A call centre is a centre which provides Inbound / Outbound calling activities. It could be a company or partnership firm or a sole trader. They can be domestic (serving Indian clients) or International (serving International clients) call centers.
Nature of Work
Call centers specialize in providing direct marketing activities for banks, Travel Companies, Insurance Companies etc., through Inbound and Outbound calling support. In some cases there could be a combination of both services for a single client
Type of Compliances
As applicable to any organization the following are required to be taken care of
- Shops and Establishments Act ( state specific) :
Before commencing operations it is essential to obtain this license form the
Concerned Labor commissioner’s office of the state for the following reasons
a) To take advantage of running the centre in 3 shifts as permitted by the Act
b) To avoid questions from police if the centre is located away from the IT zone
c) The centre is not affected by curfews imposed for any reason as they can ply
their employees after getting permission form police
- Stamp Act & Agreement
In most of the cases work is commenced without entering into agreement with the client. This could turn out to be costly to the call centre if later on a dispute arises on the reimbursement of cost if for any reason the work is not up to mark. Ensure that Agreement is entered on “Stamp Paper”
- Trade license ( State Specific)
This has to be obtained from the concerned “Municipal Office” and has to be renewed every year. In majority of cases call centers located outside the IT hub never comply with this. Failure to take this will result in penalty which will range from 25% to 50% of original fee depending on the due dates
4. OSP License
This needs to be obtained for domestic as well as for International call centress by giving relevant details to Department of Telecommunications. No operations should be commenced without obtaining this license
- Profession Tax ( sate specific)
The compliance in terms of renewal is often neglected by Companies when compared to sole trader and Partnerships. Ensure that necessary registration for company and directors is obtained before commencement of operations and they are renewed every year
- Minimum Wages ( State Specific)
I can say with my experience that in call centers this is never complied. The reasons cited in most of the cases is that callers don’t stay when they are on floor after training and hence it would be a great loss considering the number of trainees. Nevertheless this needs to be complied with
- Provident Fund Act
It is a surprise to note that companies are major defaulters on this list as they show most of he callers as consultants and avoid compliance on this front. In many call centers PF amounts are not paid on Minimum Wages which is against the ruling in Group4 Securitas case. It is essential to ensure compliance of the same by paying PF on Minimum Wages and filing proper returns for employees to avoid recovery by PF enforcement officers
Compliance on this front will act as an incentive to callers. So instead of showing as consultants, call centers must take callers on rolls as employees and provide this facility.
- Income tax
PAN and TAN must be obtained. In some cases they need to obtain Lower Deduction Certificate form the concerned IT office as Margins are less in a Domestic call center.
- STPI Compliance as EOU
Can be taken up by International call Centre for tax and duty benefits
- Excise Registration as Private Bonded Warehouse
To be taken if the call centre, being an STPI unit, wants to import capital goods and avail benefit of duty for the premises as a Private Bonded Warehouse
- Gratuity Act
Though exempted for 5 years for a start up call centre early compliance is advisable to attract talented team leads from established call centers.
- Payment of Wages Act
No registration is required but call center must ensure compliance on this front by paying wages before 10th of every month. In Small call centers this is not complied as they fear that new callers would leave after taking salary. In most of the cases they hold it up to 25th of the following month.
- Payment of Bonus Act
No registration is required but every call center needs to pay Minimum bonus and maintain forms prescribed under the Act for verification by Labour inspectors
- Contract Labour ( Regulation and Abolition) Act
For security employed in the premises ensure that the agency has the registration and that those employed by the agency have PF & ESI numbers. Inspectors from PF& ESI invariably ask for compliance on this front as call centre is the principal employer.
- State VAT
Having registration would ensure free movement of goods from one state to another and would be essential if it is a International Call center where imports are involved
- Service Tax
Registration is essential as the amount collected by way of Service tax needs to be paid after availing input credit. This compliance is there in almost all forms of organization but with the present change of mandatory e-Filing, the filing is not on time to the best of my experience. This would invite problems from the Department. If the center is an EOU then proper documentation is essential to claim rebate for inputs.
17. Company Law
Compliance under this is very less except filing returns. Internal documents which
must be maintained like Notice of Board / General Meetings as well as Minutes of
the meeting are completely absent in some centers. Minutes must be maintained
so that in case of query by ROC the company must be in a position to submit