Progression and reformation are inevitable and so rises the need for organizations to be a step ahead in time. In this extremely competitive business environment, compliance is not only about reducing monetary risks but also about creating a reputation and credibility by incorporating Legal Compliance Management (LCM) systems and processes into one’s operations that effectively addresses issues and mitigate risks.

With the previous financial year bringing in significant political, economic and regulatory changes; importance of timely compliance and repercussion of non compliance is clearly noticeable. Nestlé’s ‘Maggi’ ruled Indian markets for 103 years but lost its integrity in few days when it was banned for non conformity with FSDA standards. Another brutally effected industry was the pharmaceutical industry when last year many business centers where shutdown due to non adherence to FDA norms.

As rightly put by the Central Board of Excise and Customs that in this era of self-assessment, the need for a strong compliance verification mechanism cannot be over emphasized. Such a mechanism has three important prongs – audit, anti-evasion and return scrutiny. Working upon the same concept the CBEC has issued a circular for detailed scrutiny of ST-3 form with effect from 1st August, 2015. While the preliminary scrutiny done online at ACES includes ensuring the completeness of the information furnished in the return, arithmetic correctness of the amount computed as tax and its timely payment, timely submission of the return and identification of non-filers and stop-filers; the detailed scrutiny is to ensure the correctness of the assessment made by the assesse.

The legal scenario in India is changing; with certain major changes in labour laws for example; Labour Laws (exemption from furnishing returns and maintaining registers by certain shops and establishment acts, 1988, allows thousands of small industries with less than 40 people to file just one return for compliance instead of number of applicable labour laws (Amendment Nov 2014). Major relief was brought in to the Organizations and Contractors in the State on Mumbai with the June 2015 amendment of Maharashtra Contract Labour (Regulation and Abolition) Rules, 1971 were the Maharashtra government has directed deemed issuance/ renewal of contractor’s license within 7 days of application. This will not only speed up and simplify the contractor’s licensing procedure but also help to curb the hassles and corrupt practices of the Government Officials. The Central Government is working towards easing the working process of compliance for the employer by developing online systems for filing returns, documents and challans. With PF, ESI being online for quite a while now; Registration under Apprentices Act, 1961 shall be executed within 7 days through online medium Amendment Nov 2014, return under payment of bonus Act, 1965 (Form D) shall be henceforth filed online. The same return has been revised to make it more effective by inclusion of details of bonus remitted to contract workers which earlier could be rarely monitored at the contactor level (Amendment Nov 2015).

While some acts like Prevention of Money Laundering Act, 2002 impose rigorous imprisonment for a term not less than 3 years and extending upto 7 or 10 years along with fine because they address major issues prevalent in India. Certain acts have been revisited to reduce the unjustified repercussion levied, e.g., Apprentices Act, 1961 earlier to 2014 amendment had the employer liable to 6 months of imprisonment for not engaging the stipulated number of Apprentices within the unit. The same has been revoked and now the employer is only subject to fine of fifty thousand rupees in case he cannot or refuses to satisfy the Apprenticeship Advisor on non engagement of desired number of Apprentices.

In this era where government and regulatory authorities are getting more responsive towards compliance it shall become easier for organizations that opt for legal diligence and compliance to survive and stand out dignified. It is required that compliance as a virtue should be embedded starting from top management to the each member of an organization. The progress towards achieving legal compliances must be well planned. Management could carry out a gap analysis to fully ascertain all operational legal non-compliances. Another important tasks is for top management to identify those ethical values, over and above legal requirements, that their business must adhere to. A combination of ethical and legal requirements, the circle of priorities, will give the organization a clear framework for decision-making and a road map for achieving total compliance in a structured and phased manner.

Compliance has its main areas such as secretarial, taxation, environment or labour etc. But the incorrect practice in industry is to take a particular legislation and see how and where it impacts the company’s operations. A more effective methodology for ensuring coverage of all applicable laws and rules is to understand the organization’s functions minutely and then scan all legislations that could apply. This way, no activity will be left non-compliant.

Legal compliance in any organization shouldn’t be person dependent but has to be inculcated in the system of such organization. This can only be achieved by ensuring transparency and visibility of compliance tasks at each level. Mechanisms for recording and reporting all compliance tasks should be put in place and monitored frequently. Optimal solution is to centralize the data in a common repository which can be easily accessed by the top management. Comprehensive software can greatly help in collating all compliance records, documents and activity details so that it can be reviewed by responsible heads. Such system shall not only reduce hassle of tracking down facts but also a better handover in case of role change from one person to another.

A robust system is able to cater to any situation. All compliance tasks along with the control points must be precisely laid out in simple steps so that execution of compliance is practical. It is important to define proper timelines and deliverables for each compliance task and making a person responsible and accountable for the same. Once the legal requirement with appropriate deadline is in place, process of addressing minor, major and critical compliances should be dealt distinctly.

There is no ambiguity in the fact that the authorities are making effective and meaningful efforts in creating an improved compliance culture. Hence, it would be more rewarding for organizations to understand compliance as a means of certain goodwill and ethical work stature for itself. Our aim here is to create a positive and farsighted outlook towards legal compliance. With rightly strategized compliance structure we envisage dispute free smooth functioning organizations