The Indian business ecosystem is rapidly digitizing and formalizing, with 2025 marking a significant acceleration in regulatory enforcement and new legislation. For tech enthusiasts pioneering innovative solutions and small business owners focused on growth, staying compliant is no longer just a legal formality—it’s the foundational bedrock of sustainable success and investor confidence. Non-compliance, once a manageable risk, now attracts steep financial penalties, criminal liabilities, and severe reputation damage.

This post cuts through the complexity to highlight the Top 10 Compliance Requirements that your company—whether a startup or an established enterprise—must prioritize in the coming year. We’ll focus on the key areas where regulatory scrutiny and new statutory codes are making the biggest impact, helping you transform compliance from a burden into a competitive advantage.

⚖️ Section 1: The New Era of Labor and Data Laws

Two of the most transformative shifts in 2025 are the rollout of the consolidated Labour Codes and the enforcement of the landmark Digital Personal Data Protection (DPDP) Act.

1. The New Labour Codes (Mandatory Structural Changes)

India is consolidating 29 central labor laws into four comprehensive Codes (on Wages, Social Security, Industrial Relations, and Occupational Safety, Health & Working Conditions). The most immediate and significant impact is on employee compensation structure.

• Mandatory Wage Structure: The new Codes mandate a uniform definition of “Wages,” requiring that the Basic Salary component must constitute at least 50% of the employee’s total remuneration (CTC).
  • Impact: This will significantly increase the base on which Provident Fund (PF) and Gratuity contributions are calculated, resulting in higher statutory costs for the employer and changes to employee take-home pay. Companies must immediately review and restructure their salary components.
• Social Security for All: The new framework expands the social security net to include Gig and Platform Workers, requiring “Aggregators” (like delivery services, etc.) to contribute 1-2% of their annual turnover (capped at 5% of payments to workers) towards a new social security fund.
• Formalization and Gratuity: Providing formal appointment letters to all employees is now mandatory. Additionally, fixed-term employees are now eligible for Gratuity after just one year of service, a significant reduction from the previous five-year requirement.

2. The Digital Personal Data Protection (DPDP) Act, 2023 Compliance

With enforcement slated for 2025, the DPDP Act is India’s first comprehensive data privacy law, holding companies accountable for how they process personal data.

• Consent Management: Companies must now obtain clear, explicit, and informed consent from the individual (Data Principal) before collecting, storing, or processing their personal data. This consent must be verifiable and easily withdrawable.
• Data Protection Officer (DPO): Significant Data Fiduciaries (generally large companies or those processing sensitive data) must appoint a Data Protection Officer or a designated point of contact responsible for compliance.
• Breach Reporting: Mandatory and prompt reporting of any data breach to the Data Protection Board of India (DPBI) and the affected users is crucial.
  • Penalty Fact: Non-compliance with the DPDP Act can result in penalties of up to ₹250 crore per instance, emphasizing the severity of this new regime.

💰 Section 2: Financial and Tax Filings Checklist

Tax compliance remains the backbone of a company’s financial health, with authorities leveraging technology to increase scrutiny on filings and transactions.

3. Goods and Services Tax (GST) Regular Filings

GST compliance is an ongoing, high-frequency requirement that demands meticulous monthly management.

• Monthly Returns: Timely filing of GSTR-1 (Outward Supplies/Sales) and GSTR-3B (Summary Return and Payment) is non-negotiable. Delays incur interest and late fees.
• E-Invoicing Mandate: The government continues to lower the turnover threshold for mandatory E-Invoicing. As of 2025, even smaller businesses (with an aggregate turnover often above ₹5 crore) must comply. This digitizes invoice generation and enables real-time tracking.
• Input Tax Credit (ITC) Reconciliation: Businesses must regularly reconcile their purchased goods/services data (GSTR-2B) with their own records to ensure they claim the correct Input Tax Credit, avoiding future demands and penalties.

4. Income Tax and TDS/TCS Compliances

From an annual perspective, the Income Tax Act requires careful adherence.

• Annual Tax Filings: Timely filing of the Income Tax Return (ITR), typically ITR-6 for companies, and submission of the Tax Audit Report (if applicable) is essential. The deadline for audited accounts is usually October 31st.
• TDS (Tax Deducted at Source) & TCS (Tax Collected at Source): Accurate and timely deduction, deposit, and quarterly return filing (Forms 24Q, 26Q, etc.) for TDS and TCS are mandatory for payments like salaries, professional fees, rent, etc. Failure here can result in hefty penalties and disallowance of expenses.

🏛️ Section 3: Corporate Governance and Annual ROC Filings

Companies registered under the Companies Act, 2013, must ensure their internal governance and annual reporting to the Registrar of Companies (ROC) are flawless.

5. Annual ROC Filings (AOC-4 & MGT-7)

These forms represent the company’s public face to the Ministry of Corporate Affairs (MCA).

• Form AOC-4: Filing of Financial Statements (Balance Sheet, P&L Account) within 30 days of the Annual General Meeting (AGM).
• Form MGT-7/MGT-7A: Filing of the Annual Return (details of shareholders, directors, and changes) within 60 days of the AGM.
  • Consequence: A common default for startups and SMEs is late ROC filing, which attracts a penalty of ₹100 per day per form for the entire period of delay, quickly escalating to significant liabilities.

6. Director KYC (DIR-3 KYC)

All Directors with a Director Identification Number (DIN) must file their DIR-3 KYC annually with the MCA. Missing this deadline leads to the deactivation of the DIN, rendering the director ineligible to sign documents or act on behalf of the company until the fine (currently ₹5,000) is paid.

7. Prevention of Sexual Harassment (POSH) Act, 2013

This is a mandatory HR-related compliance for every company with 10 or more employees.

• Internal Complaints Committee (ICC): Mandatory establishment of an ICC to handle sexual harassment complaints. The ICC must be formed even if there are no complaints.
• Annual Report: Mandatory filing of an annual report to the District Officer on the number of complaints received and actions taken.
• Mandatory Training: Regular (ideally annual) training and awareness sessions for employees and ICC members are necessary to demonstrate due diligence.

The Remaining Crucial Four

• MSME Form I Filing: Companies with delayed payments to Micro, Small, and Medium Enterprise (MSME) vendors (beyond 45 days) must file this form half-yearly to protect small suppliers.
• Environment, Social, and Governance (ESG) Reporting: While currently mandatory for the top 1000 listed companies, the government is continuously increasing scrutiny and broadening the scope of Business Responsibility and Sustainability Reporting (BRSR). Non-listed companies should begin preparing to track their environmental impact and social policies.
• Statutory & Board Meetings: Companies must hold a minimum of four Board Meetings in a calendar year, with no more than 120 days between any two meetings. Proper documentation and minutes are mandatory.

FAQ Section

Q1: What are the biggest penalty risks for a small business in 2025?

A: The biggest risks are non-compliance with GST Filings (leading to interest and denial of ITC), late ROC Filings (attracting ₹100/day penalties), and—potentially the largest—breaching the new DPDP Act for data privacy, which has penalties up to ₹250 crore.

Q2: How does the new Labour Code affect my current employees’ salary?

A: The Code mandates that at least 50% of your employees’ total CTC must be classified as “Wages” (Basic Pay, Dearness Allowance, etc.). If your current salary structure has a lower basic component, you must re-structure it, which will increase your statutory contribution towards PF and Gratuity.

Q3: Is the DPDP Act applicable to all companies, even small startups?

A: Yes, the DPDP Act applies to all companies that process digital personal data within India. While smaller companies may not be designated as “Significant Data Fiduciaries,” they still have a fundamental obligation to obtain lawful consent, protect data, and report breaches.

Conclusion: Embrace Compliance for Exponential Growth

Compliance in 2025 is more intricate and technologically enforced than ever before. From the transformative Labour Codes that affect every employee’s salary to the strict new DPDP Act protecting consumer data, ignorance is no longer an excuse—it is a significant business risk.

However, viewing compliance as an investment, not an expense, allows small business owners and tech startups to build a legally sound, investor-ready, and highly trustworthy operation. Proactive compliance is the ultimate shield against penalties and the key to attracting better talent and funding.

To navigate this complex maze and ensure a 100% compliant year, partnering with an expert is the smart choice. We at Tokyo Consulting Firm India specialize in simplifying your entire compliance calendar.