How to register a company in India

In 2023, United Nations Trade and Development named India one of its top five destinations for international business deals, and it’s easy to see why. India is home to a strong and growing economy, a significant middle class, and a large population of skilled and highly educated workers—and in recent years, the country has made big moves to improve its business climate, removing bureaucratic barriers to foreign and overseas investment and introducing new tax incentives for entrepreneurs, startups, and local entities.

In other words, if you’ve ever considered expanding your business or hiring employees in India, there’s never been a better time. But navigating how to register a company in India—or any foreign country—can be challenging, from learning local customs to ensuring compliance with a new jurisdiction’s labor and employment laws. 

In this guide, we’ll explore the legal requirements, common business structures, challenges, and alternatives to setting up a local business entity—like partnering with an employer of record service in India for quicker hiring and less compliance risk.

Why register a company in India?

If you want to hire and pay employees in a foreign country without relying on a third-party service provider like an employer of record (EOR), often your only option is to establish a local business entity. In India, registering your own local entity can be a strategic move—it gives you total control over your business operations, compliance, and brand representation in the Indian market, plus it can allow you to take advantage of local tax incentives and build relationships with other local businesses.

Pros and cons of a legal entity vs. EOR

Requirements for registering a company in India

If company incorporation sounds like the right path for your business needs in India, know that the Companies Act of 2013 has some requirements for both local and foreign businesses in the country.

Companies registered in India must:

• Appoint a board of directors. All directors will need to acquire a Digital Signature Certificate (DSC) and file a DIR-3 form to receive a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA).
• Have a local registered office. This must be somewhere the company can receive official documents.
• Submit annual returns. These keep the company’s information up-to-date with the Registrar of Companies (ROC).

Note that, unlike in some countries, India doesn’t require businesses to appoint a company secretary to oversee compliance. 

In addition to these requirements, business owners and directors will need to supply the required documents to the Indian government during the company registration process, as outlined below.

Documents required to register a company in India

The necessary documents to register a company in India may vary, depending on the business structure and whether you’re a foreign or local director. But in general, be prepared to show the following documents to the MCA and ROC:

1. Documents for directors, partners, and shareholders:

• Proof of identification, which can include a passport, driving license, Aadhar card, or PAN card
• Proof of address, which can include a recent utility bill or bank account statement
• DIN and DSC for all directors and partners

2. Documents for the company

• Resident address proof, which can include a tenancy or rental agreement, letter or NOC from a landlord, or sale deed for an office in the company’s name
• The company’s Memorandum of Association (MoA)
• The company’s Articles of Association (AoA)

What is a private limited company in India?

One of the first steps in the process of setting up your new company in India is choosing a business structure. One of the most common business structures for foreign companies expanding into India is a private limited company.

A private limited company operates as a separate legal entity from any other companies owned or managed by related individuals in other countries. It’s managed by a board of directors, which is responsible for making major business decisions and overseeing its general affairs, subject to the company’s Articles of Association and as long as it complies with the Companies Act of 2013. The company’s shareholders directly elect the members of the board of directors. Private limited companies must maintain a minimum paid-up capital of 1 lakh (INR) or more.

Types of private limited companies

There are several types of private limited companies recognized under Indian company law, including:

• Companies limited by shares
• Companies limited by guarantee
• Unlimited companies

Public limited companies are also an option—these offer shares to the general public rather than just private shareholders.

Other business structures in India

While private limited companies are the most common business structure type for foreign employers expanding into India, there are other types of companies you may want to consider, depending on how you run your business and its needs, including:

• Partnership firm: A business structure in which two or more persons share both profits and losses equally
• Limited Liability Partnership (LLP): A business structure for two or more partners whose liabilities are limited to their agreed contribution
• One-Person Company (OPC): A business structure similar to a sole proprietorship, but with limited liability

How to register a foreign company in India

Once you’ve chosen a business structure, you can proceed with registering your company. Below, find a step-by-step guide to starting the process in India:

1. Choose and reserve your company name. The first step in the official registration process is to choose a unique name for the company. Names are reserved using Part A of the SPICe+ business registration form, which can be submitted through the MCA Portal. You’ll need to submit two proposed names, and they must follow all government rules (for example, a private limited company needs to have “Pvt. Ltd.” at the end of its name).
2. Submit your company details. After choosing a name, you can submit the rest of your company details using Part B of the SPICe+ form. This will include information about your capital, registered office address, shareholders, and directors. You’ll also attach the required documents and register for PAN and TAN, stamp duty, and goods and services tax (GST) at this stage of the business registration process.
3. Prepare and submit incorporation forms. Finally, draft a Memorandum of Association (MOA) and Articles of Association (AOA) and submit them to the MCA.

If your business registration application is approved, you’ll receive a certificate of incorporation from the MCA, along with tax information from the Income Tax Department. Your company’s directors and shareholders will need to sign the incorporation certificate.

Employer of record: A time- and money-saving alternative to setting up a legal entity in India

While India has made great strides in recent years to make registering a business easier, it’s still complex and potentially time-consuming. One alternative to setting up an Indian company is partnering with an employer of record (EOR) service.

An EOR is a third-party service provider that helps companies legally hire employees in other countries without going through the process of establishing their own legal entity first. The EOR acts as the legal employer for the company’s overseas workforce, so they can hire while maintaining legal compliance with local tax, labor, and employment regulations. The EOR also takes over employment-related HR duties like payroll processing, employment contracts, and benefits administration, saving its clients time-consuming administrative work and allowing them to focus on strategic initiatives—like their global expansion.

Rippling EOR can help you hire employees in India quickly and compliantly. And if you eventually decide to register a company in India, Rippling can still help you save time and money by supporting your employees with global payroll—or even a complete workforce management platform.

Frequently asked questions about registering a company in India

Can foreign nationals register companies in India?

Yes, foreign nationals can register companies in India. The Indian government allows foreign direct investment (FDI) in most sectors, enabling foreign individuals and entities to incorporate businesses in the country.

Foreign nationals can establish private limited companies, public limited companies, or wholly-owned subsidiaries, provided they comply with Indian tax, employment, and labor laws.

How long does it take to register a company in India?

Registering a company in India typically takes at least a few weeks. This can depend on several factors, such as the type of company being registered, whether the business registration application was complete upon submission, and whether the Ministry of Corporate Affairs (MCA) has a backlog of applications at the time. Making sure all required documents are correctly prepared and submitted can help expedite the process.

How much does it cost to register a company in India?

The cost of registering a company in India varies based on the type of company, authorized capital, and professional fees for legal services. On average, expenses can range from INR 6,000 to INR 30,000. This includes government fees for name reservation, incorporation filing, Digital Signature Certificates (DSCs), Director Identification Numbers (DINs), stamp duty, and notary charges.

What is a foreign entity for tax purposes?

For tax purposes, a foreign entity refers to a company or organization that is incorporated outside India but conducts business within the country. Foreign entities are subject to Indian tax laws on income that accrues, arises, or is received in India. They may operate through liaison offices, branch offices, or project offices and are taxed differently compared to domestic companies. Understanding this classification is necessary for compliance with the Income Tax Act 1961 and for determining the applicable tax rates and obligations.

What taxes apply to Indian companies?

Indian companies are subject to corporate income tax, with rates varying based on their turnover and activities. Depending on the type of business, it may also be subject to other taxes, including goods and services tax (GST), stamp duty, and others.

What are the tax advantages of registering a company in India?

Registering a company in India can offer many tax advantages that have been established to attract entrepreneurs and foreign investment to the country. Some of these advantages are:

• Tax holidays: Companies operating in Special Economic Zones (SEZs) or engaged in specific sectors like infrastructure may enjoy tax exemptions for a certain period.
• Reduced tax rates: New manufacturing companies can benefit from lower corporate tax rates if they meet certain conditions.
• Deductions and exemptions: Businesses can claim deductions for expenses on research and development, capital expenditure, and depreciation on assets.
• Startup incentives: Recognized startups may receive tax exemptions on profits for three consecutive years within their first ten years of operation under the Startup India program.

Double Taxation Avoidance Agreements (DTAAs): India has DTAAs with several countries, allowing companies to avoid being taxed twice on the same income.

This blog is based on information available to Rippling as of December 3, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.