Expert Guide
A complete walkthrough — Pvt Limited Registration
Reading this guide locally — In Jaganathapuram Valasaravakkam, on the Valasaravakkam-Karambakkam corridor that passes through Jaganathapuram Valasaravakkam.
What Private Limited incorporation means under Indian company law
Statutory framework under Section 7
Private Limited incorporation in India is governed by Section 7 of the Companies Act 2013 read with the Companies (Incorporation) Rules 2014. Section 7(1) requires the subscribers to the memorandum to file an application with the Registrar within whose jurisdiction the registered office of the company is to be situated, accompanied by the MOA and AOA duly signed by the subscribers, a declaration by a professional that the requirements of the Act and Rules have been complied with, a declaration from each subscriber and first director in Form INC-9, the address for correspondence till the registered office is established, the particulars of subscribers and first directors with proof of identity, and the particulars of first directors with their DIN and consent in Form DIR-2. Section 7(2) provides that the Registrar shall on the basis of the documents filed register the memorandum and articles and issue a Certificate of Incorporation in Form INC-11 with a Corporate Identity Number. The CIN under Section 7(3) is the company's unique identifier for all subsequent statutory filings.
Distinction from One Person Company and LLP
Section 2(68) defines a Private Limited as a company having a minimum paid-up share capital as may be prescribed and which by its articles restricts the right to transfer its shares, limits the number of members to two hundred (excluding present and former employee-members) and prohibits any invitation to the public to subscribe for any securities. The OPC under Section 2(62) is a company with only one person as member — a sub-form of Private Limited but with restrictions on conversion above turnover / capital thresholds under Rule 6 of the Incorporation Rules. The LLP under the Limited Liability Partnership Act 2008 is a hybrid form with partner-based governance under the LLP Agreement, no minimum capital, and a simpler annual filing regime under Form 8 and Form 11. The choice among Private Limited, OPC and LLP turns on the number of promoters, the need for ESOP issuance, contemplation of external investment under Section 42, and the comfort with annual compliance cost.
Limited liability and separate legal personality
The foundational doctrine of Private Limited incorporation is separate legal personality, articulated by the House of Lords in Salomon v A Salomon and Co Ltd [1897] and adopted by Indian jurisprudence in Tata Engineering and Locomotive Co Ltd v State of Bihar [1965 SCR 391]. The company is a distinct legal person from its members and directors, capable of holding property, suing and being sued in its own name. Liability of members under Section 2(22) is limited to the amount unpaid on the shares held. The corporate veil can be lifted only in narrow circumstances — fraud, sham, evasion of statutory obligation — as elaborated in Vodafone International Holdings BV v Union of India [2012 6 SCC 613]. The limited-liability shield is the principal commercial advantage of Private Limited over proprietorship and partnership, and is the reason promoters of consequence almost invariably elect the Private Limited form for ventures with external counterparties.
Stamp duty on incorporation by State
Post-incorporation stamp duty events
Beyond incorporation, several events trigger State stamp duty: increase in authorised capital under Section 61 (additional duty on the incremental amount, paid with SH-7); issuance of share certificates under Section 56 and Rule 6 of the Companies (Share Capital and Debentures) Rules 2014 (stamp duty under Article 19 of the Stamp Act, typically ₹1 per ₹1,000 of share value, payable within thirty days of issuance); transfer of shares (stamp duty at 0.015% of consideration or value, whichever is higher, under the Indian Stamp (Amendment) Act 2019 read with the Indian Stamp (Collection of Stamp-duty through Stock Exchanges, Clearing Corporations and Depositories) Rules 2019 — applies through the depository for demat shares); issuance of debentures (0.005% of face value); and registration of charges (varies by State).
State Stamp Acts and Schedule I
Stamp duty on the MOA, AOA and the share-capital allotment at incorporation is levied under the Indian Stamp Act 1899 as applied to each State, or under the State-specific Stamp Act where the State has enacted its own (Maharashtra, Karnataka, Gujarat, Kerala, Rajasthan, Tamil Nadu have variations). The duty is typically computed as a percentage of authorised share capital, with a minimum and maximum cap. SPICe+ has an integrated stamp-duty payment module that calculates the duty based on the State of registered office declared in Part A and remits it to the State Treasury. The duty applies once at incorporation; subsequent increases in authorised capital under Section 61 attract additional duty on the incremental amount, payable along with the SH-7 filing.
Tamil Nadu duty structure
In Tamil Nadu, the Indian Stamp Act 1899 as amended by the Tamil Nadu Government applies. The stamp duty on Memorandum of Association under Article 39 of Schedule I to the Indian Stamp Act (Tamil Nadu) is ₹200. The stamp duty on Articles of Association under Article 10 is 0.5% of authorised share capital subject to a maximum of ₹5,00,000. For incorporation with authorised capital of ₹1 lakh, the total stamp duty is approximately ₹700; for authorised capital of ₹10 lakh, approximately ₹5,200; for authorised capital of ₹1 crore, approximately ₹50,200. The duty is paid through the SPICe+ integrated module to the Tamil Nadu Treasury. Where additional places of business are in Tamil Nadu, no further State-specific stamp duty is triggered at the incorporation stage — INC-22 changes attract a flat ₹100 duty.
Post-incorporation compliance — PAN TAN GST
Section 10A commencement declaration
Section 10A inserted by the Companies (Amendment) Act 2019 requires every company incorporated after 2 November 2018 having a share capital to file a declaration of commencement of business in Form INC-20A within 180 days of incorporation. The declaration is filed by a director and certified by a practising professional confirming that every subscriber to the memorandum has paid the value of shares agreed to be taken by him on the date of making of such declaration, and that the company has filed with the Registrar verification of its registered office in INC-22. Non-filing attracts a penalty of ₹50,000 on the company and ₹1,000 per day on every officer in default up to ₹1 lakh. The Registrar can also strike off the company under Section 248(1)(b) for non-filing.
EPFO ESIC PT and Shop & Establishment
Beyond PAN, TAN and GSTIN, post-incorporation compliances include EPFO Establishment Code activation (mandatory from twenty employees under EPF & MP Act 1952), ESIC Code activation (mandatory from ten employees in covered areas under ESI Act 1948), Profession Tax registration in States other than those integrated in AGILE-PRO-S, Shop and Establishment registration under the State Shops and Establishments Act (Tamil Nadu Shops and Establishments Act 1947, with online registration through the Labour Department portal), Labour Welfare Fund contribution registration (annual in Tamil Nadu), MSME registration through Udyam portal (optional but commonly opted for benefits under MSMED Act 2006), and sectoral licences as applicable (FSSAI, Drug Licence, IEC, BIS, etc.). The order of obtaining these depends on the business activity and the time horizon to commencement.
PAN and TAN through SPICe+
PAN under Section 139A of the Income Tax Act 1961 and TAN under Section 203A are allotted automatically along with the Certificate of Incorporation through the SPICe+ integration with the Income Tax Department's PAN / TAN systems. The PAN is the company's identifier for all income-tax filings, including ITR-6 annual returns, advance tax instalments under Section 211, TDS deduction obligations, and assessment proceedings. The TAN is required for deducting tax at source under Chapter XVII-B, filing quarterly TDS returns (Form 24Q for salaries, 26Q for non-salary domestic, 27Q for non-resident, 27EQ for TCS), and issuing TDS certificates (Form 16 / 16A). PAN and TAN are typically generated within forty-eight hours of the Certificate of Incorporation issuance.
Annual return AOC-4 and MGT-7
MGT-7 / MGT-7A annual return
Section 92(1) read with Rule 11 of the Companies (Management and Administration) Rules 2014 requires every company to prepare a return called the annual return in Form MGT-7 (MGT-7A for OPCs and small companies under the 2021 amendment) containing the particulars as on the close of the financial year — registered office, principal business activities, particulars of holding / subsidiary / associate companies, shares / debentures / other securities and shareholding pattern, indebtedness, members and debenture holders, promoters / directors / KMP and changes therein, meetings of members / board / committees and attendance, remuneration of directors and KMP, penalty / punishment / compounding of offences, certification of compliances, and shareholding pattern. The return must be filed within sixty days of the AGM. Certification by a Company Secretary is required for listed companies and companies with paid-up capital ≥ ₹10 crore or turnover ≥ ₹50 crore.
Board's report under Section 134
Section 134(3) prescribes the contents of the Board's Report to be attached to the financial statements — extract of annual return (now replaced by web-link to MGT-7 under the 2017 amendment), number of board meetings, directors' responsibility statement, frauds reported by auditors, policy on directors' appointment and remuneration, declarations from independent directors (where applicable), explanations to qualifications in the audit report, particulars of loans / guarantees / investments under Section 186, particulars of related-party transactions in AOC-2 under Section 188, state of company's affairs, transfers to reserves and dividend declared, material changes between balance-sheet date and signing date, conservation of energy / technology absorption / foreign exchange particulars under Section 134(3)(m), risk management policy, CSR particulars (where Section 135 applies), and the like. The Board's Report is signed by the Chairperson or by two directors.
Late-filing additional fees
Late filing of AOC-4 and MGT-7 attracts additional fees under the Companies (Registration Offices and Fees) Rules 2014 at ₹100 per day of delay, with no maximum cap — the additional fee accumulates indefinitely until the form is filed. The Companies (Amendment) Act 2020 also empowers the Registrar to initiate adjudication proceedings under Section 454 for non-filing, with penalty under Section 92(5) on the company at ₹10,000 plus ₹100 per day up to ₹5 lakh, and on every officer in default at ₹10,000 plus ₹100 per day up to ₹2 lakh. Persistent non-filing for two consecutive years triggers Section 248(1)(c) strike-off proceedings and Section 164(2) director disqualification for five years. Late-filing additional fees and Section 454 adjudication are independent — both can apply concurrently.
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