Company Registration Cost in India

Starting a company in India involves several steps, one of the most crucial being the registration of the company. This process not only gives your business a legal identity but also helps in building trust and credibility among customers, investors, and other stakeholders. Understanding the costs associated with company registration in India is essential for entrepreneurs and business owners who are planning to launch a new venture. This comprehensive guide provides detailed insights into the costs involved in company registration, the various factors that influence these costs, and the steps involved in the registration process. Additionally, we answer ten frequently asked questions to provide a thorough understanding of company registration costs in India.

Company registration in India is governed by the Companies Act, 2013, which provides the legal framework for the incorporation, regulation, and winding up of companies in the country. The process involves several steps, including selecting the type of company, obtaining Digital Signature Certificates (DSCs), Director Identification Numbers (DINs), and filing the necessary documents with the Registrar of Companies (RoC).

The most common types of companies that can be registered in India are:

1. Private Limited Company (Pvt Ltd)
2. Public Limited Company
3. One Person Company (OPC)
4. Limited Liability Partnership (LLP)
5. Section 8 Company (Non-Profit Organization)

The costs associated with registering a company in India vary depending on the type of company, the location, the number of directors, and other factors. This guide will break down these costs to help you understand the expenses involved.

The total cost of registering a company in India includes several components, each of which contributes to the overall expense. These costs can be broadly categorized as follows:

1. Government Fees
2. Professional Fees
3. Stamp Duty
4. Digital Signature Certificate (DSC)
5. Director Identification Number (DIN)
6. Name Reservation Fees
7. Memorandum of Association (MoA) and Articles of Association (AoA) Fees
8. PAN and TAN Application Fees
9. GST Registration Fees (if applicable)

Let’s explore each of these components in detail.

Overview

Government fees are the mandatory charges levied by the Ministry of Corporate Affairs (MCA) for the incorporation of a company. These fees vary based on the authorized share capital of the company.

Cost Breakdown

• For a Private Limited Company with an authorized capital of up to ₹15 lakhs: The government fees range from ₹3,000 to ₹7,000.
• For an LLP: The fees are generally lower, starting at ₹500.
• For higher authorized capital: The fees increase progressively with the increase in authorized capital.

Overview

Professional fees are charged by legal and financial experts, such as Chartered Accountants (CAs), Company Secretaries (CSs), and legal advisors, who assist in the registration process. These professionals help with the preparation and submission of documents, ensuring compliance with legal requirements.

Cost Breakdown

• Basic Professional Fees: Typically range from ₹5,000 to ₹15,000 for the entire registration process.
• Complex Cases: For more complex cases or higher-authorized capital companies, the fees may increase, ranging from ₹20,000 to ₹50,000 or more.

Overview

Stamp duty is a tax levied on legal documents, including the MoA and AoA, which are essential for company registration. The stamp duty varies depending on the state in which the company is being registered.

Cost Breakdown

• Stamp Duty for MoA and AoA: Varies between states but generally ranges from ₹1,000 to ₹5,000.
• For higher authorized capital: The stamp duty increases in proportion to the share capital.

Overview

A Digital Signature Certificate (DSC) is required for the directors of the company to digitally sign the electronic documents submitted to the MCA. DSCs are issued by certified agencies and are valid for 1 to 2 years.

Cost Breakdown

• DSC Cost: Ranges from ₹1,000 to ₹2,000 per director.
• Number of Directors: The total cost increases with the number of directors requiring DSCs.

Overview

The Director Identification Number (DIN) is a unique identifier for each director of the company, issued by the MCA. Obtaining a DIN is mandatory for every individual who wishes to become a director.

Cost Breakdown

• DIN Application Fee: Typically, the cost is ₹500 per DIN.
• Total DIN Cost: Depends on the number of directors in the company.

Overview

The name reservation process is the initial step in company registration, where you propose a name for your company. The name must be unique and comply with the naming guidelines set by the MCA.

Cost Breakdown

• Name Reservation Fee: ₹1,000 per application.
• Re-Submission: If the proposed name is rejected, additional charges may apply for re-submission.

Overview

The MoA and AoA are the founding documents of the company. The MoA outlines the company’s objectives, while the AoA defines the internal rules and regulations. The preparation and filing of these documents incur additional costs.

Cost Breakdown

• Drafting Fees: Professional fees for drafting the MoA and AoA typically range from ₹5,000 to ₹10,000.
• Filing Fees: The filing fees with the MCA can range from ₹1,000 to ₹5,000, depending on the authorized share capital.

Overview

After registration, the company must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) with the Income Tax Department.

Cost Breakdown

• PAN Application Fee: ₹107 (₹93 + GST).
• TAN Application Fee: ₹65 (₹55 + GST).
• Professional Fees: If done through a professional, additional service charges may apply.

Overview

If your company’s turnover exceeds the threshold limit for GST registration (₹40 lakhs for goods and ₹20 lakhs for services as of the latest update), you will need to apply for GST registration.

Cost Breakdown

• Government Fees: There are no government fees for GST registration.
• Professional Fees: If done through a professional, the fees can range from ₹1,500 to ₹5,000.

Several factors influence the overall cost of company registration in India. Understanding these factors can help you estimate the total expense more accurately:

1. Type of Company: The cost varies depending on whether you are registering a Private Limited Company, LLP, OPC, or a Section 8 Company.
2. Authorized Share Capital: Higher authorized share capital results in higher government fees and stamp duty.
3. Location: The stamp duty and professional fees can vary significantly between different states and cities.
4. Number of Directors and Shareholders: More directors and shareholders typically increase the cost due to additional DSCs, DINs, and documentation.
5. Professional Services: The choice of professional services, such as legal, accounting, and consultancy, also impacts the overall cost.
6. Additional Licenses and Permits: Depending on your business activity, you may need to obtain additional licenses or permits, which can add to the registration cost.

The company registration process in India involves several steps, each of which requires careful attention to detail. Here’s a step-by-step guide to the application process:

1. Choose the Type of Company

• Determine the Structure: Decide whether you want to register a Private Limited Company, Public Limited Company, LLP, OPC, or Section 8 Company.
• Understand Legal Requirements: Each type of company has its own set of legal requirements, so choose the structure that best suits your business goals.

2. Obtain Digital Signature Certificates (DSCs)

• Apply for DSCs: Directors need to apply for DSCs from a certified agency. The application process involves submitting identification documents and completing an online form.
• Receive DSCs: Once approved, the DSCs will be issued, and the directors can use them to sign electronic documents.

3. Apply for Director Identification Numbers (DINs)

• Submit DIN Application: File the DIN application through the MCA portal, providing necessary identification and address proofs.
• DIN Approval: Upon verification, the MCA will issue the DIN, which is required for company registration.

4. Reserve Your Company Name

• Check Name Availability: Use the MCA portal to check the availability of your proposed company name.
• File Name Reservation: Submit the name reservation application (Form SPICe+ Part A) through the MCA portal, along with the ₹1,000 fee.
• Name Approval: If the name is approved, it will be reserved for 20 days during which you can proceed with the registration.

5. Prepare the Memorandum of Association (MoA) and Articles of Association (AoA)

• Draft MoA and AoA: Engage a professional to draft the MoA and AoA according to your business objectives and internal rules.
• Sign and File: The directors and shareholders must sign these documents, which are then filed with the MCA.

6. File Incorporation Application (SPICe+)

• Complete SPICe+ Form: Fill out the SPICe+ (Simplified Proforma for Incorporating a Company Electronically) form, which consolidates various applications like company incorporation, DIN allotment, and PAN/TAN application.
• Attach Documents: Attach the MoA, AoA, DSCs, and other required documents.
• Pay the Fees: Pay the requisite government fees based on the company’s authorized share capital.

7. Obtain Certificate of Incorporation (COI)

• MCA Review: The MCA will review the application and documents. If everything is in order, they will issue the Certificate of Incorporation.
• Commence Operations: Once you receive the COI, your company is legally registered, and you can start business operations.

8. Post-Incorporation Compliances

• PAN and TAN: Apply for PAN and TAN immediately after incorporation.
• Bank Account: Open a corporate bank account in the company’s name.
• GST Registration: If applicable, apply for GST registration.
• Other Licenses: Depending on your business activity, obtain any additional licenses or permits required.

Key Considerations for Company Registration in India

When registering a company in India, consider the following points to ensure a smooth process:

1. Budgeting for Costs: Plan your budget by considering all the potential costs, including government fees, professional fees, and additional expenses.
2. Choosing the Right Structure: Select the company structure that best fits your business objectives and long-term goals.
3. Understanding Legal Requirements: Ensure that you understand the legal requirements for your chosen company structure, including compliance obligations.
4. Engaging Professionals: Consider hiring legal and financial professionals to assist with the registration process, especially for complex cases.
5. Timely Compliance: After incorporation, stay updated on compliance requirements to avoid penalties and legal issues.

1. Legal Recognition: A registered company has legal recognition and can enter into contracts, own property, and sue or be sued.
2. Limited Liability Protection: Shareholders’ liability is limited to their shareholding, protecting personal assets from business liabilities.
3. Access to Capital: Registered companies can raise capital through equity, debt, and other financial instruments.
4. Perpetual Succession: The company continues to exist even if the owners or shareholders change.
5. Brand Credibility: A registered company enhances brand credibility, making it easier to attract customers, investors, and partners.

1. Cost: The cost of registration, including ongoing compliance, can be a burden for startups with limited budgets.
2. Regulatory Compliance: Registered companies are subject to stringent regulatory compliance, which can be time-consuming and complex.
3. Disclosure Requirements: Companies must disclose financial and operational details, which may be sensitive for some businesses.

1. Ola Cabs: Ola, a leading ride-hailing company in India, started as a registered Private Limited Company. The legal structure allowed it to attract significant investment, scale operations across India, and become a market leader in the transportation industry.
2. Zomato: Zomato, a popular food delivery and restaurant discovery platform, leveraged its registered status to secure funding, expand internationally, and grow into a billion-dollar enterprise.
3. BYJU’S: BYJU’S, an ed-tech company, began as a registered entity, which enabled it to raise funds, comply with educational regulations, and become one of the largest online learning platforms in India.

1. Name Rejection: Proposed company names may be rejected if they are too similar to existing names or violate naming guidelines. Solution: Conduct a thorough name search before submission and prepare alternative names.
2. Document Errors: Errors in documentation can delay the registration process. Solution: Double-check all documents and consider professional assistance for accurate filing.
3. Complex Compliance: Navigating compliance requirements can be challenging, especially for first-time entrepreneurs. Solution: Engage a legal advisor or company secretary to guide you through the process.

1. Opt for a Simple Structure: If you are a small business, consider starting with a simpler structure like an LLP to reduce initial costs.
2. DIY Approach: If you have a clear understanding of the registration process, you can handle some tasks yourself to save on professional fees.
3. Bundled Services: Look for professional firms that offer bundled services, which can include DSCs, DINs, and name reservations, at a discounted rate.
4. Negotiate Fees: Don’t hesitate to negotiate professional fees, especially if you are working with a firm on multiple services.
5. Stay Updated on Legal Changes: Be aware of any changes in government fees or regulations that might affect your registration costs.

Company registration in India is a critical step for entrepreneurs looking to establish a legal and credible business entity. Understanding the costs involved, the factors that influence these costs, and the registration process can help you plan effectively and ensure a smooth incorporation. While the costs may vary depending on several factors, being well-prepared and informed can save time, money, and effort. This comprehensive guide provides all the necessary information to help you navigate the company registration process and manage the associated costs efficiently.

1. What is the total cost of registering a company in India? The total cost varies depending on the type of company, authorized share capital, location, and professional fees. It can range from ₹10,000 to ₹50,000 or more.
2. What are the mandatory costs for company registration? Mandatory costs include government fees, stamp duty, DSCs, DINs, name reservation fees, and filing fees for MoA and AoA.
3. Can I register a company without a professional’s help? Yes, you can register a company without professional help, but it may be challenging. Hiring a CA or CS can ensure accuracy and compliance.
4. How much do Digital Signature Certificates (DSCs) cost? DSCs typically cost between ₹1,000 and ₹2,000 per director and are valid for 1 to 2 years.
5. What is the cost of obtaining a Director Identification Number (DIN)? The cost for obtaining a DIN is approximately ₹500 per director.
6. Are there any additional costs after company registration? Yes, additional costs may include PAN/TAN application fees, GST registration (if applicable), and ongoing compliance costs.
7. How does the type of company affect registration costs? Private Limited Companies generally incur higher registration costs than LLPs or OPCs due to higher government fees and stamp duty.
8. Is stamp duty the same across all states in India? No, stamp duty varies by state, and it is generally based on the authorized share capital of the company.
9. Can company registration costs be claimed as a business expense? Yes, registration costs can be claimed as a business expense, reducing your overall taxable income.
10. How long does the company registration process take in India? The registration process typically takes 7 to 15 days, depending on the complexity and accuracy of the application.