other institutions for financing and lending. Assam Financial Corporation, a premier term lending institution of the North East, has been providing credit and other financial services to Micro, Small and Medium Enterprises (MSME).
The Corporation offers liberal credit of term loan and working capital term loan to a maximum limit of Rs.150.00 lakhs per projects including consortium finance by way of joint financing with SIDBI/Commercial Banks for viable large size projects.
To accelerate the business activity and rapid industrial growth of the region, the Corporation has planned for more than Rs.20,000 lakhs as sanction and disbursement targets for the next three years.
The Corporation ensures to provide best and efficient service delivery to its customers.
North Eastern Development Finance Corporation Ltd. (NEDFi) was incorporated under the Companies Act, 1956, on August 9, 1995 with its registered office at Guwahati, Assam, for the development of industries, infrastructure, animal husbandry, agri-horticulture plantation, medicinal plantation, sericulture plantation, aquaculture, poultry and dairy in the North Eastern states of India. NEDFi is the premier financial and development institution of the North East of India. The main objects to be pursued by NEDFi as per its Memorandum of Association are:
To carry on and transact the business of providing credit and other facilities for promotion, expansion and modernization of industrial enterprises and infrastructure projects in the North Eastern Region of India, also carry on and transact business of providing credit and other facilities for promotion of agri-horticulture plantation, medicinal plantation, sericulture plantation, aquaculture, poultry, dairy and animal husbandry development in order to initiate large involvement of rural population in the economic upsurge of the society and faster economic growth of different parts of the North Eastern region.
NEDFi has been promoted by All India Financial Institutions - Industrial Development Bank of India, ICICI Ltd., Industrial Finance Corporation of India, Small Industries Development Bank of India, Insurance Companies - Life Insurance Corporation of India, General Insurance Corporation and its subsidiaries, Investment Company - Unit Trust of India and Bank - State Bank of India. After the creation of DONER, NEDFi has come under the administrative control of this Ministry.
Almost all the nationalized commercial Banks, financial institutions and insurance companies have their Regional/Zonal offices at Guwahati. Many multi-national Banks like Standard Chartered and national level Banks like IDBI, HDFC, and ICICI are present in the State. EXIM Bank, the premier foreign trade Bank also operates in Guwahati.
Securities & Exchange Board of India (SEBI) established under the Securities and Exchange board of India Act, 1992 is the regulatory authority for capital markets in India. India has 23 recognized stock exchanges that operate under government approved rules, by-laws and regulations. These exchanges constitute an organized market for securities issued by the central and state governments, public sector companies and public limited companies. The Mumbai Stock Exchange and National Stock Exchange are the premier stock exchanges. Under the process of de-mutualization, these stock exchanges have been converted into companies now, in which brokers only hold minority share holding. In addition to the SEBI Act, the Securities Contracts (Regulation) Act, 1956 and the Companies Act, 1956 regulates the stock markets.
in India has been traditionally dominated by state owned Life Insurance Corporation and General Insurance Corporation and its four subsidiaries. Government of India has now allowed Foreign Direct Investment (FDI) in insurance sector up to 26%. Since then, a number of new joint venture private companies have entered into life and general insurance sectors and their share in the insurance market in rising. Insurance Development and Regulatory Authority (IRDA) is the regulatory authority in the insurance sector under the Insurance Development and Regulatory Authority Act, 1999.
RBI also regulates foreign exchange under the Foreign Exchange Management Act (FERA). India has liberalized its foreign exchange controls. Rupee is freely convertible on current account. Rupee is also almost fully convertible on capital account for non-residents. Profits earned, dividends and proceeds out of the sale of investments are fully repatriable for FDI. There are restrictions on capital account for resident Indians for incomes earned in India.
ndia has a well-established and independent judiciary system. The Supreme Court of India in New Delhi is the highest Court of Appeal. Each State has a High Court along with subsidiary District Courts, which enforce the rule of law and ensure fundamental rights of citizens, guaranteed by the Constitution of India.
India has a three-tier court system with a typical Indian litigation starting from a District Courts and reaching its logical conclusion in the Supreme Court of India. The High Courts along with the various State level forums, situated mostly in the State capitals, constitute the middle rung of this three-tier system. District level courts are the courts of first instance in dispute resolution except in cases where they are prevented from being so by virtue of lack of pecuniary jurisdiction. Cases involving violation of fundamental rights are filed in respective High Court or Supreme Court.
A civil, criminal or commercial dispute may be filed in the court having territorial jurisdiction and depending upon level of crime or pecuniary jurisdiction. The place of cause of action and the place of residence of the defendant are the necessary determinants of territorial jurisdiction.
An appeal can be filed against an order of the civil or criminal judge before the Court of District and Sessions Judge. Next appeal can be preferred before the High Court and after that to the Supreme Court.
Under Article 141 of the Constitution of India, every judgment delivered by the Supreme Court becomes the Law of the Land to be followed by all the other lower courts.
India provides protection to Intellectual Property Rights in accordance with its obligations under the TRIPS Agreement of the WTO. The importance of intellectual property in India is well established at all levels- statutory, administrative and judicial. India has well-established administrative mechanism for enforcement of Intellectual Property Rights. Police officers are empowered to take action against the infringement of IPRs in case of pirated and counterfeit products.
Cases of infringement of IPRs are tried in the judicial courts. Indian Intellectual Property Rights Laws also provide for appeals in the judicial courts of the administrative decisions relating to Intellectual Property Rights.
Details of Patents Act, Copyright Act, Trademark Acts, Geographical Indications, and Industrial Designs can be obtained from the following links.
India provides for core labour standards of the International Labour Organization ILO for welfare of workers and to protect their interests. India has a number of labour laws addressing various issues such as resolution of industrial disputes, working conditions, labour compensation, insurance, child labour, equal remuneration etc. Labour is a subject in the concurrent list of the Indian Constitution and is therefore in the jurisdiction of both central and state governments. Both central and state governments have enacted laws on labour issues. Central laws grant powers to officers under central government in some cases and to the officers of the state governments in some cases.
India has an exhaustive legal framework governing all aspects of business. Some of the important legislations are described below which needs attention of the investors.
Arbitration and Reconciliation Act, 1996
Act relating to alternative in redressal,of disputes amongst parties.
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Central Excise Act, 1944
Act governing duty levied on manufacture.
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Companies Act, 1956
Act governing all corporate bodies.
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Competition Act, 2002
Act to ensure free and fair competition in the market.
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Consumer Protection Act, 1986
Act relating to the protection of consumers from unscrupulous
traders/manufacturers
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Customs Act, 1962
Act dealing with import regulations.
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Customs Tariff (Amendment) Act, 2003
Act that has put in place a uniform commodity classification code based on globally adopted system of nomenclature for use in all trade-related transactions.
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Electricity Act, 2003
Act that regulates generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to the development of the electricity industry, promotion of investment and competition, protection of the interests of consumers and the assured supply of electricity to all areas.
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Environment Protection Act, 1986
Act providing the framework for seeking environmental clearances.
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Factories Act, 1948
Act regulating labor in factories.
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Foreign Exchange Management Act, 1999
Act regulating foreign exchange transactions including foreign investment.
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Income Tax Act, 1961
Act governing direct taxes on income of all persons, both corporate and non-corporate as well as residents and non-residents.
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Industries Disputes Act and Workmen Compensation Act
Labor laws dealing with disputes.
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Industrial (Development & Regulation) Act, 1951
Act governing all industries.
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Information Technology Act, 2000
Act governing e-commerce transactions.
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Money Laundering Act
Act preventing money laundering and providing for confiscation of
property derived from, or involved in, money laundering.
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Patent (Amendments) Act, 2004
The Act amends the Patent Act, 1970 to extend the product patent protection to all fields of technology, including drugs, foods and chemicals.
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Sales Tax Act, 1948
Act governing the levy of tax on sales.
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Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 Act seeking to put in place securitisation and asset foreclosure laws creating a legal framework for the establishment of Asset Reconstruction Companies.
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The Special Economic Zones Act, 2005
Provides a long-term, stable policy framework and establishes a single-window clearance mechanism for the establishment, development and management of SEZs and units operating in such zones. An SEZ is a specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
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Payment of Wages Act, 1936
The Payment of Wages Act was enacted during the British Rule in 1936 on the recommendations of the Royal Commission on Labour. The Act regulates the payment of wages to workers and ensures that they are disbursed by the employers within the stipulated time frame and without any unauthorized deductions.
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Contract Labour [R&A] Act, 1970
Every principle employer who intends to employ contract Labor in his Establishment/Factory shall make an application in specified form to the concerned authority of the area in which the establishment sought to be registered is located.
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Payment of Bonus Act, 1965
The payment of Bonus Act is applicable to every factory and every other establishment in which twenty or more persons are employed on any day during an accounting year excluding some categories of employees as contained in section 32 of the Act (i.e. employees in Life Insurance – Corporation, seamen, port and dock workers, universities, etc.).
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Minimum Wages Act
A Minimum Wages Bill was introduced in the Central Legislative Assembly on 11.4.48 to provide for fixation of minimum wages in certain employments. It was passed in 1948 and came into force with effect from 15.3.48.
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Dock Workers (Safety, Health & Welfare) Act, 1986
contains provisions for the health, safety and welfare of workers working in ports/docks.
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Mines Act, 1972
Contains provisions for measures for the health, safety and welfare.
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Maternity Benefit Act, 1961
Regulates employment of women before and after child birth and provides for 12 weeks maternity leave, medical bonus and certain other benefits.
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Payment of Gratuity Act, 1972
provides for payment of gratuity @ 15 days’ wages for every completed year of service or part thereof, in excess of seven months.
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