Private Limited Company Incorporation in India
What a Private Limited Company Actually Is
A Private Limited Company is a company incorporated under the Companies Act, 2013, with a separate legal personality distinct from the people who own it. It is the default structure for anyone building a business in India that intends to grow, raise money, or eventually be sold.
The critical point that gets lost in most explanations: incorporation is not the achievement. A Certificate of Incorporation takes ten days and costs less than a laptop. What you are actually signing up for is a permanent compliance calendar under the Companies Act, and penalties for missing items on it accrue per day, per director, whether or not your company has done any business at all.
Three frameworks apply to your company from the day it exists:
- Companies Act, 2013 — incorporation, directors, board meetings, statutory registers, annual filings
- Income Tax Act, 1961 — corporate tax, TDS, advance tax, annual return
- GST law, and sector-specific licensing — where your turnover or activity triggers it
We will tell you before you engage us whether a Private Limited Company is the right vehicle, or whether an LLP or OPC would serve you better and cost you less to maintain.
Before Anything Else: Three Questions That Decide Your Structure
1. Are you actually going to raise money from the public?
If yes, a Private Limited Company is effectively your only option. Venture capital funds, angel investors and institutional lenders invest in equity shares. An LLP cannot issue shares, cannot create an ESOP pool, and cannot accommodate preference shares, convertible instruments or a cap table. Converting an LLP into a company later is possible but slow, and it is invariably done under time pressure during a live funding round.
If no — if this is a professional services firm, a family business, or a venture funded entirely from your own capital — an LLP will give you the same limited liability at roughly a third of the annual compliance cost.
2. Do you have a second person?
A Private Limited Company requires a minimum of two directors and two shareholders. The same two people can occupy both roles, but there must be two of them.
If you are genuinely alone and unwilling to bring in a nominal second shareholder, a One Person Company is the correct structure. It has its own limits — a turnover ceiling and a paid-up capital ceiling, beyond which conversion into a Private Limited Company becomes mandatory — but it exists precisely for this situation.
We run both checks in the first conversation, before you pay us anything.
Is a Private Limited Company Actually Right for You?
Here is the honest comparison.
| Private Limited | LLP | One Person Company | Partnership Firm | Sole Proprietorship | |
|---|---|---|---|---|---|
| Minimum members | 2 directors, 2 shareholders | 2 partners | 1 member + 1 nominee | 2 partners | 1 |
| Liability | Limited to shareholding | Limited to contribution | Limited | Unlimited, joint and several | Unlimited |
| Separate legal entity | Yes | Yes | Yes | No | No |
| Can raise equity funding | Yes | No | No | No | No |
| ESOP possible | Yes | No | No | No | No |
| Corporate tax | 22% (~25.17% effective) or 15% for new manufacturers | 30% + surcharge | Same as Pvt Ltd | 30% + surcharge | Individual slab rates |
| Statutory audit | Mandatory from day one | Only above turnover / capital thresholds | Mandatory | Only under tax audit limits | Only under tax audit limits |
| Annual compliance cost | Higher | Moderate | Higher | Low | Minimal |
| Ownership transfer | Share transfer | Requires deed amendment | Restricted | Requires deed amendment | Not transferable |
| Perpetual succession | Yes | Yes | Yes | No | No |
| Setup time | 7–15 working days | 10–20 working days | 7–15 working days | 3–7 days | 1–3 days |
Choose a Private Limited Company if you intend to raise capital, issue ESOPs, take on institutional clients who diligence their vendors, or build something you may eventually sell.
Choose an LLP instead if you are a professional services firm or a self-funded business with no equity funding plans, and you want limited liability without a mandatory annual audit.
Choose a One Person Company instead if you are genuinely a single founder and will not have a second shareholder in the near term.
Choose a Partnership or Proprietorship instead if you are testing an idea, revenue is small, and the annual compliance cost of a company would exceed what the structure is worth to you. You can incorporate later; we do those conversions regularly.
We will tell you when the answer is not a Private Limited Company. It is not the most profitable advice for us to give, and saying so is the point.
What You Need Before You Can Incorporate
Two directors minimum, fifteen maximum. At least one must be a resident director — someone who has stayed in India for 182 days or more in the preceding financial year (Section 149(3), Companies Act 2013). Citizenship is irrelevant; residence is what is tested.
Two shareholders minimum, two hundred maximum. Directors and shareholders can be the same people. A company or an LLP can also hold shares.
A registered office address in India from the date of incorporation, supported by ownership or lease documentation, a No Objection Certificate from the owner, and a utility bill not older than two months. A residential address is entirely acceptable. We offer a registered office address in Connaught Place if your premises are not ready.
Class 3 Digital Signature Certificates for every proposed director and subscriber, issued by an Indian licensed Certifying Authority.
A name that will actually survive scrutiny. Most name rejections are avoidable. The name must not resemble an existing company or LLP, must not conflict with a registered trademark in the same class, must not use restricted words without approval, and must reflect your stated business objects. We screen against the MCA database and the trademark registry before filing, not after rejection.
No minimum capital is prescribed by statute. But set your authorised capital against a realistic two-to-three year plan — increasing it later attracts additional stamp duty and filing fees that would have been nil at incorporation.
Documents Required
From each director and shareholder (Indian nationals)
- PAN card — mandatory, no substitute accepted
- Aadhaar card
- One of: Passport, Voter ID, or Driving Licence
- Bank statement or utility bill in the person’s own name, not older than two months
- Passport-size photograph, white background
- Mobile number and email address linked to Aadhaar for OTP verification
- Form DIR-2, consent to act as director
From foreign nationals or NRIs — all apostilled or consularised
- Passport, notarised and apostilled — all pages
- Address proof from the home country, not older than two months
- Photograph, DSC, DIR-2
A note on the apostille: if the director’s country is a signatory to the Hague Apostille Convention, documents need notarisation followed by an apostille from the designated competent authority — budget two to four weeks. If it is not a signatory, documents must be attested by the Indian Embassy or Consulate instead, which takes longer. Documents notarised but not apostilled are rejected at the ROC and the cycle repeats.
For the registered office
- Lease deed or ownership proof
- No Objection Certificate from the property owner
- Electricity bill or utility bill not older than two months
Forms filed with the MCA
| Form | Purpose |
|---|---|
| SPICe+ Part A | Name reservation |
| SPICe+ Part B (INC-32) | Incorporation application |
| e-MoA (INC-33) | Memorandum of Association |
| e-AoA (INC-34) | Articles of Association |
| AGILE-PRO-S | GST, EPFO, ESIC, professional tax, bank account |
| INC-9 | Declaration by first directors and subscribers |
A note on outdated guidance you may have read elsewhere: INC-7 was withdrawn and no longer exists. The standalone RUN service now applies mainly to name changes for existing companies — new incorporations reserve names through SPICe+ Part A. If a checklist you have been given mentions either, it predates the current process.
The Process, Step by Step
Step 1 — Structure assessment (1–2 days) Confirmation that a Private Limited Company is the right vehicle, share split between founders, authorised versus paid-up capital, and drafting of your business objects. You receive a written note before anything is filed.
Step 2 — Digital Signature Certificates (1–3 working days) Class 3 DSCs for all proposed directors and subscribers through an Indian Certifying Authority, with video KYC.
Step 3 — Name reservation (1–3 working days) Two proposed names through SPICe+ Part A, screened in advance against the MCA database, existing LLPs and the trademark registry. Approved names are reserved for 20 days.
Step 4 — MoA and AoA drafting The objects clause defines what your company is legally permitted to do. Drafted against your actual business plan and any licensing you will need later, not copied from a template.
Step 5 — Incorporation filing (3–7 working days for ROC approval) SPICe+ Part B with e-MoA, e-AoA, AGILE-PRO-S and INC-9 filed as a single integrated application covering PAN, TAN, GST, EPFO and ESIC.
Step 6 — Certificate of Incorporation CIN, PAN and TAN issued together. Your company legally exists.
Step 7 — Bank account (3–7 working days) Current account opening. Some banks are materially faster than others for newly incorporated entities, and we will tell you which.
Step 8 — Capital infusion Subscribers deposit the subscription money stated in the MoA into the company’s account. This must actually happen — INC-20A depends on it.
Step 9 — INC-20A, commencement of business (within 180 days — hard deadline) Declaration that subscription money has been received, supported by the bank statement. Without it, the company cannot legally commence business or borrow, and the penalty is ₹50,000 on the company plus ₹1,000 per day on each director.
Realistic total: 7–15 working days where all directors are Indian residents with PAN and Aadhaar in order. 3–6 weeks where a foreign director is involved and documents require apostille.
What Happens After Incorporation — The Part Nobody Warns You About
Most providers hand you a Certificate of Incorporation and disappear. That certificate is the beginning of a permanent compliance calendar, and the penalties for missing items on it are not trivial.
First 180 days
| Obligation | Deadline |
|---|---|
| First board meeting | Within 30 days of incorporation |
| Appoint first statutory auditor (Form ADT-1) | Within 30 days of incorporation |
| Issue share certificates | Within 60 days of incorporation |
| Stamp duty on share certificates | Within 30 days of issue |
| File INC-20A, commencement of business | Within 180 days |
Every year, permanently
- Annual ROC filings — AOC-4 (financial statements) and MGT-7 or MGT-7A (annual return)
- Statutory audit by a practising Chartered Accountant — mandatory from year one, irrespective of turnover, irrespective of whether the company traded at all
- Income tax return (ITR-6), plus advance tax quarterly
- DIR-3 KYC annually for every director holding a DIN
- DPT-3 annually, reporting outstanding receipts that are not deposits
- Minimum four board meetings per financial year, with a maximum gap of 120 days between any two
- One Annual General Meeting, within six months of financial year end
- Statutory registers maintained throughout — members, directors, charges, share transfers
- GST returns monthly or quarterly, where registered
- TDS returns quarterly, where applicable
On dormant companies specifically
A very common and expensive misunderstanding: a company that has not started operations is still required to file AOC-4, MGT-7 and its income tax return. Late filing penalties under Section 92 and Section 137 run at ₹100 per day per form, with no cap. Founders who incorporate, pause the plan, and file nothing for two years routinely return to a liability well into six figures — on a company that never issued an invoice.
If you are not going to trade for a while, tell us. There are formal routes — dormant status under Section 455, or striking off under Section 248 — and both are far cheaper than silence.
This is what we do. Incorporation is a two-week project. Compliance is the relationship. We handle bookkeeping, payroll, GST, TDS, annual filings and virtual CFO support so that your compliance calendar does not become a founder’s second job.
Six Mistakes We See Repeatedly
- Choosing a name without checking the trademark registry. MCA name approval is not trademark clearance. Companies build a brand for two years and then receive an infringement notice.
- Copying the objects clause from another company’s MoA. It surfaces later when you apply for a licence, a tender, or a bank facility and the activity is not covered.
- Missing INC-20A. Incorporation goes smoothly, the bank account takes a while, the subscription money sits unpaid, and the 180 days pass. ₹50,000 plus ₹1,000 per day per director.
- Setting authorised capital too low. Increasing it later costs stamp duty and filing fees that would have been nil at incorporation.
- No founders’ agreement. Two founders, 50:50, no vesting, no exit terms. One leaves in month eight and takes half the company with them. Vesting is agreed at incorporation or it is not agreed at all.
- Assuming a dormant company has no filings. It has all of them.
Why Delhi Legal Company
Corporate law, tax and compliance under one roof. The most common failure after incorporation is the coordination gap between a consultant who filed the forms, a CA who does the tax return, and nobody who owns the ROC calendar. We do.
We stay after incorporation. Bookkeeping, payroll, GST, TDS, annual ROC filings and monthly MIS. Your company does not need to become a compliance problem you discover in year three.
Registered office address available in-house, in Connaught Place, if your premises are not ready.
We tell you when the answer is an LLP. Roughly one in five enquiries that reach us asking for a Private Limited Company should not incorporate one, and we say so before invoicing.
Delhi-based, working nationally. Connaught Place, central New Delhi, serving founders across India and NRI promoters across time zones.
Start With a Conversation, Not a Quote
Tell us what you intend to build, who is involved, and whether you expect to raise capital. In thirty minutes we will tell you whether a Private Limited Company is the right structure, what it will realistically cost you to run each year, and what your timeline looks like.
No charge, and no obligation to proceed.
[Book a Free Consultation] [WhatsApp Us] [Call +91 95993 32456]
4th Floor, E Block, Innov8 Workspaces, Harsha Bhawan, 13/29, Connaught Place, New Delhi – 110001 info@delhilegalcompany.com
Frequently Asked Questions
1. How long does it take to register a Private Limited Company in India?
7 to 15 working days where all directors are Indian residents with PAN and Aadhaar in order. Where a foreign national or NRI is a director, 3 to 6 weeks — the apostille process in the home country is the variable, and in some jurisdictions it alone takes three to four weeks.
2. What is the minimum capital required?
None is prescribed by statute. You can incorporate with ₹10,000 of paid-up capital or less. But set authorised capital against a realistic two-to-three year plan, since increasing it later attracts additional stamp duty and filing fees.
3. Can I register a company at my home address?
Yes. A residential address is entirely acceptable as a registered office. You need a utility bill not older than two months and a No Objection Certificate from the owner. If you are renting, the rent agreement as well.
4. Can I register a company alone?
Not as a Private Limited Company — two directors and two shareholders are the statutory minimum. A One Person Company exists for single founders, with a turnover and paid-up capital ceiling beyond which conversion becomes mandatory. Most founders add a family member as a nominal second shareholder and incorporate as a Private Limited Company instead, which avoids that ceiling entirely.
5. Can a foreign national be a director?
Yes. There is no restriction on foreign nationals or NRIs serving as directors, and a foreign company can hold shares. At least one director must be an Indian resident — 182 days or more in the preceding financial year — but that person need not be an Indian citizen. Where foreign investment is involved, additional FEMA reporting applies; see our wholly-owned subsidiary services.
6. What is the corporate tax rate?
A domestic company can opt for the concessional rate under Section 115BAA — 22%, approximately 25.17% effective after surcharge and cess. New manufacturing companies incorporated after 1 October 2019 and commencing production by the prescribed date may opt for 15% under Section 115BAB. The concessional regimes require forgoing certain deductions, and the election is generally irreversible, so it should be made deliberately.
7. What does annual compliance cost?
Typically ₹15,000 to ₹40,000 per year for a small company, depending on transaction volume, GST registration, payroll and whether audit complexity is significant. This is unavoidable and applies whether or not the company trades — it should be part of your decision on structure, not a surprise in month fourteen.
8. Do I have to file anything if my company has no business?
Yes, all of it. AOC-4, MGT-7, the income tax return, DIR-3 KYC and the statutory audit apply to a company with zero revenue exactly as they apply to one with crores. Late filing penalties run at ₹100 per day per form with no cap. If you do not intend to trade for a while, apply for dormant status under Section 455 or strike off under Section 248 — both are far cheaper than silence.
9. Is GST registration mandatory at incorporation?
No. It becomes mandatory when turnover crosses ₹40 lakh for goods or ₹20 lakh for services, and from day one for inter-state supply, e-commerce operators, and certain other categories. It can be obtained through AGILE-PRO-S at incorporation if you want it in place immediately.
10. What is INC-20A and why does it matter?
INC-20A is the declaration that subscribers have paid in the subscription money stated in the MoA, filed within 180 days of incorporation with the bank statement as proof. Until it is filed, the company cannot legally commence business or borrow. The penalty is ₹50,000 on the company plus ₹1,000 per day on every officer in default. It is the most commonly missed first-year deadline.
11. What is the difference between authorised and paid-up capital?
Authorised capital is the ceiling on what the company may issue, stated in the MoA. Paid-up capital is what shareholders have actually paid in. You can have ₹10 lakh authorised and ₹1 lakh paid-up. Raising authorised capital later requires a shareholders’ resolution, Form SH-7, additional stamp duty and filing fees — which is why it is worth setting sensibly at incorporation.
12. Can I convert my LLP or proprietorship into a Private Limited Company later?
Yes, both are possible, and we do them regularly. Both take longer than incorporating correctly in the first place, and conversions are almost always attempted under time pressure during a funding round. If equity funding is a realistic prospect within eighteen months, incorporate as a company now.