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india-formation.md229 lines10.8 KB
v10India
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| 1 | --- |
| 2 | name: india-formation |
| 3 | description: > |
| 4 | Use this skill whenever asked about forming, incorporating, or registering a company in India. Trigger on phrases like "set up a company in India", "Pvt Ltd India", "private limited company India", "MCA registration", "SPICe+", "Indian company formation", "register a business India", "OPC India", "LLP India", "ROC filing", "DIN", "DSC", or any question about starting a business entity in India. Covers entity types (Pvt Ltd, OPC, LLP, public), registration process via SPICe+, capital requirements, costs, post-formation compliance, and bank account opening. ALWAYS read this skill before advising on Indian company formation. |
| 5 | version: 1.0 |
| 6 | jurisdiction: IN |
| 7 | category: formation |
| 8 | depends_on: |
| 9 | - company-formation-workflow-base |
| 10 | --- |
| 11 | |
| 12 | # India Company Formation Skill v1.0 |
| 13 | |
| 14 | --- |
| 15 | |
| 16 | ## Section 1 -- Quick Reference |
| 17 | |
| 18 | | Field | Value | |
| 19 | |---|---| |
| 20 | | Country | India (Republic of India) | |
| 21 | | Currency | INR | |
| 22 | | Company registrar | Ministry of Corporate Affairs (MCA) / Registrar of Companies (ROC) -- mca.gov.in | |
| 23 | | Key legislation | Companies Act, 2013; LLP Act, 2008 | |
| 24 | | Typical formation time | 7--15 working days (SPICe+ online) | |
| 25 | | Corporate tax rate | 22% + surcharge + cess (~25.17% effective, new regime); 15% for new manufacturing companies | |
| 26 | | Skill version | 1.0 | |
| 27 | |
| 28 | --- |
| 29 | |
| 30 | ## Section 2 -- Entity Types Comparison |
| 31 | |
| 32 | | Feature | Sole Proprietorship | LLP (Limited Liability Partnership) | OPC (One Person Company) | Private Limited (Pvt Ltd) | Public Limited | |
| 33 | |---|---|---|---|---|---| |
| 34 | | Legal personality | No | Yes | Yes | Yes | Yes | |
| 35 | | Liability | Unlimited | Limited to contribution | Limited | Limited | Limited | |
| 36 | | Min. founders | 1 | 2 designated partners | 1 (+ 1 nominee) | 2 directors + 2 shareholders | 3 directors + 7 shareholders | |
| 37 | | Min. capital | N/A | No minimum | ₹1 lakh (authorised) | ₹1 lakh (authorised) | ₹5 lakh (paid-up) | |
| 38 | | Tax treatment | Personal | Partnership tax (30% flat or new regime) | Corporate | Corporate | Corporate | |
| 39 | | FDI (100% automatic) | N/A | Restricted sectors only | Yes (most sectors) | Yes (most sectors) | Yes | |
| 40 | | Admin burden | Very low | Low--Medium | Medium | High | Very High | |
| 41 | | Audit required | If turnover > ₹1 crore | If turnover > ₹40 lakh or contribution > ₹25 lakh | If turnover > ₹2 crore or paid-up > ₹50 lakh | Mandatory | Mandatory | |
| 42 | |
| 43 | **Recommended default:** Private Limited Company (Pvt Ltd) for startups and businesses seeking funding. LLP for professional firms and partnership structures. |
| 44 | |
| 45 | --- |
| 46 | |
| 47 | ## Section 3 -- Registration Process |
| 48 | |
| 49 | ### Step 1: Obtain Digital Signature Certificate (DSC) |
| 50 | - Class 3 DSC required for each proposed director |
| 51 | - Cost: ₹1,000--₹2,000 per person |
| 52 | - Issued by licensed Certifying Authorities (e.g., eMudhra, Sify, NSDL) |
| 53 | - Processing: 1--3 days |
| 54 | |
| 55 | ### Step 2: Reserve Company Name (SPICe+ Part A or RUN) |
| 56 | - Apply via MCA V3 portal using RUN (Reserve Unique Name) form |
| 57 | - Fee: ₹1,000 |
| 58 | - Can propose up to 2 names; valid for 20 days if approved |
| 59 | - Name must include "Private Limited" at the end |
| 60 | |
| 61 | ### Step 3: File SPICe+ (INC-32) Form |
| 62 | - Integrated form that handles: |
| 63 | - Incorporation application |
| 64 | - DIN (Director Identification Number) allotment (up to 3 directors) |
| 65 | - PAN and TAN application |
| 66 | - GST registration (optional) |
| 67 | - EPFO (Employees' Provident Fund) registration |
| 68 | - ESIC (Employees' State Insurance) registration |
| 69 | - Bank account opening request |
| 70 | - Attach: MoA (INC-33), AoA (INC-34), declarations, ID/address proofs, registered office proof |
| 71 | - Pay government fees + stamp duty online |
| 72 | |
| 73 | ### Step 4: MCA Processing and Certificate of Incorporation |
| 74 | - ROC verifies documents and approves |
| 75 | - Certificate of Incorporation (CoI) issued with company PAN, TAN, and CIN |
| 76 | - Typically 7--10 working days from filing |
| 77 | |
| 78 | ### Step 5: Open Bank Account |
| 79 | - CoI triggers bank account opening (applied via AGILE-PRO-S in SPICe+) |
| 80 | - Deposit initial share capital |
| 81 | |
| 82 | ### Step 6: Issue Share Certificates |
| 83 | - Must be issued within 60 days of incorporation |
| 84 | - Maintain statutory registers |
| 85 | |
| 86 | --- |
| 87 | |
| 88 | ## Section 4 -- Capital Requirements |
| 89 | |
| 90 | | Entity Type | Min. Authorised Capital | Min. Paid-Up Capital | Payment Timing | In-Kind Contributions | |
| 91 | |---|---|---|---|---| |
| 92 | | Pvt Ltd | ₹1 lakh (commonly used) | No statutory minimum paid-up | On or after incorporation | Not permitted at incorporation via SPICe+ (cash subscription only initially) | |
| 93 | | OPC | ₹1 lakh | No statutory minimum paid-up | On or after incorporation | Same as Pvt Ltd | |
| 94 | | Public Ltd | ₹5 lakh (paid-up minimum) | ₹5 lakh | On or after incorporation | Permitted (valuation report required) | |
| 95 | | LLP | No minimum | No minimum | Per LLP agreement | Permitted | |
| 96 | |
| 97 | **Note:** There is no statutory minimum paid-up capital for Pvt Ltd since the Companies (Amendment) Act 2015 removed the ₹1 lakh paid-up requirement. However, authorised capital of ₹1 lakh is standard practice as it determines filing fees and stamp duty. |
| 98 | |
| 99 | --- |
| 100 | |
| 101 | ## Section 5 -- Costs Breakdown |
| 102 | |
| 103 | | Cost Component | Amount (INR) | Notes | |
| 104 | |---|---|---| |
| 105 | | DSC (per director, 2 directors) | ₹2,000--₹4,000 | Class 3 digital signature | |
| 106 | | RUN name reservation | ₹1,000 | Non-refundable | |
| 107 | | SPICe+ filing fee (up to ₹1 lakh authorised capital) | ₹500 | Scales with authorised capital | |
| 108 | | SPICe+ filing fee (₹1--₹5 lakh authorised capital) | ₹4,000 | | |
| 109 | | INC-22 (registered office) | ₹400 | | |
| 110 | | AGILE-PRO-S | ₹600 | | |
| 111 | | Stamp duty (MoA + AoA) | ₹200--₹12,600 | Varies dramatically by state | |
| 112 | | PAN and TAN | ₹0 | Issued via SPICe+ | |
| 113 | | **Total government fees** | **₹4,700--₹18,600** | Depending on state and capital | |
| 114 | | Professional fees (CA/CS) | ₹3,000--₹15,000 | Optional; recommended | |
| 115 | | **Total all-in** | **₹7,700--₹30,000** | | |
| 116 | |
| 117 | ### State Stamp Duty Variation (Select States) |
| 118 | |
| 119 | | State | Approximate Stamp Duty (₹1 lakh capital) | |
| 120 | |---|---| |
| 121 | | Maharashtra | ₹2,500--₹5,000 | |
| 122 | | Delhi | ₹1,000--₹2,000 | |
| 123 | | Karnataka | ₹5,000--₹6,000 | |
| 124 | | Tamil Nadu | ₹3,000--₹4,000 | |
| 125 | | Jammu & Kashmir | ₹100--₹200 | |
| 126 | | Madhya Pradesh | ₹10,000--₹12,600 | |
| 127 | |
| 128 | ### Annual Maintenance |
| 129 | |
| 130 | | Item | Cost (INR) | |
| 131 | |---|---| |
| 132 | | ROC annual return (MGT-7A) | ₹200--₹400 | |
| 133 | | Financial statements filing (AOC-4) | ₹200--₹400 | |
| 134 | | Income tax return | Included in accountant fees | |
| 135 | | Accountant / CS fees | ₹15,000--₹50,000/year | |
| 136 | | Statutory audit (mandatory) | ₹10,000--₹50,000/year | |
| 137 | | Director KYC (DIR-3 KYC) | Free (if on time); ₹5,000 (if late) | |
| 138 | |
| 139 | --- |
| 140 | |
| 141 | ## Section 6 -- Post-Formation Compliance |
| 142 | |
| 143 | | Obligation | Deadline | Authority | |
| 144 | |---|---|---| |
| 145 | | Annual return (MGT-7A) | Within 60 days of AGM | ROC (MCA) | |
| 146 | | Financial statements (AOC-4) | Within 30 days of AGM | ROC (MCA) | |
| 147 | | AGM (Annual General Meeting) | Within 6 months of financial year-end (first AGM within 9 months of incorporation) | Internal | |
| 148 | | Board meetings | Minimum 4 per year (gap ≤ 120 days) | Internal | |
| 149 | | Income tax return | 31 October (if audit required) / 31 July (otherwise) | Income Tax Department | |
| 150 | | GST returns | Monthly (GSTR-1, GSTR-3B) or quarterly (QRMP) | GST portal | |
| 151 | | TDS returns | Quarterly | Income Tax Department | |
| 152 | | DIR-3 KYC (director verification) | 30 September annually | MCA | |
| 153 | | Statutory audit | Mandatory for all companies | ICAI-registered CA | |
| 154 | |
| 155 | --- |
| 156 | |
| 157 | ## Section 7 -- Bank Account Opening |
| 158 | |
| 159 | ### Documents Typically Required |
| 160 | - Certificate of Incorporation (CoI) |
| 161 | - MoA and AoA |
| 162 | - PAN card of company |
| 163 | - Board resolution for account opening |
| 164 | - ID and address proof of all directors |
| 165 | - Proof of registered office |
| 166 | - SPICe+ application (bank account request embedded) |
| 167 | |
| 168 | ### Typical Timeline |
| 169 | - 3--7 days (with SPICe+ bank integration) |
| 170 | - 1--2 weeks (manual process) |
| 171 | |
| 172 | ### Common Banks |
| 173 | - State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank (major) |
| 174 | - Kotak Mahindra, IndusInd (private sector) |
| 175 | - RazorpayX, Open (neo-banking for startups) |
| 176 | |
| 177 | --- |
| 178 | |
| 179 | ## Section 8 -- Foreign Founder Considerations |
| 180 | |
| 181 | | Question | Answer | |
| 182 | |---|---| |
| 183 | | Non-resident directors allowed? | Yes, but at least 1 director must be resident in India (stayed in India for ≥182 days in the previous calendar year) | |
| 184 | | DIN for foreign directors | Obtainable via SPICe+ with passport and foreign address proof | |
| 185 | | DSC for foreign nationals | Available from Indian Certifying Authorities via video KYC | |
| 186 | | 100% FDI allowed? | Yes, in most sectors under automatic route; some sectors require government approval | |
| 187 | | Physical presence required? | Not for incorporation (online via MCA portal); resident director must be physically present in India | |
| 188 | | Apostille requirements | Foreign documents require apostille + notarised translation | |
| 189 | | FEMA compliance | FDI inflows must comply with FEMA regulations; FC-GPR filing within 30 days of allotment | |
| 190 | | Repatriation of profits | Permitted under automatic route for most sectors (subject to transfer pricing) | |
| 191 | |
| 192 | --- |
| 193 | |
| 194 | ## Section 9 -- Common Mistakes and Refusals |
| 195 | |
| 196 | **R-IN-F1 -- No Indian-resident director.** "At least one director must have been resident in India for at least 182 days in the preceding calendar year. A company cannot be incorporated without this. Foreign founders must appoint a qualifying resident director." |
| 197 | |
| 198 | **R-IN-F2 -- Ignoring annual compliance.** "Indian companies face heavy penalties for non-filing: ₹100/day for late annual return, disqualification of directors after 3 years of non-filing (s164(2)), and potential strike-off by ROC." |
| 199 | |
| 200 | **R-IN-F3 -- DIR-3 KYC missed.** "Every director must file DIR-3 KYC annually by 30 September. Missing this results in DIN deactivation (₹5,000 penalty to reactivate) and inability to file any MCA forms." |
| 201 | |
| 202 | **R-IN-F4 -- Shell company formation.** "MCA actively identifies and strikes off shell companies under s248. This skill will not assist in forming a company with no genuine business activity. Dormant company status (s455) exists for genuine temporary inactivity." |
| 203 | |
| 204 | **R-IN-F5 -- Authorised capital too low.** "Starting with ₹1 lakh authorised capital is common, but increasing it later costs ₹15,000+ in fees. If the business plan requires significant capitalisation, advise higher authorised capital upfront." |
| 205 | |
| 206 | --- |
| 207 | |
| 208 | ## Section 10 -- Timeline |
| 209 | |
| 210 | | Step | Duration | Cumulative | |
| 211 | |---|---|---| |
| 212 | | Obtain DSC for directors | 1--3 days | Day 1--3 | |
| 213 | | Reserve name (RUN) | 2--3 days | Day 3--6 | |
| 214 | | Prepare MoA, AoA, and supporting documents | 2--5 days | Day 5--11 | |
| 215 | | File SPICe+ on MCA portal | 1 day | Day 6--12 | |
| 216 | | ROC processing | 5--10 working days | Day 11--22 | |
| 217 | | Certificate of Incorporation + PAN + TAN | Same as ROC approval | Day 11--22 | |
| 218 | | Open bank account | 3--7 days | Day 14--29 | |
| 219 | | GST registration (if applied via AGILE) | 3--7 working days | Day 14--29 | |
| 220 | | **Ready to trade** | | **~2--4 weeks** | |
| 221 | |
| 222 | --- |
| 223 | |
| 224 | ## Disclaimer |
| 225 | |
| 226 | This skill and its outputs are provided for informational and computational purposes only and do not constitute legal, tax, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before acting upon. |
| 227 | |
| 228 | The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). |
| 229 |
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About
Use this skill whenever asked about forming, incorporating, or registering a company in India. Trigger on phrases like "set up a company in India", "Pvt Ltd India", "private limited company India", "MCA registration", "SPICe+", "Indian company formation", "register a business India", "OPC India", "LLP India", "ROC filing", "DIN", "DSC", or any question about starting a business entity in India. Covers entity types (Pvt Ltd, OPC, LLP, public), registration process via SPICe+, capital requirements, costs, post-formation compliance, and bank account opening. ALWAYS read this skill before advising on Indian company formation.
INty-2025
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