Private Limited Company Registration Cost

Registering a Private Limited Company (Pvt Ltd) is a popular choice for entrepreneurs in India due to its numerous advantages, such as limited liability protection, ease of raising funds, and a separate legal identity. However, one of the most common questions that arise during the initial stages of setting up a Pvt Ltd company is the cost involved in the registration process. This guide will provide a detailed breakdown of the costs associated with registering a Pvt Ltd company in India, the factors that influence these costs, and the steps involved in the registration process.

A Private Limited Company is a type of business entity that is privately held by a small group of shareholders. In India, Pvt Ltd companies are governed by the Companies Act, 2013. The registration of a Pvt Ltd company involves several steps, including obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), and name approval, among others. The entire process can be completed online, making it easier for entrepreneurs to get their businesses up and running.

Key Advantages of a Private Limited Company:

• Limited Liability: The liability of shareholders is limited to their share capital, protecting their personal assets from business debts.
• Separate Legal Entity: A Pvt Ltd company has its own legal identity, separate from its shareholders and directors.
• Ease of Fundraising: Pvt Ltd companies can easily raise funds from investors, venture capitalists, and banks.
• Perpetual Succession: The company continues to exist even if the ownership changes, ensuring business continuity.

The cost of registering a Pvt Ltd company in India can vary based on several factors, such as the state in which the company is being registered, the number of directors and shareholders, and whether professional services are used. Below is a detailed breakdown of the various costs involved in the registration process.

2.1. Digital Signature Certificate (DSC)

A Digital Signature Certificate is required for all directors and subscribers to the Memorandum of Association (MoA) and Articles of Association (AoA). The DSC is used to digitally sign documents during the registration process.

• Cost: The cost of obtaining a DSC ranges from ₹800 to ₹2,000 per person, depending on the certifying authority and the type of DSC (Class 2 or Class 3).

2.2. Director Identification Number (DIN)

A Director Identification Number is a unique identification number assigned to each director of the company. It is mandatory for all directors to obtain a DIN before they can be appointed.

• Cost: The cost of obtaining a DIN is typically included in the Professional Fees (mentioned below), but if applied separately, it may cost around ₹500.

2.3. Name Reservation

The proposed name of the company must be unique and not similar to any existing company names. The name reservation process is done through the SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) form on the Ministry of Corporate Affairs (MCA) portal.

• Cost: The government fee for name reservation is ₹1,000 per application. This fee may need to be paid multiple times if the name is rejected and a new name is proposed.

2.4. MoA and AoA Drafting

The Memorandum of Association (MoA) and Articles of Association (AoA) are the primary legal documents that define the company’s constitution and the scope of its operations.

• Cost: The cost for drafting MoA and AoA can range from ₹1,000 to ₹5,000 if done through a professional. However, if you are using an online platform, this cost might be included in the overall package.

2.5. Government Fees

The government charges a fee based on the authorized share capital of the company. This fee is mandatory and must be paid at the time of registration.

• Cost: The government fee for registration is as follows:
  • Up to ₹1 lakh of authorized capital: ₹500
  • ₹1 lakh to ₹5 lakhs: ₹2,000
  • ₹5 lakhs to ₹10 lakhs: ₹5,000
  • ₹10 lakhs to ₹25 lakhs: ₹10,000
  • ₹25 lakhs to ₹1 crore: ₹12,000
  • Above ₹1 crore: ₹15,000

2.6. Stamp Duty

Stamp duty is payable on the MoA and AoA of the company. The amount of stamp duty varies from state to state.

• Cost: The stamp duty can range from ₹1,000 to ₹10,000, depending on the state in which the company is being registered and the authorized capital.

2.7. Professional Fees

Most entrepreneurs opt to hire professionals such as Chartered Accountants (CAs), Company Secretaries (CSs), or lawyers to handle the registration process. These professionals charge a fee for their services, which can vary based on their experience and the complexity of the registration.

• Cost: Professional fees can range from ₹5,000 to ₹20,000 or more, depending on the service provider.

2.8. Other Miscellaneous Costs

There may be additional costs involved in the registration process, such as notarization of documents, courier charges, and other incidental expenses.

• Cost: These costs are generally minimal, ranging from ₹500 to ₹1,000.

The total cost of registering a Pvt Ltd company in India can vary significantly based on the factors mentioned above. However, to provide a general estimate, the total cost can range from ₹10,000 to ₹30,000 for a company with a basic authorized capital. This estimate includes all government fees, DSC, DIN, professional fees, and other miscellaneous expenses.

3.1. Cost for DIY (Do-It-Yourself) Registration

If you choose to register the company yourself without hiring a professional, the cost may be lower, around ₹8,000 to ₹15,000, depending on the authorized capital and state-specific charges.

3.2. Cost for Registration through Online Platforms

Many online platforms offer Pvt Ltd company registration services at competitive prices. These platforms provide a one-stop solution, handling everything from DSC and DIN to name reservation and MoA/AoA drafting. The cost for registration through such platforms typically ranges from ₹10,000 to ₹20,000.

The registration process for a Pvt Ltd company involves several steps, which can be completed online through the Ministry of Corporate Affairs (MCA) portal. Here is a step-by-step guide to the registration process:

Step 1: Obtain Digital Signature Certificates (DSC)

• Apply for DSC for all directors and subscribers.
• Use the DSC to digitally sign the registration documents.

Step 2: Obtain Director Identification Number (DIN)

• Apply for DIN through the SPICe+ form on the MCA portal.
• Attach the required identity and address proof documents.

Step 3: Name Reservation

• Choose a unique name for the company and submit it for approval through the SPICe+ form.
• Pay the name reservation fee and wait for the name approval.

Step 4: Prepare MoA and AoA

• Draft the Memorandum of Association (MoA) and Articles of Association (AoA).
• Ensure that these documents comply with the Companies Act, 2013.

Step 5: File SPICe+ Form

• Fill out the SPICe+ form on the MCA portal, providing details of the company, directors, and shareholders.
• Upload the necessary documents, including DSC, DIN, MoA, AoA, and address proof.

Step 6: Payment of Government Fees

• Pay the required government fees based on the authorized capital of the company.

Step 7: Issue of Certificate of Incorporation (COI)

• After successful verification of the application, the Registrar of Companies (RoC) will issue the Certificate of Incorporation (COI).
• The COI will include the company’s Corporate Identification Number (CIN) and is proof of the company’s legal existence.

Several factors can influence the overall cost of registering a Pvt Ltd company in India. Understanding these factors can help entrepreneurs budget effectively and avoid unexpected expenses.

5.1. Authorized Share Capital

• The government fees and stamp duty are directly proportional to the authorized share capital of the company. A higher authorized capital results in higher registration costs.

5.2. State of Incorporation

• The stamp duty varies from state to state, affecting the overall cost of registration. Some states may also have additional charges.

5.3. Professional Fees

• The experience and expertise of the professionals handling the registration can significantly impact the cost. Experienced professionals may charge higher fees but can ensure a smoother registration process.

5.4. Number of Directors and Shareholders

• The cost of obtaining DSCs and DINs increases with the number of directors and shareholders, adding to the total registration cost.

5.5. Choice of Service Provider

• The choice between hiring a professional, using an online platform, or opting for a DIY approach can influence the overall cost. Each option has its own set of pros and cons in terms of cost, convenience, and reliability.

After the registration of a Pvt Ltd company, there are ongoing compliance costs that businesses need to consider. These costs are essential to ensure that the company remains in good standing with the regulatory authorities.

6.1. Annual Compliance

• Pvt Ltd companies are required to comply with various annual filings and disclosures, such as filing annual returns, financial statements, and income tax returns.
• The cost for annual compliance can range from ₹10,000 to ₹50,000, depending on the complexity of the company’s operations and the services required.

6.2. Accounting and Auditing

• Pvt Ltd companies must maintain proper books of accounts and have them audited by a qualified Chartered Accountant.
• The cost for accounting and auditing services can range from ₹15,000 to ₹50,000 or more, depending on the volume of transactions and the auditor’s fees.

6.3. Other Compliance Costs

• Other ongoing costs may include Goods and Services Tax (GST) compliance, statutory filings, and regulatory fees.

Registering a Private Limited Company in India involves several costs, including government fees, professional fees, and other incidental expenses. The total cost can vary based on the authorized share capital, state of incorporation, and the choice of service provider. Understanding the breakdown of these costs and the factors that influence them can help entrepreneurs plan effectively and ensure a smooth registration process. Additionally, it’s important to consider the post-registration compliance costs to maintain the company’s legal status and avoid penalties.

1. What is the minimum cost of registering a Private Limited Company in India?

The minimum cost for registering a Pvt Ltd company in India is approximately ₹10,000, which includes government fees and DSC costs.

2. Are there any hidden costs in the Pvt Ltd company registration process?

While the main costs are outlined, additional expenses such as notarization, courier charges, and professional fees may arise.

3. Can I register a Pvt Ltd company without professional help?

Yes, you can register a Pvt Ltd company yourself, but hiring professionals can ensure accuracy and compliance.

4. What are the ongoing costs after registering a Pvt Ltd company?

Ongoing costs include annual compliance, accounting, auditing, and statutory filings, which can range from ₹10,000 to ₹50,000 or more.

5. Does the authorized share capital affect the registration cost?

Yes, the government fees and stamp duty are higher for companies with a higher authorized share capital.

6. How much does it cost to obtain a Digital Signature Certificate (DSC)?

The cost of obtaining a DSC ranges from ₹800 to ₹2,000 per person.

7. What is the cost of name reservation during the registration process?

The government fee for name reservation is ₹1,000 per application.

8. Are there any discounts available for online company registration?

Some online platforms may offer discounted packages for company registration, which can reduce overall costs.

9. How long does the registration process take, and does it affect the cost?

The registration process typically takes 7-10 days. Delays may incur additional costs if professional services are extended.

10. Can I change the authorized capital after registration, and what are the costs involved?

Yes, the authorized capital can be changed post-registration, but it involves additional government fees and compliance costs.