India with its expanding economy and startup-friendly practices is a hotspot for entrepreneurs. A popular business structure in India is the Private limited Company that provides both Limited liability for the owners and high growth potential. Private limited business registration in India is carried out through the Companies Act, 2013, under the Ministry of Corporate Affairs. The costs of pvt ltd company registration might depend upon the number of stakeholders, authorized share capital and professional fees. Here, we talk about the costs of incorporating private limited company in India in detail.
Company Registration Costs in India – Initial Costs
Company registration in India has been made less complicated with the integrated SPICe + (Simplified Proforma for Incorporating company Electronically Plus) form. This form enables entrepreneurs to apply for company title registration, incorporation, Director Identification Number, Permanent Account Number and Tax Account Number simultaneously.
The price of incorporating a private limited company generally ranges between Rs 6,000 and Rs 30,000. The reason for variation of cost is actually:
- 1. Number of Directors & Members: The more directors and members a company has the greater the registration cost.
- 2. Authorized Share Capital: Companies with greater authorized share capital might have higher registration fees.
- 3. Professional Fees: Complexity of fees and registration of financial and legal consultants can increase the cost considerably. Such fees frequently depend upon the difficulty of the task and also the abilities of the professionals involved.
Registration Cost Breakdown
The registration costs are clearly mentioned below:
1. Government Fees: The MCA charges a nominal fee for the SPICe + form depending on the company’s authorized share capital.
Also, Stamp duty charges differ from state to state and depend on the authorized share capital.
2. Professional Fees: The price of engaging a Chartered Accountant, Company Secretary or lawyer to handle the incorporation procedure varies from Rs 5,000 to Rs 20,000.
3. Digital Signature Certificate: To obtain a DSC for a minimum of 1 director is necessary and costs between Rs 1,000 and Rs 2,000 a director.
4. Director Identification Number: Getting a DIN costs about Rs 500.
Extra Registration Costs
Other necessary registrations that a company might need, based on the nature of its company, comprise the main registration charges. Such registrations also add expense to establishing a Pvt Ltd company in India.
- GST Registration: Goods & Services Tax registration is required for businesses having an annual turnover exceeding Rs 20 lakhs (Rs 10 lakhs for special category states). The price of GST registration includes expert costs and varies between Rs 1,000 and Rs 4,000.
- Import Export Code: For import/export companies an IEC is mandatory. The registration fee is Rs 500 and extra professional charges will be possible between Rs 1,500 and Rs 3,000.
- Professional Tax Registration: Some states require professional tax registration. The cost varies but ranges between Rs 1,000 and Rs 2,500.
- Employees’ Provident Fund Registration: For any company employing over twenty individuals EPF registration is mandatory. The registration itself is totally free of charge, but experts demand between Rs 1,500 to Rs 5,000 for managing the procedure.
- Micro, Small and Medium Enterprise Registration: MSME registration could bring various benefits to small and medium enterprises. The registration cost consists of professional costs and ranges between Rs 1,500 and Rs 3,000.
Mandatory Compliances and Their Costs
A company must meet several mandatory compliances from time of incorporation onwards once it is registered. These compliances have related costs:
1. Board Meetings:
The very first board meeting must occur within thirty days of incorporation. Then follow board meetings should be held at the very least 4 times each year. The price of organizing these kinds of meetings could vary between Rs 2,000 and Rs 5,000 a meeting.
2. Filing of Disclosure of Interest by Directors:
Directors must declare interest in some other entities. The filing cost related to this particular compliance could be between Rs 500 and Rs 2,000.
3. Nomination of Auditors:
A first auditor should be appointed within 30 days of incorporation. Afterward auditors must be appointed at annual general meetings. Auditor fees differ considerably but vary between Rs 5,000 and Rs 20,000 annually.
4. Annual General Meeting:
The company is obligated to hold an AGM yearly. The price of organizing an AGM might be between Rs 2,000 and Rs 10,000.
5. Annual Return Filing (Form MGT-7):
The annual return is a result of the MCA. The filing fee ranges between Rs 500 and Rs 5,000 with regards to the permitted share capital.
6. Filing of Financial Statements (Form AOC-4):
The financial reports have to be submitted annually. This particular filing might cost you anywhere from Rs 500 to Rs 5,000.
7. Statutory Audit of Accounts:
A statutory audit is mandatory for all companies. Auditing cost is determined by the company size in addition to complexity of accounts and could vary between Rs 10,000 and Rs 50,000.
Event Based Compliances
Event-based compliances are triggered by events like a change of registered office, directors or share capital. The forms associated with these events and their costs are the following:
- Change in Registered Office (Form INC-22): The price of filing this particular form could be between Rs 1,000 and Rs 5,000.
- Change in Directors or Key Managerial Personnel (Form DIR-12): This form might cost you between Rs 1,000 and Rs 5,000 to fill out.
- Authorized increase in Share Capital (Form SH-7): This particular form costs according to the increase and will cost you anywhere from Rs 1,000 and Rs 10,000.
- Filing of Resolutions and Agreements (Form MGT-14): The price of filing this particular form could be between Rs 1,000 and Rs 5,000.
- Increase in Paid-Up Share Capital (Form PAS-3): This form might cost you between Rs 1,000 and Rs 5,000 to fill out.
- Application for Registration of Creation or Modification of Charge (Form CHG-1): The price of filing this particular form could be between Rs 1,000 and Rs 5,000.
- KYC of Directors Application (Form DIR 3 KYC): This form might cost you between Rs 500 and Rs 2,000 to fill out.
- ACTIVE (Active Company Tagging Identities and Verification) (Form INC-22A): This form might cost you anywhere from Rs 1,000 to Rs 5,000.
- Declare of Commencement of Business (Form INC-20A): This form might cost you between Rs 1,000 and Rs 5,000 to fill out.
Additional Fees for Delayed Filing
The government levied higher fees for late filing of forms. These fees are set up to make sure timely compliance by companies. The extra fees depend on the form along with the waiting period, and penalties may be considerable.
Conclusion
There are many steps and associated expenses for registering a private limited company in India. Although the first registration price is between Rs 6,000 and Rs 30,000, extra charges for necessary registrations, event-based filings and compliances can add considerably to the cost tag. Entrepreneurs need to calculate these costs and plan accordingly to run a private limited company legally and smoothly. The breakdown of costs in detail might help in financial planning and prevent unforeseen expenses during company registration in India.
FAQs
How much will it cost to start a Pvt Ltd company?
The Price of registering a Private Limited Company in India or registration of Pvt Ltd Company is going to be between Rs 6,000 / – and Rs 30,000 / – based on no. of directors, No. of members, authorized share capital & Professional costs.
Can I register a Pvt Ltd Company myself?
You can self-register a company in India as per MCA guidelines. Nevertheless, it’s a lengthy and complex process and you need to think about expert assistance or consulting a Chartered Accountant for correct registration.
What’s the minimum capital for a Pvt Ltd business?
From 2015 there is no minimum paid up capital for Private Limited companies in India.
Can one person own a Pvt Ltd?
Earlier a private limited company required at least 2 directors and 2 members. One man couldn’t form a private company. But a new concept of OPC was introduced under Section 2 (sixty two) of the Companies Act 2013 where a single person can form a private limited Company.
What’s the minimum turnover of a Pvt Ltd?
A one person Company has to convert into a Private Limited company once its yearly sales turnover exceeds Rs. 2.00 crores or its paid up capital exceeds Rs. Fifty lakhs within 2 months.
