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Registration of a Private Limited Company in India. Service offer

India is gradually becoming a fully-fledged player on the international market. It is no secret that the country attracts a growing number of foreign investors and large multinationals. We offer private company registration services in India.

India has a variety of forms of business organization, which include:

Partnership;

Limited Liability Partnership;

Private Limited Company;

Public Limited Company;

Joint Venture Company.

The main piece of legislation governing companies is the Companies Act 1956. The most common type of company is the Private Limited Company, which will be described in more detail below.

Structure

Directors

The minimum number of directors is 2 (individuals)

At least one director must be a resident of India (which requires residing in India for at least 182 days in a year)

Every individual wishing to become a company director must apply for a director identification number. A person who previously received such a number is not eligible to apply for another one

The names of the directors and their identification number are publicly available.

Shareholders

The minimum number of is 2 (individuals or legal entities)

There are no requirements for the residency of shareholders/

Share capital

Following the recent changes in the legislation, the minimum share capital has been reduced from INR 100 000 to INR 100, payable within 30 days of incorporation.

Company incorporation

The incorporation of a company takes approximately 3-4 weeks.

The incorporation of a company includes the following steps:

1) Checking the name of the future company for its availability

India has the following requirements for the company name:

  • the name can only be in English;
  • should end with an indication of the type of entity: in the case of a private limited company, it is “Private Limited”;
  • must not be identical or too similar to the name of an existing company;
  • must not constitute an offence;
  • must not be undesirable in the opinion of the Central Government;
  • must not contain any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government unless the previous approval of the Central Government has been obtained for the use of any such word or expression.

2) It is necessary to provide the following documents

2.1. for directors and shareholders:

a) proof of identity:

  • for foreigners: notarized copies of passports, translated into English and apostilled;
  • for a local director: Pan Card;

b) proof of address:

  • for foreigners: bank reference / bank statement, Utility Bill or driving licence (if shows the address), translated into English and apostilled;
  • for a local director: Voter ID, Aadhar Card or Utility Bill.

c) photos of directors (passport-like format – 3.5 x 4.5, against a white background);

d) CVs of directors.

If one of the founders is a legal entity, then a full set of constitutive documents is required, including a certificate of good standing (or its equivalent) for companies older than 1 year. The documents must also disclose the ownership structure up to the ultimate beneficial owner.

2.2. lease agreement for the future office.

3) Paying the share capital

4) Obtaining a director identification number (DIN)

5) Obtaining a digital signature certificate (DSC)* for directors

6) Preparing and submitting constitutive documents to the Registrar, making a complete set of company documents

7) Obtaining a taxpayer identification number (PAN) and a tax deduction and collection account number (TAN) for the company

8) Opening a bank account

9) Registration with the local municipality

It is next necessary to register with the local municipality for VAT, for profession tax and for import-export operations.

10) Registering a foreign-owned company with the Reserve Bank of India

In accordance with the new requirements of Indian legislation.

11) Applying for licences, if required by the activities of the company

Taxation in India

India has two levels of taxation:

  • Central level
  • State level

At the central level there are:

  • Income tax;
  • Central goods and services tax;
  • Integrated goods and services tax;
  • Customs duty.

At the state level there are:

  • State goods and services tax;
  • Property tax;
  • Stamp duty.

Income tax

A resident company is taxed on its worldwide income, whereas a non-resident company is only taxed on income that is derived in India or that accrues or arises (is deemed to accrue or arise) in India.

Reduced income tax rate for new manufacturing companies

Starting from 2019, local manufacturing companies incorporated on or after 1 October 2019 that commence operations before 31 March 2023 are eligible, subject to certain conditions, for a reduced income tax rate of 15% (plus 10% surcharge and 4% health and education cess).

Goods and services tax

Goods and services tax (GST) is an indirect tax that has been in force in India since 1 July 2017. It is levied on the production, sale and consumption of goods and services.

Since India is a federal republic, goods and services tax is levied at both the central (CGST) and state (SGST) levels.

The rate of goods and services tax varies depending on the type of goods and services and can be 0%, 5%, 12%, 18% or 28%.

All suppliers whose aggregate turnover in a financial year exceeds the established threshold are required to register for GST.

The GST registration threshold is INR 2 million (approx. USD 26 000) of aggregate turnover in a financial year (INR 1 million (approx. USD 13 000) for some special category states such as the north eastern states). For the purposes of the threshold, the aggregate turnover is calculated on all India basis. For certain specific categories of supplies and suppliers, the registration for GST is mandatory.

Small traders with a turnover below INR 10 million (approx. USD 130 000) have an option to use the composition scheme. Under this scheme, GST will be applied at a lower rate (1% of the taxable turnover for manufacturers/traders and 5% for restaurants). The composition scheme is not applicable to services other than restaurant services.

We recommend seeking tax advice to assess the tax burden of the project, taking into account your parameters, before proceeding with the incorporation of the company.

Accounting and reporting

All Indian companies are required to prepare annual financial statements. The first financial statements of a new company must be made not more than 9 months before the Annual General Meeting (AGM). After that, the annual financial statements must be prepared not more than 6 months before the AGM.

Annual financial statements are required to be filed with the Registrar within 30 days of the date of AGM, or, if the meeting was not held, within 30 days of the date on which the AGM should have been held.

Financial statements must cover the financial year (12 months), but not more than 15 months. It is possible to apply to the Registrar for extension of the financial period to 18 months.

In the case of a limited company, its balance sheet is publicly available, but its profit and loss account is not.

In addition, every Indian company is required to prepare and file an Annual Return with the Registrar within 60 days of the date of AGM or the deadline for AGM, if such was not held.

The tax return must be filed by the company by 30 September.
The fees for preparing financial statements and filing a return depend on the scope of work, based on the hourly rate of USD 100-400.

Fees for basic services**

Services
Fees (USD)
Total cost of incorporation
Includes:
- basic Compliance fee,
- preparation and provision of original constitutive documents,
- payment of government fees (except stamp duty on payment of share capital),
- registration for tax (PAN, TAN, VAT) and at the RBI,
- assistance with opening a local bank account for depositing the share capital;
Does not include:
- translation, notarization and apostille of documents,
- payment of share capital,
- office lease
from 7 600
Subsequent annual maintenance (starting from the second year), including the registered agent services for a year, but not including Compliance fee
from 4 200
Renting a physical office is necessary for registration of a company in India.
Our fees for finding an office and preparing a lease agreement for a year – 750
Local director (for 1 year)
from 4 500
(services such as signing, visits to banks, etc. are to be paid for additionally and to be agreed with the director in advance)
Local secretary (for 1 year) (if necessary)
from 3 600
Preparation and submission of non-dormant financial statements
100 – 400 / hour
(based on time spent)
Shipment of documents
from 125
Compliance fee
Payable in the cases of:
- renewal of a company,
- liquidation of a company,
- transfer out of a company,
- issue of a power of attorney to a new attorney,
- change of director/shareholder/beneficial owner, except the change to a nominee director/shareholder)
250 (standard rate, includes the check of 1 individual);
+ 50 for each additional individual (director, shareholder, or beneficial owner) or legal entity (director or shareholder) if such legal entity is administered by GSL;
+ 100 for each additional legal entity (director or shareholder) if such legal entity is not administered by GSL;
350 (rate for high-risk companies, includes the check of 1 individual)

*The digital signature is valid for two years, after which it is subject to renewal.

**The fees are valid as at September 2022.

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7600 USD
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