Private Limited
Company at ₹6,999.

What is a Private Limited Company?

A Private Limited Company is a business entity registered under the Companies Act, 2013 that combines the operational flexibility of a partnership with the limited liability protection of a corporation. It is a distinct legal person, capable of owning assets, incurring debt, entering contracts and being sued — completely separate from the individuals who own or manage it. This separation is the single most powerful concept in modern commercial law, and it is what makes the Pvt Ltd the default vehicle for serious ventures across India.

The company is owned by its shareholders (also called members) and managed by its directors. Shareholders contribute capital in exchange for shares; directors are appointed to run day-to-day affairs. In most early-stage startups the same individuals wear both hats, but as the company grows, external investors buy shares without joining the board, and professional managers may serve as directors without owning any equity. This flexibility is why every venture capital fund in India insists on incorporation as a Pvt Ltd before writing a cheque.

Registered on the MCA-21 portal via the integrated SPICe+ form (INC-32), a modern Pvt Ltd incorporation now bundles PAN, TAN, EPFO, ESIC, GSTIN and bank account into a single 24-hour workflow. Once the Registrar of Companies issues the Certificate of Incorporation, the CIN becomes the company's permanent identity — the number stamped on every invoice, contract and letterhead for the rest of its existence.

Why register a Pvt Ltd — the ten reasons founders actually care about

• Limited liability — shareholders are only liable up to the unpaid value of their shares. Personal assets are insulated from business losses, lawsuits and creditor claims.
• Separate legal identity — the company signs its own contracts, holds its own bank account, owns its own IP and outlives its founders.
• Fundraise-ready — angels, VCs, family offices, NBFCs and PE funds invest almost exclusively into Pvt Ltds. SAFE notes, CCPS, priced rounds and ESOPs all require this structure.
• Enterprise credibility — MNCs, PSUs and government tenders routinely refuse to onboard proprietors and partnerships. The 'Pvt Ltd' suffix signals governance and durability.
• Perpetual succession — the entity continues indefinitely through founder exits, director changes and share transfers. A true multi-generational business vehicle.
• Clean cap-table hygiene — founder equity, ESOPs, advisor grants and investor rounds all live cleanly in the share register, avoiding the mess of partnership deeds.
• IP ownership — patents, trademarks and copyrights held by the company (rather than founders) are transferable, valuable and investor-visible on the balance sheet.
• Tax planning flexibility — Section 115BAA (22%), Section 115BAB (15% for manufacturing) and Section 80-IAC (100% deduction for DPIIT startups) all sit inside a Pvt Ltd toolkit.
• Bank credit — Pvt Ltds get term loans, working capital and NBFC lending on far better terms than proprietorships, especially after their first audited financials.
• Ownership transferability — shares can be sold, gifted or inherited without disrupting operations. Onboarding co-founders, ESOP holders and investors becomes a routine paperwork exercise.

Eligibility and basic requirements

• Minimum 2 directors (maximum 15). At least one director must be an Indian resident (stayed in India for 182+ days in the previous FY).
• Minimum 2 shareholders (maximum 200). Directors and shareholders can be the same individuals.
• Every director must have a valid PAN. Foreign directors need a valid passport and apostilled/notarised address proof.
• Every director requires a Class-3 Digital Signature Certificate (DSC) and a Director Identification Number (DIN) — both issued through SPICe+.
• A registered office address in India — residential, commercial or co-working — with a recent utility bill, rent agreement (if applicable) and NOC from the owner.
• A unique name that complies with the Companies (Incorporation) Rules, 2014 — no conflict with existing companies, trademarks or prohibited words.
• No minimum paid-up capital requirement since the 2015 amendment. Authorised capital is typically ₹1L or ₹10L.

Pvt Ltd vs OPC vs LLP vs Partnership — the definitive comparison

For any founder who wants to raise external capital, hire employees against ESOPs, sell to enterprise clients or eventually IPO — Pvt Ltd is the only sensible starting point. LLP is attractive for small services firms with no funding plans; OPC works for solopreneurs happy to stay small; partnership is a legacy structure best avoided for any serious venture in 2026.

Documents required — the complete checklist

For every director and shareholder

• Self-attested PAN card copy.
• Self-attested Aadhaar card copy (with linked mobile number for OTP).
• Recent passport-size colour photograph on plain background.
• Latest bank statement OR utility bill (electricity/gas/mobile postpaid) not older than 2 months as address proof.
• Unique email ID and mobile number — each director must have a distinct set.
• Occupation and educational qualification declaration.

Additional documents for foreign nationals / NRIs

• Valid passport (self-attested + notarised / apostilled).
• Overseas address proof — driving licence, utility bill or bank statement (apostilled or attested at an Indian embassy).
• Passport-size photograph and notarised specimen signature.
• Where a foreign company is a shareholder — Certificate of Incorporation, MoA and board resolution authorising investment, all apostilled.

For the registered office

• Latest electricity bill or property tax receipt (not older than 2 months).
• If rented — registered rent agreement + NOC from the owner on plain paper.
• If owned by a director/family — ownership document + NOC.
• If co-working — membership agreement on their letterhead with allowed use for company registration.

The SPICe+ process — step by step

Stage 1 — Discovery & scope (Day 0)

A senior CA understands your business, proposed shareholders, co-founder equity split, authorised capital plan, ESOP pool intent and fundraising timeline. You receive a written quote and a name-search shortlist on WhatsApp before any payment.

Stage 2 — Name Reservation via SPICe+ Part A (Day 1–2)

Two names are proposed in order of preference. Our team pre-checks MCA-21 (existing companies, LLPs), IPIndia (trademarks) and common-law usage to avoid rejection. The Registrar of Companies approves the name within 1–2 working days. Reserved names are valid for 20 days for fresh incorporation.

Stage 3 — DSC + Documentation (Day 2–4)

Class-3 Digital Signature Certificates are issued for all directors via video-based KYC. In parallel, we draft the Memorandum of Association (MoA), Articles of Association (AoA), INC-9 self-declaration and AGILE-PRO (PAN/TAN/EPFO/ESIC/GSTIN/Bank) — all reviewed by a Company Secretary.

Stage 4 — SPICe+ Part B Filing (Day 4–5)

The integrated SPICe+ form is filed on MCA-21 with MoA, AoA, INC-9, AGILE-PRO, subscriber sheets and address proof. Stamp duty is paid based on the state of registered office and authorised capital. An SRN is generated immediately for tracking.

Stage 5 — MCA Review & Approvals (Day 5–8)

The Registrar reviews the application. Any queries are cleared within 24 hours by our team. On approval, MCA issues the Certificate of Incorporation containing the CIN, PAN and TAN — usually within 3–5 working days of a clean filing.

Stage 6 — Post-incorporation setup (Day 8–10)

Bank account is activated, EPFO/ESIC codes go live, DSCs are handed over, statutory registers are set up, and the compliance calendar (auditor appointment, INC-20A, first board meeting) is loaded into the founder's WhatsApp reminders.

MoA and AoA — the constitutional documents of your company

The Memorandum of Association (MoA) is the company's charter. It defines the name, registered office, main objects, incidental objects, liability of members, share capital and the initial subscribers. The objects clause is critical — any activity outside the objects is legally void, so it must be drafted broadly enough to cover current and reasonably anticipated activities without becoming a laundry list.

The Articles of Association (AoA) is the internal rulebook. It governs share transfers, share issue, board meetings, quorum, voting rights, dividend distribution, appointment and removal of directors, and dispute resolution. Standard 'Table F' articles from Schedule I of the Companies Act work for basic incorporation, but investor-ready companies always customise the AoA with:

• Right of first refusal (ROFR) — existing shareholders get the first right to buy shares before an outsider.
• Tag-along rights — minority shareholders can force the buyer to purchase their shares on the same terms as the majority.
• Drag-along rights — majority shareholders can force minority to sell in an exit event.
• Pre-emption rights — existing shareholders get proportionate opportunity to subscribe to new share issues.
• ESOP pool provisions — pre-authorised pool of shares reserved for employee grants.
• Anti-dilution protection — a broad-based weighted average or full-ratchet clause protecting investors from down rounds.

Taxpex drafts MoA/AoA with these clauses built-in from day one — saving founders a painful (and expensive) restructuring at Series-A due diligence.

Authorised capital vs paid-up capital — the founder's mental model

Authorised capital is the ceiling — the maximum face value of shares the company is legally allowed to issue. Paid-up capital is the reality — the face value of shares actually issued to and paid for by shareholders. Government stamp duty at incorporation is computed on the authorised capital, not the paid-up. Setting authorised too high means paying stamp duty on capital you don't need; setting it too low means paying MCA fees again later to increase it via Form SH-7.

A common founder setup for a fundable startup — authorised ₹10 lakh, initial issue 10,000 equity shares of ₹10 each fully paid up (₹1 lakh paid-up capital), split 60% to Founder A, 40% to Founder B. ESOP pool is authorised but issued only when needed. This structure clears through Series-A due diligence without a single amendment.

FDI, NRI and foreign shareholders

India permits 100% Foreign Direct Investment under the automatic route in most sectors — software, ecommerce marketplaces, cloud services, ed-tech, health-tech, consulting, financial technology (with sub-caps), manufacturing and single-brand retail. Sectors under the government approval route include defence, satellites, print media, broadcasting and specified banking activities.

When foreign or NRI shareholders subscribe to shares at incorporation or in a later round, the company must:

• File Form FC-GPR with the Reserve Bank of India via the FIRMS portal within 30 days of share allotment.
• Comply with FEMA pricing guidelines — shares must be issued at fair market value determined by a Chartered Accountant or SEBI-registered Category-I Merchant Banker.
• Report the transaction in the annual FLA return by 15 July each year.
• Ensure the inward remittance is received through banking channels with a KYC-verified Advance Reporting Form.

NRIs and OCIs are treated as non-residents under FEMA even if they hold an Indian PAN. Foreign nationals with an Indian address may be treated as residents for FEMA if they have been in India for 182+ days — Taxpex verifies residency status before locking the shareholder pattern to avoid FEMA violations that can invalidate the entire capital structure at exit.

Startup India (DPIIT) recognition

The Startup India initiative, administered by DPIIT under the Ministry of Commerce, offers a certification that unlocks powerful tax and regulatory benefits for eligible Pvt Ltds, LLPs and Partnership Firms:

• Incorporated within the last 10 years, with annual turnover under ₹100 crore in any FY since incorporation.
• Working towards innovation, development or improvement of products/services, or a scalable business model with high potential for employment or wealth creation.
• Not formed by splitting up or reconstructing an existing business.

Key benefits — 100% profit deduction under Section 80-IAC for any 3 consecutive years out of the first 10 years; angel tax exemption under Section 56(2)(viib) for share issues to Indian resident investors; ESOP tax deferral under Section 191(2); self-certification under 9 labour laws and 3 environmental laws for 5 years; fast-tracked patent and trademark filing with 80% fee rebate; and eligibility to bid on government tenders without prior turnover or experience requirements.

Taxpex bundles DPIIT recognition with company incorporation for eligible founders — typically approved within 2–3 weeks of a clean application.

Post-incorporation compliance — the first 180 days

Annual ROC filings — the compliance rhythm

• AOC-4 (financial statements) — within 30 days of AGM. Contains balance sheet, P&L, cash flow, director's report, auditor's report.
• MGT-7 (annual return) — within 60 days of AGM. Contains shareholding pattern, changes in directors and share transfers.
• MGT-14 (special resolutions) — within 30 days of any special resolution (ESOP, borrowing beyond limit, related-party transactions).
• DIR-3 KYC — every director must file annually by 30 September or face DIN deactivation and ₹5,000 reactivation fee.
• DPT-3 (deposits return) — annually by 30 June if the company has accepted loans from directors, related parties or shareholders.
• MSME Form 1 — half-yearly by 30 April and 31 October for outstanding payments to MSME suppliers beyond 45 days.
• Income tax return (ITR-6) — by 31 October of the assessment year for audit cases, 30 September for tax-audit non-applicable cases.

Corporate tax rates and structuring

Section 115BAA is the default choice for most Pvt Ltds — the 22% base rate with no MAT applicability makes it a clean structure. Once opted for, it cannot be revoked, and the company loses access to Section 10AA (SEZ), Section 32AD (investment allowance), Section 33 (development allowance) and additional depreciation. For a startup that expects to be loss-making in early years, deferring the 115BAA election until profitable can be tactically smart.

ESOP structuring for founders

Employee Stock Options are the single most powerful lever to attract and retain talent in a resource-constrained startup. A Pvt Ltd can grant ESOPs by:

• Passing a special resolution at a general meeting authorising the ESOP scheme.
• Filing MGT-14 with MCA within 30 days of the resolution.
• Preparing an ESOP Scheme document that lays out eligibility, grant, vesting schedule, cliff, exercise window and lapse conditions.
• Ensuring the pool does not exceed 15% of paid-up capital without regulatory approval (SEBI ESOP guidelines for listed entities).
• Maintaining a Register of Employee Stock Options in Form SH-6.

A typical Indian startup grants ESOPs with a 4-year vest and a 1-year cliff — 25% vests after the first year, then equal monthly instalments over the next 36 months. The exercise price is usually the face value (₹10) at grant for early employees, and fair market value for later grants to defer income tax. Under Section 191(2) inserted by Finance Act 2020, DPIIT-recognised startups can defer TDS on ESOP perquisite by 5 years, until sale of shares or exit from the company (whichever earliest) — massively improving employee cash-flow at exercise.

Preparing your Pvt Ltd for fundraising

A funding-ready Pvt Ltd is not just about having a Pvt Ltd stamp. Investors will look for:

• Clean cap table — no informal handshake stakes, no undocumented advisor grants, no promissory notes floating outside the share register.
• Founders' agreement — vesting for co-founders, IP assignment, non-compete, dispute resolution, exit provisions.
• IP assignment — every past and future employee/contractor signs an IP assignment ensuring all code, designs and trademarks belong to the company, not the individual.
• AoA with investor-friendly clauses — ROFR, tag-along, drag-along, pre-emption, anti-dilution.
• Statutory registers — up-to-date registers of members, directors, share transfers, charges, ESOPs.
• Financials — first-year audited financials (even if minimal) and a rolling 24-month cash-flow forecast.
• Compliance clean bill — no MCA/ROC/GST/TDS defaults; all periodic filings up to date.

Taxpex builds these into every incorporation from day one — a startup that spends ₹6,999 on a proper setup saves ₹1.5–3 lakh on Series-A restructuring and 30–60 days of due-diligence delay.

Converting LLP / Proprietor / Partnership to Pvt Ltd

Section 366 of the Companies Act, 2013 read with Rule 3 of the Companies (Authorised to Register) Rules, 2014 allows entities registered under other laws to convert into a Pvt Ltd. The process:

• The existing entity must have at least 2 partners/members. Sole proprietorships must first onboard a co-founder or convert to a Partnership/LLP.
• Publish a newspaper advertisement in Form URC-2 in two newspapers (one English, one vernacular) 21 days before filing.
• File Form URC-1 with a No Objection Certificate from all secured creditors, statement of assets and liabilities, list of members, and consent of partners.
• File SPICe+ (INC-32) simultaneously with the new MoA, AoA and INC-9 subscription sheet.
• The Registrar of Companies issues a fresh Certificate of Incorporation. The earlier entity is deemed dissolved and its assets/liabilities vest in the new Pvt Ltd by operation of law.

The most common conversion is LLP → Pvt Ltd to unlock equity fundraising, which cannot be done directly in an LLP. GST registration and current bank account transfer are handled in the same window.

10 costly mistakes to avoid at incorporation

• Choosing a name similar to an existing trademark — leads to rejection at Part A or worse, forced re-branding after building goodwill.
• Not creating an ESOP pool authorised in the AoA at incorporation — investors will insist on ESOP dilution before their round.
• Registering with a single director email that later becomes inaccessible — MCA notices go unanswered and DINs get deactivated.
• Choosing an authorised capital that is too low (needing SH-7 later) or too high (paying unnecessary stamp duty upfront).
• Skipping INC-20A filing within 180 days — attracts ₹50,000 penalty on the company and ₹1,000/day on every director.
• Not appointing a statutory auditor within 30 days of incorporation — attracts penalty and disqualifies the company from claiming statutory audit costs.
• Using a personal savings account as the company bank — banks reject this on first cheque; a proper current account in the company's name is mandatory.
• Weak co-founder equity split — 50/50 splits without a lead founder cause deadlocks at every important decision.
• Not signing a Founders' Agreement — leads to messy departures, IP disputes and vesting confusion later.
• Assuming a Pvt Ltd is 'set-and-forget' — annual ROC, DIR-3 KYC, board meetings and statutory registers are non-optional.

State-wise stamp duty on authorised capital

Stamp duty is charged on the MoA and AoA at the rate prescribed by the state where the registered office is located. Rates vary sharply — Delhi and Tamil Nadu are the cheapest, Telangana and Maharashtra are among the highest. For companies planning to raise substantial capital, the state of incorporation can materially affect the initial setup cost.

Closure and strike-off

A Pvt Ltd can be closed voluntarily via:

• Fast Track Exit (FTE) / Strike-off under Section 248 — file Form STK-2 if the company has not commenced business within one year of incorporation, or has not carried on business for 2 immediately preceding financial years. All pending returns must be filed first; a special resolution by 75% shareholders is required.
• Voluntary Liquidation under the IBC, 2016 — for companies with more meaningful assets and liabilities, wound up by an appointed liquidator over 6–12 months.
• Compulsory Winding-Up — initiated by the Registrar or a creditor via NCLT petition where the company has committed serious defaults or is unable to pay debts.

Strike-off is the fastest and cheapest option for dormant startups — Taxpex handles the entire process (indemnity bonds, affidavits, no-dues certificates, board and shareholder resolutions, STK-2 filing, newspaper advertisement in STK-6) for a flat ₹9,999 professional fee.

Your first-year compliance calendar at a glance

Expert tips from our CAs and CS

• Reserve two name options in strict order of preference — MCA rejects the first if similar to any existing company or trademark; the second saves you a re-application fee.
• Set authorised capital slightly above your 12-month funding plan — SH-7 amendments cost time and money later.
• Create the ESOP pool in the AoA at incorporation itself — issuing the pool later requires investor consent, which they usually deduct from founder equity.
• Never miss INC-20A — the ₹50,000 + ₹1,000/day penalty is the most avoidable startup cost in Indian company law.
• Sign a founders' agreement with vesting, IP assignment and dispute resolution before you write your first line of production code.
• Open the company bank account in the same week as COI — waiting delays your INC-20A deadline.
• Get your first statutory audit done cleanly, even if turnover is nil — the audited financials are the single most important document at your first fundraise.
• Register for GST voluntarily even below the threshold if you plan to invoice B2B — enterprise clients treat GSTIN as a basic hygiene check.

Private Limited Company registration fees in India — full cost breakdown

The question founders actually search for is "how much does it cost to register a Pvt Ltd company". The honest answer has three layers: statutory MCA fees, state stamp duty on the MoA/AoA and authorised capital, and the professional fee for drafting and filing. Below is the realistic all-in cost for a two-director company with ₹1 lakh authorised capital, before state variation.

For most founders the realistic landed cost of a clean Pvt Ltd incorporation is ₹8,000–₹14,000, with Maharashtra, Kerala and Madhya Pradesh at the higher end purely because of stamp duty. Anyone quoting ₹2,999 all-inclusive is either excluding stamp duty and DSC, or intends to bill them later.

Name approval — why MCA rejects names, and how to pass first time

Name rejection is the single biggest cause of incorporation delay. Each rejected SPICe+ Part A costs another ₹1,000 and three to four working days. The Registrar applies the Companies (Incorporation) Rules and the trademark register together, so a name that is free on MCA can still be refused because of a live TM class.

• Phonetic or visual similarity to an existing company or LLP — 'Zentra Technologies' vs 'Zentraa Tech' will be refused.
• Conflict with a registered or applied-for trademark in a related class, even if no company uses the name.
• Generic or descriptive-only names such as 'India Trading Company' with no distinctive element.
• Restricted words — 'Bank', 'National', 'Insurance', 'Stock Exchange', 'Nidhi' — need sectoral approval.
• Objective clause mismatch — the name suggests activity (e.g. 'Pharma') not covered in the MoA objects.
• Plural, spacing or suffix tricks on an existing name ('Solutions' vs 'Solution') are treated as identical.

Practical rule: pick a coined word plus an activity word, run a free search on the MCA name database and the IP India trademark register in the same class, and submit two genuinely distinct options rather than two variants of the same word. Taxpex runs both searches before filing, which is why most of our applications clear on the first attempt.

SRN tracking — what each MCA status actually means

After SPICe+ is submitted you receive an SRN (Service Request Number). Every subsequent movement is visible under "Track SRN / Transaction Status" on the MCA portal. The status wording is terse, so here is what each one means for your timeline.

After the COI arrives — the first 30 days checklist

Incorporation is a starting line, not a finish line. The Companies Act attaches several deadlines to the date on your Certificate of Incorporation, and the penalties for missing them are disproportionate to the effort involved.

• Open the company current account using the COI, MoA, AoA, PAN, board resolution and KYC of directors — do this in week one.
• Deposit the subscribed paid-up capital from each shareholder's personal account into the company account; this evidence is needed for INC-20A.
• File INC-20A (declaration of commencement of business) within 180 days of incorporation — ₹50,000 company penalty plus ₹1,000 per day on officers if missed.
• Appoint the first statutory auditor within 30 days of incorporation by board resolution and file ADT-1.
• Issue share certificates within 60 days of incorporation and pay stamp duty on them as per state rules.
• Hold the first board meeting within 30 days and maintain statutory registers (members, directors, charges).
• Register for GST if applicable, plus professional tax, PF and ESI once employee thresholds are crossed.
• Apply for Startup India / DPIIT recognition if eligible — it unlocks the 80-IAC tax holiday and angel tax exemption.