Indian Company Registration: Complete Guide

Registered Office

It is not necessary to own a property for company registration in India. A rented place can also serve as your registered office address. But you do need to acquire an NOC (No Objection) from the owner of your rental to register successfully.

Company Name

The company’s name should not match already registered companies and trademarks.

Minimum Capital investment

The minimum capital requirement for a Pvt Ltd corporation is not specified.

Two Directors

A maximum of 15 and a minimum of 2 Directors are a must for an Indian Private Limited company registration. Also, one of the directors must be an Indian resident.

From the Directors or shareholders

• PAN Card or Passport copy – from any of the directors or shareholders
• ID Proof – any one of driving license, Voter ID, Passport, Aadhaar card
• Address Proof – any one of your Mobile bills, electricity bills, or latest bank details, or an NOC from your landlord if your office is a rental property.
• If your office is your own, get a copy of your sale deed/property deed
• Passport size photograph

For registered office address:

• NOC from the owner of the property
• Address Proof – Anything from Mobile bill, electricity bill, or latest bank details

You would require a scanned copy of all the listed documents above. Also, for address registration, it is not necessary to own your own company office.

What Makes India the Destination of Choice for Your Business?

Most of the global investors are stepping into the Indian market, due to the rapid advancement in digitalization, urbanization as well as the favourable demographic. 

Alongside the technology, India also having skilled workers who are specialized in tech, handlooms, etc. Such cutting-edge technology makes India a favourable choice for business. 

Yet, below we’ve listed some of the key points which outlook the reasons to choosing India as your next business destination.

• 3rd Most Attractive FBI Destination in the World
• 1.4 million Companies in Active Operation & Rising
• 32 Global Unicorn Companies Registered so far, each valued at over USD 1 billion
• 419.5 Million Consumers by 2030
• High Digital Competitiveness.
• Continuous Business Reforms
• Stable Political Environment
• World’s 3rd Largest Economy by PPP 

Types of Business Structures Available in India

In general, a foreign business can begin operations in India with the following types of organizational structure: Form an Indian Company:

• Through a Joint Venture
• Through a wholly-owned Indian subsidiary

You can do either of these through private or public limited companies. 

The following types of companies can be incorporated in India:

One Person Company (OPC, for Indian Residents only)

This option lets you limit your liability, in case the business winds up, to business assets only. A single person can start an OPC with minimum documentation requirements. There is also no need to conduct annual general meetings or file returns with the Registrar of Companies.

Private Limited Company

A private limited company may be a company limited by shares in capital or by an amount that each company member promises to contribute to the assets of the company. Shares or contributions need to be mentioned in the Memorandum of Association of the company. You also need to have a minimum of 2 members and 2 directors, one of whom (directors) must be an Indian resident.

Public Limited Company

A Public Limited Company allows you to obtain funding via shares from the public. You need to have a minimum of 7 members and 3 directors, one of whom must be a resident Indian.

You can choose the type of company that best suits your needs and register the organization under the Indian Companies Act 2013. Other than the types of companies mentioned above, Indians can also apply to set up a Hindu Undivided Family, Sole Proprietorship, or Partnership firm structures. However, not all of these fall under the Companies Act for registration. All these latter three types have different registration structures.

Who Regulates Company Registration in India?

The Ministry of Corporate Affairs offers a wholly online process to help you register the type of companies mentioned above. However, documentation requirements can be complex. Your decision at this stage will also affect how much tax and what kinds of filings and audits you will need to legally perform each year.

Apart from registering your company in India, you also have the option of setting up:

Liaison Office

To collect information, promote imports and exports, or facilitate technical or financial collaboration.

Branch Office

To provide professional or consultancy services, perform research, develop IT products and services for the parent company, act as a buying/selling agent, etc.

Project Office

To execute specific projects in India. A PO cannot undertake any other activity apart from activities that are related and incidental to the specific project.

Limited Liability Partnership (LLP)

This company form is relatively simpler to set up than a full-fledged company, requiring at least 2 partners and 2 designated partners, one of whom must be a resident Indian. However, your liability is limited by the number of shares in the LLP in India you own.

How to Decide Which Business Structure Type is Best for You?

Before registering your company in India, it is must you should be equipped with a suitable business structure that will fulfil all your requirements.

Here, are the few things that you need to consider while deciding on your business structure type. 

1. Number of Owners

If you want to start a business single-handedly then you can go for a sole proprietorship or a One-Person Company (Indian residence mandatory). If more than one person is present, you should opt for a Limited Liability Partnership firm, a Private Limited Company, etc.

2. Level of risk

A One-Person Company and a Sole Proprietorship come with full risk assumptions by the founder, whereas in a company, there is no personal risk. In a partnership, the risk gets divided among the partners depending upon the mutual agreement.

3. Registration and maintenance cost

In the case of a proprietorship, registration and maintenance are inexpensive and one-time costs. However, companies have a high maintenance cost and need compliance requirements from time to time.

4. Credibility

Companies are more credible in terms of registration and other similar procedures but their financial records are accessible to the public. In a sole proprietorship, maintaining a reputation is the sole responsibility of the owner.

5. Tax structures

Each type of business has a different set of tax slabs and structures. For a Company & LLP, these taxes are charged directly. A partnership, too, attracts different kinds of tax structures. All these structures are charged basic 30% and 25% tax rates, respectively, for small companies. For a Sole Proprietorship, the tax rate lies between 5% to 25% after all exemptions.

Benefits of Registering Your Company in India

• Registration helps in generating more capital through reliable sources (banks & institutional lenders)
• The company becomes a separate entity and if anyone sues the company you will not be affected directly.
• Your liability towards the company is limited to the number of shares you own
• Your ownership and liabilities can be transferred from yourself to another person.
• You enjoy tax benefits for Directors and other employees
• Hiring professional management and ownership helps the company maximize its potential
• It becomes easier to build a brand reputation and attract genuine leads
• Scalability and expansion become easier
• Improved relationships with vendors, suppliers, industry associations, and customers
• Distinct corporate identity and existence
• Ensures perpetuity and continuity
• A company becomes more transparent and trustworthy in the eyes of the government.

What Taxes Do Companies in India Need to Pay?

For the purposes of tax, companies are classified into domestic and foreign companies. While the former are liable to pay taxes on income they earn anywhere, the latter are liable to pay taxes only on income earned in India.

Income earned by a company incorporated and registered in India is further categorized as:

• Profits from the business
• Capital Gains
• Income earned from renting assets
• Income from sources such as dividends, interest, and so on

Tax rates on companies as well as individuals keep changing every year and are announced in the Annual National Budget declaration in Parliament. For the Financial Year that ended on March 31, 2021, the rates were as follows.

Tax Rates for Domestic Companies in India

Foreign companies are subject to the following
tax rates

According to Section 139 of the Income Tax Act, you, as a taxpayer, need to file your income tax returns every year within the notified period or face a penalty.

These high rates are one more reason why you should register your company under Indian law to commence business in the country.

GST in India

It is mandatory for companies manufacturing or supplying goods and services in the Indian market to register for the Goods & Services Tax (GST). This includes foreign companies without a place of business in the country.

The GST replaces the previous system of Value Added Taxes (VAT), Excise taxes, service taxes, etc.

The GST is made up of 3 components- CGST, SGST and IGST.

• The Central GST (CGST) is levied on sales where goods/services are transferred within state borders.
• The State GST (SGST) is levied on sales where goods/services are transferred within state borders.
• The IGST is levied on the inter-state sale of goods or services.

Who should register for GST?

• Previously registered taxpayers of Value Added Taxes (VAT), Excise taxes, service taxes, etc.
• Taxpayers without a place of residence in the place where he/she supplies goods and services
• Any taxpayer in India whose annual turnover is INR 4000,000 (INR 1000,000 in the North Eastern and hill states of India) or above needs to register for the GST
• Input service distributors and agents of suppliers
• Those to whom the Reverse Charge Mechanism of the GST is applicable
• E-commerce aggregators and their suppliers
• Businesses supplying information or database services from outside India to a person residing in India.

The GST requires taxpayers to register on the GSTIN website, file monthly and annual returns, file to receive Input Tax Credit, e-way bills for goods being transported, and so on. We recommend consulting a seasoned tax professional to manage the entire process so that you can concentrate on innovating and growing your business.

Most Promising Business Opportunities within India

You could be selling and earning profits off any of the myriad booming opportunities from your India business right now.