Private Limited Company Registration in India

Your dream to start a business in India can't come to realization if you don't have a proper business entity to support it. A private limited company is India's most prominent form of business entity. From veterans to novices, from budding start-ups to established entrepreneurs, and from north India to south India, it is considered the best business entity.

In order to start your business with such an entity, you must go through four simple steps. The first step is to obtain the DSC signature, and the second is to apply for the Director Identification Number. Third, get name approval and fill SPICe+ form and lastly obtain PAN and TAN number.

Advantages of Private Limited Company

Private Limited Companies have many benefits and some of them are as follows:

Limited Liability

The main benefit of setting up a private limited company is that the liability of members becomes limited means they don’t have to sell their personal assets at the time of liquidation. The liability will be limited to the part of your share in the company. 

Separate Legal Entity

In a private limited company, the company has a separate entity from its members. This means that the company is liable for all the management of assets, liabilities, debtors and creditors. So, in case of any loss, the creditors cannot legally proceed against you.

Trustworthiness

In India, if you have to register a company, then you must register with the Registrar of Companies as per the Companies Act, 2013. Anyone can check the details of the company through the online portal of MCA. So, the company is registered on a government website which shows credibility and builds the trust of the clients.

Perpetual Existence

The company has a perpetual succession, meaning it will continue or its existence will be uninterrupted until it is dissolved legally. On the death or cessation of a member, the company continues without any change in the membership.

Tax Benefits

Under Section 80IAC of Income-tax, the private limited companies get 100% tax exemption for 3 consecutive financial years. It can be said that it is one of the most important tax benefits to startups in India.

Easy Access to Loans

Compared to public companies, private limited companies have more options to generate funds by offering securities to the public without any limitation and can get money from angel investors.

However, acquiring this business entity is no small task, for there are many requirements for a private limited company. And if you want to register any company type including, public limited company or one person company - read full process here - How to Register a Company in India.

Eligibility criteria for Private Limited Company Registration in India

Private Limited Company registration requirements:

As per the Companies Act, 2013, the private limited company must fulfill the below criteria before applying for the registration process in India.

• A company must have a minimum of two directors and a maximum of fifteen. One member must be a resident of India.
• There should be a minimum of two shareholders and a maximum of 200 shareholders.
• The name must be unique, and it should not be similar to any existing company name or trademark in India.
• The minimum capital amount required for a Private Limited company should be Rs. 1 lakh.
• The registered address of the company should be a commercial space, even the rented home can be registered as an office, as long as NOC is taken from the landlord.

Documents required for Private Limited Company Registration in India

Document requirements to register a Private Limited Company

• Self-attested copy of identity proof of all the Directors and Shareholders. Any one of the following can be used as proof of identification.
   
  • Self-attested PAN card copy 
  • PAN card
  • Aadhar card
  • Driving license
  • Passport

• Address proof of all the directors and shareholders. Any one of the following can be used as company address proof:
  
  
  • Latest telephone bill (not older than 2 months)
  • Latest electricity bill (not older than 2 months)
  • Bank account statement showing address
    
    
• Director Identification Number (DIN) and Digital Signature Certificate (DSC) of the Directors.

Documents Required for Foreign Nationals

• Passport is mandatory
• Self-attested copy of any one of the Identity Proofs Driving license/ Bank Statement/ Residence Card
• Self-attested copy of any one of the Addresses Proof like Bank Statement / Electricity Bill / Phone Bill
• Board resolution authorizing investment in the company
• Incorporation Certificate of the Company
• Address proof of the company

Process for Private Limited Company Registration in India

Want to know the procedure for the formation of a Private Limited Company in India?

But before jumping into the procedure, you must know that the registration process is not easy, it's complex because of the many compliances involved. Here you don’t need to worry about the process because our expert will assist you at every step.

Well, the procedure for online Pvt Ltd Co incorporation in India is as follows:

Step 1: Obtain Digital Signature Certificate

The Directors of the company must have a digital signature certificate to file the company formation. As the process is completely online, so all the forms are required to have a signature.

A DSC certificate is compulsory for all subscribers and has it in the Memorandum of Association (MoA) and Articles of Association (AoA). The certificate must be Government recognised, and the cost depends on the certifying authority.

Step 2: Apply for Director Identification Number (DIN)

The DIN number must be obtained by the person who wants to be a Director of a company. One DIN is enough to become a director. To obtain the number, fill the SPICe+ Form with details such as the name of the proposed director, PAN card, Aadhar card, and address proof. A maximum of three directors can apply for DIN but if the applicant wants to incorporate more than three directors. Here first the company should be incorporated with three directors and then appoint a new director after incorporation.

Step 3: Get Name Approval

Reserve the name through the SPICe+ form, in this two proposed names can be reserved and one re-submission can be done while reserving Unique Names of the Companies. 

In case the name gets rejected due to any similarity or other reason, the applicant has to refile another SPICe+ form with the prescribed fees. Once the name gets approved, it will be reserved for 20 days. During this time the company must proceed with the incorporation process by submitting Part B of the SPICe+ form.

Another option for name approval is by filing Part-A and Part-B of the SPICe+ Form together: The company can file the name along with the application for incorporation. Part B of the SPICe+ enables applying for incorporation. 

In case of rejection of the application due to non-approval of the name, the applicant will get a chance to refill the same SPICe+ form without any further charges. This means you get two chances to change the name without paying an extra charge of Rs. 1000/- both times. 

After getting the second chance, even if the name gets rejected, then the applicant has to file the SPICe+ form from scratch. So, this option is cheaper as compared to the first one. The whole process of name approval and incorporation takes 2-3 days.

Step 4: Form SPICe+ (INC-32)

The MCA has introduced the Form SPICe+ form for new companies. The process is web-based and it makes the process easier. The online process helps in real-time validation of the incorporation process seamlessly and quickly.

Information filled in Part -A and Part B of the SPICe+ form will be automatically shown in the linked forms such as AGILE PRO, eAoA, eMoA, URC1, and INC-9. Download the forms in PDF and sign digitally. 

Step 5: e-MoA(INC-33) and e-AoA (INC-34)

It is an electronic Memorandum of Association and an electronic Article of Association. These forms have brought the simplified process of company registration in India. Memorandum shows the charter of the company whereas the other hand AoA shows the internal rules and regulations of the company.

First, the MoA and AoA are required to be filed physically. But now these forms are filed online on the MCA portal as a linked form with SPICe+ (INC-32). Both documents must be digitally signed by the subscribers.

Step 6: PAN and TAN Application

With the help of the SPICe+ form, PAN and TAN can be applied. The system will automatically generate the form after the submission of the SPICe+ form. An email containing the certificate of incorporation, PAN and TAN will be sent to the applicant. The PAN card will be issued by the Income Tax Department.

If all the details filled in the form are correct, the MCA will approve the registration and provide a Corporate Identity Number (CIN). Applicants can track the application MCA portal.

Capital Required to Set Up a Private Limited Company

A company can incorporate in India with a minimum amount of capital, and there is no need for shareholders to have a fixed amount of capital. So, while setting up the capital structure the following points should be considered:

Face Value of Share: The face value of a share is typically the price per share at which the company is incorporated. The face value of shares can be Rs. 1 or Rs. 10 or Rs. 100 or Rs. 1000 or Rs. 10,000.

Authorized Capital: The total amount of stock that a company can issue to its shareholders. All companies are typically formed with an authorized capital of Rs. 1 lakh or Rs. 10 lakhs. If a larger authorized capital is required, the company must pay additional fees to the Ministry of Corporate Affairs. A company's authorized capital can be increased at any time after incorporation.

Paid-up Capital: A company's paid-up capital is the number of shares issued to shareholders in exchange for money paid or deposited to the company. A company's paid-up capital cannot be greater than its authorized share capital.

Private Limited Company Compliances

Once a company got registered, the following compliances have to be maintained:

Directors KYC: Every individual must have a Director Identification Number (DIN) which is assigned during the incorporation process. The KYC process should be complete. This verification ensures that their phone number and email address on record with the Ministry of Corporate Affairs are up to date-and accurate.

Business Commencement: Within 180 days of incorporating a company it is mandatory to open a Bank Current Account and have shareholders deposit the subscription amount mentioned in the Memorandum of Association (MOA). 

For example, if a company is incorporated with a paid-up capital of Rs. 1 lakh then the shareholders must deposit Rs. 1 lakh into the company's bank account. Alongside this, they also need to file the bank statement with the MCA in order to obtain a certificate for commencing business operations.

Annual Filings with MCA: All companies which are registered in India are required to submit their statements to the Ministry of Corporate Affairs each year. If a company is incorporated between January and March it has the option to include its MCA return, as part of the next financial year's filings. The MCA annual return includes Form MGT 7 and Form AOC 4 both of which need to be signed by the Directors and a practicing professional

Income Tax Filing: Every company must file an income tax return using Form ITR 6 each year. Income tax filing needs to be completed every year, before the deadline regardless of when the company was incorporated. To file a company's income tax return one of the Directors should digitally sign it using their signature.

Bank Account for Private Limited Company

Within 180 days of company registration, a bank current account in the company's name must be opened and the subscription amount deposited. If the above steps are not followed, the certificate of commencement of business will not be issued, and a penalty will be imposed.

The following documents are required to open a bank account for a private limited company:

• Incorporation Certificate of Company
• Directors KYC Documents
• Board Resolution Authorizing the Directors to Open Bank Account
• Address Proof of the Company
• At IndiaFilings, we work with various banks to help our clients open current accounts for their companies in a seamless fashion.

GST Registration for Private Limited Company

The Directors can choose to obtain GST registration along with the incorporation during the company registration process. Unless certain turnover thresholds are met, a company is not required to register for GST. More information on the turnover limit and the process for obtaining GST registration can be found in our comprehensive guide to GST registration in India.

Time and Cost Required to Register a Private Limited Company

The entire process, including DIN, Name, and Incorporation approval, takes about 10 working days. Registering a company is now a quick process because all documents are dragged into a single application form with MCA. It is a significant step toward e-governance and for businesses looking to expand their operations.

Time and Cost Required to Register a Private Limited Company

The entire process, including DIN, Name, and Incorporation approval, takes about 10 working days. Registering a company is now a quick process because all documents are dragged into a single application form with MCA. It is a significant step toward e-governance and for businesses looking to expand their operations.

Cost Required to Set Up a Private Limited Company

Below is the table that states all the required fees for registration: