Business Registration
in India: The Complete Treatise.
An exhaustive legal treatise on business structuring in India, designed for entrepreneurs, corporate professionals, and legal practitioners. This guide provides a deep analysis of all major business structures—from incorporated entities like Private Limited Companies (Section 2(68), Companies Act, 2013), One Person Companies (Section 2(62)), and Limited Liability Partnerships (LLP Act, 2008) to unincorporated formations including Partnership Firms (Indian Partnership Act, 1932) and Sole Proprietorships (governed by license stacks under Udyam, Shop & Establishment Acts).
Beyond basic registration, we cover the full lifecycle: SPICe+ and AGILE-PRO-S workflows for company incorporation (with 10 integrated registrations including PAN, TAN, GSTIN, EPFO, ESIC), state-wise Stamp Duty analysis, post-incorporation "Day Zero" compliances (INC-20A within 180 days, First Auditor appointment, Share Certificate issuance), Annual Compliance Calendars (MGT-7, AOC-4, DIR-3 KYC with exact deadlines and penalties), and Tax Comparison across structures (including Section 115BAA/BAB concessional rates and abolished DDT implications).
Special sections address nuanced legal rules: the Resident Director requirement (Section 149(3) - 182 days), FEMA Land Border Countries Rule (Press Note 3/2020), common SPICe+ rejection reasons, Small Company benefits (₹10Cr/₹100Cr thresholds), Foreign National requirements (Apostille and Notarization), and specialized entity types including Section 8 Companies (Non-Profit), Nidhi Companies (Section 406), and Producer Companies (Agrarian sector). For Partnership and Proprietorship, we detail Section 69 suing disability, Partnership Deed mandatory clauses, Udyam Registration benefits, and the unlimited liability reality.
A Word of Counsel Before You Proceed
The choice of business structure is not merely a formality—it is a foundational decision that will determine your compliance burden, tax liability, fundraising ability, and personal risk exposure for years to come. Each structure carries distinct regulatory obligations. A Private Limited Company requires mandatory statutory audits, quarterly board meetings, and annual filings regardless of turnover. An LLP, while lighter, still demands timely Form 8 and Form 11 submissions with penalties for delay.
Do not rush this decision. If you are starting a business, take time to understand your operational model, funding needs, exit strategy, and risk tolerance. The "easiest" structure today may become the most burdensome tomorrow. Converting between structures later (e.g., Partnership to LLP, or LLP to Pvt Ltd) is legally complex, expensive, and may trigger capital gains tax implications.
We strongly recommend consulting with a qualified professional—a Company Secretary, Chartered Accountant, or Corporate Lawyer—before making your final decision.
Select Your Business Structure
Documents Required
For Private Limited CompanyStep-by-Step Registration Process
For Private Limited CompanyObtain Class 3 DSC
All proposed Directors must procure a Class 3 Digital Signature Certificate from a licensed Certifying Authority (eMudhra, Capricorn, Sify). Requires video-verification KYC.
Name Reservation (SPICe+ Part A / RUN)
File for name approval. Propose up to 2 names. System checks against existing names and trademarks. Name reserved for 20 days if approved. Fee: ₹1,000 if filed separately.
Draft eMoA (INC-33) & eAoA (INC-34)
eMoA defines objects (must align with NIC code). eAoA defines internal bylaws—meetings, share transfers, board proceedings.
File SPICe+ Part B & AGILE-PRO-S
Comprehensive form capturing registered office, subscribers, directors, capital structure. AGILE-PRO-S handles GST, EPFO, ESIC, Bank Account, Professional Tax registrations.
Pay Stamp Duty & Fees
Pay applicable MCA fees and state-specific Stamp Duty online. For Authorized Capital ≤ ₹15 Lakhs, MCA filing fee is NIL (Zero Fee Initiative).
Certificate of Incorporation (COI)
Central Registration Centre (CRC) issues COI with Corporate Identity Number (CIN). Company is now a distinct legal person with PAN, TAN, GSTIN issued simultaneously.
Fees & Cost Structure
For Private Limited Company| Item | Amount |
|---|---|
| MCA Filing Fee (Authorized Capital ≤ ₹15L) | NIL (Zero Fee) |
| MCA Filing Fee (₹15L - ₹50L) | ₹2,000 + ₹200/₹10K |
| DSC (per Director) | ₹1,500 - ₹3,000 |
| Stamp Duty (State-specific) | Varies (See below) |
| PAN/TAN | Included |
State-wise Stamp Duty (for ₹1 Lakh Authorized Capital)
| State | MoA | AoA | Remark |
|---|---|---|---|
| Delhi | ₹200 | 0.15% (Min ₹1,000) | Low-cost jurisdiction |
| Haryana | ₹60 | ₹60 | Extremely low cost |
| Maharashtra | ₹1,000/₹5L | 0.2% - 0.5% | Higher initial cost |
| Karnataka | ₹2,000+ (Slab) | Variable | High cost jurisdiction |
| Punjab | ₹5,000+ | High Fixed | Discourages small cap |
Insight: Entrepreneurs who are location-agnostic often choose Delhi or Haryana over Punjab or Karnataka to minimize initial Stamp Duty.
Practical Tips & Things to Keep in Mind
Practitioner's Intelligence for Private Limited Company
- Start with Authorized Capital of ₹1-10 Lakhs to minimize stamp duty. You can increase later.
- Generic names like "Global Solutions" are rejected 90% of the time. Use coined/unique words.
- The utility bill for registered office must be < 2 months old. Older bills are auto-rejected.
- Video-KYC for DSC requires PAN-Aadhaar name match. Fix any ID discrepancy FIRST.
- Virtual offices often fail INC-22 geotagging if they don't provide a physical name board.
"Day Zero" Compliances: Avoiding Penalties
The Certificate of Incorporation is NOT the end. The following filings are mandatory within the first 30-180 days.
Form INC-20A (Within 180 Days)
Commencement of Business: Subscribers must deposit capital into bank. Attach bank statement. Without this, company cannot borrow or legally commence business. Non-filing = Strike Off proceedings.
First Auditor (Within 30 Days)
Section 139(6): Board must appoint First Statutory Auditor within 30 days of incorporation. Form ADT-1 filing recommended (though technically optional for first auditor).
Share Certificates (Within 60 Days)
Section 56(4): Issue share certificates to subscribers within 60 days. Stamp duty must be paid. For Pvt Ltd, demat is now mandatory.
INC-22 (If Address Changed)
Geotagging: If incorporated with temporary address, file INC-22 within 30 days. Now requires photo of director outside office with name board.
Legal Intelligence: Common Pitfalls & Nuanced Rules
Common SPICe+ Rejection Reasons
1. Vague Object Clauses
Clauses like "To carry on any business as the directors may deem fit" are rejected. Objects must be specific and align with the NIC code selected in SPICe+ Part A.
2. Name Resemblance (Rule 8)
A name phonetically similar to an existing company will be rejected. "Techno Ltd" fails if "Tekno Ltd" exists. Adding "The", "Industry", or "Group" does NOT make it unique.
3. Defective NOC
The NOC must explicitly state: "no objection to the use of the premises as the registered office of the company." Generic rent agreements are insufficient.
Resident Director Rule (Section 149(3))
Every company must have at least one director who stays in India for ≥ 182 days during the financial year.
Newly Incorporated Exception: For companies incorporated mid-year, the requirement is proportionate. If incorporated on Jan 1 (90 days remaining), the director needs ~45 days residency, not 182.
Foreign Subsidiaries: WOS of foreign companies must appoint a local Indian director or a foreign national who meets the 182-day test. MCA is strictly enforcing this post-COVID.
LLPs use DPIN (not DIN). Designated Partners need 120 days residency.
FEMA: Land Border Countries Rule (Press Note 3/2020)
Any investment from a country that shares a land border with India (China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, Afghanistan) requires prior Government Approval from the Ministry of Home Affairs.
SPICe+ Part B contains a mandatory declaration. If "Yes", the MHA approval letter must be attached. Failure to disclose = FEMA + Companies Act violation.
AGILE-PRO-S: 10 Integrated Services (Single Window)
The SPICe+ ecosystem now offers 10 integrated registrations in a single workflow. A company is "born" with all these IDs simultaneously:
Specialized Entity Types
Beyond standard Pvt Ltd, LLP, and OPC, the Companies Act provides for specialized structures for specific purposes:
Section 8 Company
Non-Profit Organization
- • Objective: Promoting commerce, art, science, education, charity, social welfare, religion, environment
- • Profits: Cannot distribute dividends. All income applied to objects only.
- • Privilege: Can use "Foundation", "Association", "Council", "Chamber" instead of "Limited"
- • License: Requires Central Government license
Nidhi Company
Section 406 - Mutual Benefit
- • Function: Borrowing from and lending to members only (thrift/savings)
- • Structure: Must be incorporated as Public Limited Company
- • NOF: Minimum Net Owned Funds of ₹20 Lakhs required
- • Membership: Must enroll 200 members within 1 year
- • Form NDH-4: Must file within 120 days for Nidhi status
Producer Company
Agrarian / Artisanal Sector
- • Focus: Agricultural producers, artisans, craftsmen
- • Rule: 10+ individuals or 2+ producer institutions required
- • Directors: Minimum 5 directors (vs. 2 for Pvt Ltd)
- • Voting: Often single vote per member (cooperative style)
- • Restriction: Can NEVER convert to Public Ltd Company
Annual Compliance Calendar
The following are mandatory annual filings. Missing deadlines attracts penalties and can lead to DIN deactivation or company strike-off.
| Form | Description | Deadline | Penalty |
|---|---|---|---|
| AOC-4 | Filing of Financial Statements | Within 30 days of AGM | ₹100/day (max ₹52L) |
| MGT-7 / MGT-7A | Annual Return | Within 60 days of AGM | ₹100/day (max ₹52L) |
| DIR-3 KYC | Director KYC (Annual) | 30th September | ₹5,000 + DIN deactivation |
| AGM | Annual General Meeting | Within 6 months of FY end (Sept 30) | ₹1L (Company) + ₹5K/director |
| ADT-1 | Auditor Appointment | Within 15 days of AGM | ₹300/day |
| ITR-6 | Income Tax Return | 31st October | ₹5,000 - ₹10,000 |
Taxation Comparison: Which Structure Pays Less?
| Entity Type | Tax Rate | Effective Rate | Key Consideration |
|---|---|---|---|
| Pvt Ltd (New Regime - Sec 115BAA) | 22% + Surcharge + Cess | ~25.17% | Lowest for companies. No MAT. |
| Pvt Ltd (Turnover ≤ ₹400Cr) | 25% + Surcharge + Cess | ~26-29% | Standard rate for most startups |
| LLP / Partnership Firm | 30% (Flat) + Cess | ~31.2% | No DDT. Partner share exempt u/s 10(2A) |
| Proprietorship (New Regime) | Slab: 0% to 30% | 0% - 31.2% | Up to ₹12L = NIL (with rebate) |
| New Manufacturing (Sec 115BAB) | 15% + Surcharge + Cess | ~17.16% | Lowest rate. For new mfg. cos only. |
DDT Abolished (April 2020)
Dividend Distribution Tax is no longer payable by companies. Dividends are now taxed in the hands of shareholders at their slab rates. TDS @ 10% if dividend > ₹5,000.
MAT (Minimum Alternate Tax)
Companies under old regime pay 15% of book profit as MAT if normal tax is lower. Companies opting for Sec 115BAA/BAB are exempt from MAT.
"Small Company" Status: Reduced Compliance
Definition (Section 2(85) - Effective Dec 2025)
A Private Limited Company qualifies as a "Small Company" if it satisfies BOTH:
✅ Benefits for Small Companies
- • File simplified MGT-7A (not full MGT-7)
- • No Cash Flow Statement required
- • Only 2 Board Meetings/year (90-day gap)
- • 50% reduced penalties for non-compliance
- • No mandatory auditor rotation
- • Fast-track merger process
- • Lower filing fees
❌ Exclusions (Cannot be Small Co.)
- • Public Companies
- • Holding or Subsidiary Companies
- • Section 8 (Non-Profit) Companies
- • Companies governed by Special Acts
Foreign National Directors/Partners: Special Requirements
📄 Document Requirements
- Passport: Mandatory. Notarized + Apostilled in home country.
- Address Proof: Utility bill / Bank statement. Notarized + Apostilled.
- Specimen Signature: Notarized in home country.
- DSC: Video-KYC with passport verification.
⚠️ Land Border Countries (FEMA)
If the foreign national is from: China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, or Afghanistan
- • Prior Government Approval from MHA required
- • SPICe+ has mandatory declaration
- • Attach MHA approval letter
- • Non-disclosure = FEMA violation
What is Apostille?
Apostille is an international certification that validates documents for use in foreign countries (Hague Convention 1961). Documents must be notarized first, then apostilled by the designated government authority in the home country (e.g., Secretary of State in USA, FCO in UK). Indian authorities will reject non-apostilled foreign documents.
When to Go Public: Pvt Ltd vs Public Ltd
Private Limited Company
Section 2(68) - Companies Act, 2013
- • Members: 2-200
- • Directors: Minimum 2
- • Share Transfer: Restricted (via Articles)
- • Public Offer: Prohibited
- • Independent Directors: Not required (most cases)
- • Committees: Not mandatory (most cases)
Public Limited Company
Section 2(71) - Companies Act, 2013
- • Members: Minimum 7, No cap
- • Directors: Minimum 3
- • Share Transfer: Freely transferable
- • Public Offer: Can raise via IPO
- • Independent Directors: Mandatory
- • Committees: Audit, NRC, Stakeholder
2026 Outlook: AI-Driven Scrutiny
The Central Scrutiny Centre (CSC) now employs Artificial Intelligence to analyze filings. Key areas of automated flagging:
GST-MCA Mismatch
Discrepancies between GST returns and MCA financial statements are auto-flagged for inquiry.
Director Overlap
Directors with pending KYC or serving in struck-off companies trigger alerts.
Geotagging Fraud
INC-22 photos are analyzed for metadata. Fake submissions are tracked.
Official Government Portals
Structure Your Vision Correctly.
The choice of business structure is foundational. Schedule a consultation with our Corporate Secretarial team to determine the optimal structure for your specific situation.