Standardised company

Legal Form: Private Limited Company

City: Mumbai

Registration Requirements Summary :

Procedure 1

Obtain director identification number (DIN) on-line

Time to complete : 1 to 6 days

Cost to complete : INR 400 to INR 2650

Name of Agency : Ministry of Corporate Affairs

The process to obtain the Director Identification Number (DIN) is as follows :

1) Obtain the provisional DIN by filing application Form DIN-1 online. This form is on the Ministry of Corporate Affairs 21st Century
(MCA 21) portal www.mca.gov.in. The provisional DIN is immediately issued. The application form must then be printed and signed and sent for approval to the ministry by courier along with proof of identity and address :

2) The concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The process takes about 4 weeks.

Procedure 2

Obtain digital signature certificate on-line

Time to complete : 1 to 6 days

Cost to complete : INR 400 to INR 2650

Name of Agency : Private agencies authorized by MCA 21

To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate. The digital signature certificate can be obtained from one of six private agencies authorized by MCA 21 such as Tata Consultancy Services. Company directors submit the prescribed application form along with proof of identity and address. Each agency has its own fee structure, ranging from INR 400 to INR 2650.

Procedure 3

Reserve the company name with the Registrar of Companies (ROC) on-line

Time to complete : 2-3 days

Cost to complete : INR 500

Name of Agency : Registrar of Companies

Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on the MCA 21 Web site.

The RoC in Mumbai has staff members working full time on name reservations (approximately 3 but more if the demand increases). A maximum of 6 suggested names can be submitted, they are then checked by RoC staff for any similarities with all other names in India.

The MCA receives approximately 50-60 applications a day. After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the selected name appears on the website. Applicants need to keep consulting the website to confirm that one of their submitted names was approved.

In practice, it takes 2 days for obtaining a clearance of the name if the proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website).

Procedure 4

Stamp the company documents either at the Superintendent or an authorized bank

Time to complete : 1 day

Cost to complete : Rs. 200 (for MOA) +Rs. 1000 (for AOA) for every Rs.500,000/- or part thereof +Rs. 100 (stamp paper for declaration Form 1)

Name of Agency : Superintendent of Stamps or to the authorized bank

The request for stamping the incorporation documents should be accompanied by unsigned copies of the memorandum and articles of association and the payment receipt.

The company must ensure that the copies submitted to the Superintendent of Stamps or to the authorized bank for stamping are unsigned and that no promoter or subscriber has written anything on it by hand. The Superintendent returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty.

The rate of stamp duty varies from state to state.

According to Article 10 and Article 39 of the Indian Stamp Act (1899), the stamp duty payable on the memorandum and articles of association for company incorporation in Mumbai, Maharashtra, is as follows:
- Articles of association: INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 50,000,000.
- Memorandum of association: INR 200.
- Form-1 (declaration of compliance): INR 100.

Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father's name, address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed.

Procedure 5

Present the required documents along with the registration fee to the Registrar of Companies to get the certificate of incorporation

Time to complete :3-7 days

Cost to complete :INR 15,823

Name of Agency :Ministry of Company Affairs

The following forms are required to be electronically filed on the website of the Ministry of Company Affairs: (a) e-form 1; (b) e-form 18; and (c) e-form 32. Along with these documents, scanned copies of the consent of the initial directors, and also of the signed and stamped form of the Memorandum and Articles of Association, must be attached to Form 1;
- The fees for registering a company can be paid online by using a credit card or by payment in cash at certain authorized banks;
- One copy of the Memorandum of Association, Articles of Association, Form 1, Form 32, Form 18 and the original name approval letter, consent of directors and stamped power of attorney must be physically submitted before the Registrar of Companies; and
- The certificate of incorporation is sent automatically to the registered office of the company by registered or speed post.

The registration fees paid to the Registrar are scaled according to the company’s authorized capital (as stated in its memorandum):
- INR 100,000 or less: INR 4,000. If the nominal share capital is over INR 100,000, additional fees based the amount of nominal capital apply to the base registration fee of INR 4,000
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 1,00,000, up to INR 500,000: INR 300.
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 500,000, up to INR 5,000,000: INR 200.
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 5,000,000, up to INR 1 10,000,000: INR 100.
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 10,000,000: INR 50.

The payment of fees can be made either
(1) Offline : one can upload all incorporation documents and generate the payment Chalan. Against this Chalan, the applicant has to obtain a demand draft for filing fees amount in favor of "Pay & Accounts Office, Ministry of Corporate Affairs, New Delhi" and this demand draft is payable at Mumbai. The applicant has to visit the specified branches of certain banks to make the payments. Upon the receipt of the payments, it takes around one week for clearance of payment. Only after the clearance of payment does the RoC accept the documents for verification and approvals
(2) Online : the applicant makes the payment through credit cards and the system accepts the documents immediately. Please note that in Mumbai, RoC requests for pre-scrutiny of documents for any correction thereon, before the documents are uploaded, so that once the documents have been uploaded, it can be approved without any further correction. The online filing mechanism requires only one copy of scanned documents to be filed (including stamped MOA, AOA, and POA).

Schedule of Registrar filing fees for the articles and for the other forms (l, 18, and 32):
- INR 200 for a company with authorized share capital of more than INR 100,000 but less than INR 500,000.
- INR 300 for a company with nominal share capital of INR 500,000 or more but less than INR 2,500,000.
- INR 500 for a company with nominal share capital of INR 2,500,000 or more.

Procedure 6

Make a seal

Time to complete :1 day

Cost to complete :INR 350

Name of Agency :Although making a seal is not a legal requirement for the company to be incorporated, companies require a company seal to issue share certificates and other documents.

Procedure 7

Obtain a Permanent Account Number (PAN)

Time to complete :7 days

Cost to complete :INR 66 for Fee and INR 5 for Application Form, (if not downloaded)

Name of Agency :Income Tax Department, agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd.

Under the Income Tax Act, 1961, each person must quote his or her permanent account number (PAN) for tax payment purposes and the tax deduction and collection account number (TAN) for depositing tax deducted at source. The Central Board of Direct Taxes (CBDT) has instructed banks not to accept any form for tax payment (Chalan) without the PAN or TAN, as applicable.

The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN related services, the Income Tax department (effective July 2003) outsourced their operations pertaining to allotment of PAN and issue of PAN cards to UTI Investor Services Ltd, which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office.

The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the above mentioned service centers on Form 49A, with a certified copy of the certificate of registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable taxes) applies for processing the PAN application.

IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A), assist the applicant in filling up the form, collect filled form and issue acknowledgement slip. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant.

The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details (www.incometaxindia.gov.in, www.utiisl.co.in, www.tin.nsdl.co.in)

Procedure 8

Obtain a tax account bumber for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department

Time to complete :7 days, simultaneously with Procedure 7

Cost to complete :INR 55

Name of Agency : Income Tax Department, any authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL)

The tax deduction and collection account number (TAN) is a 10-digit alphanumeric number required by all persons responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment Chalans, and all TDS/TCS certificates issued. Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- .

The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Locations of TIN Facilitation Centers are at www.incometaxindia.gov.in and http://tin.nsdl.com. The processing fee for both applications (a new TAN or a change request) is INR 50 (plus applicable taxes).

After verification of application, the same is sent to Income Tax Department and upon satisfaction the department issues the TAN to the applicant. The national government levies the income tax. Since outsourcing, any authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) can accept and process the TAN application.

The application for TAN can be made either online TAN can be through the NSDL website www.tin-nsdl.com or offline. However, after the payment of the fee by credit card, the hard copy of the application must be upon payment of the fee through credit card, the hard copy of the application is required to be physically filed with NSDL.

Procedure 9

Register with Office of Inspector, Mumbai Shops and Establishment Act

Time to complete :2 days, simultaneous with procedure 8

Cost to complete :INR 1,500 + 3 times registration fee for Trade Refuse Charges

Name of Agency :Local shop inspector

A statement containing the employer’s and manager’s name and the establishment’s name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees.

According to Section 7 of the Bombay Shops and Establishments Act, 1948, the establishment must be registered as follows:
- Under Section 7(4), the employer must register the establishment in the prescribed manner within 30 days of the date on which the establishment commences its work.
- Under Section 7(1), the establishment must submit to the local shop inspector Form A and the prescribed fees for registering the establishment.
- Under Section 7(2), after the statement in Form A and the prescribed fees are received and the correctness of the statement is satisfactorily audited, the certificate for the registration of the establishment is issued in Form D, according to the provisions of Rule 6 of the Maharashtra Shops and Establishments Rules of 1961.

Since the amendments in the Maharashtra Shops & Establishment (Amendment) Rules, 2003 dated 15th December 2003, the Schedule for fees for registration & renewal of registration (as per Rule 5) is as follows:
0 employees: INR 100
1 to 5 employees: NR 300
6 to 10 employees: INR 600
11 to 20 employees: INR 1000
21 to 50 employees : INR 2000
51 to 100 employees : INR 3500
101 or more:- INR 4500
Hence in the given case the registration fees would be INR 2000, as there are 50 employees

In addition, an annual fee (three times the registration and renewal fees) is charged as trade refuse charges (TRC), under the Mumbai Municipal Corporation Act, 1888.

Procedure 10

Register for VAT before the Sales Tax Officer of the ward in which the company is located

Time to complete :12 days, simultaneous with procedure 9

Cost to complete :INR 5000 (Registration Fee) + INR 100 (Stamp Duty)

Name of Agency :Sales Tax Office

Beginning April 1, 2005, the sales tax was replaced by the VAT, which requires registration by filing Form 101. The authorized representative signing the application must be available at the Sales Tax Office on the day of application verification.

The applicant goes to the Sales Tax Office and enters the registration counter. The clerk at the counter reviews that the applicant has all the required documents and gives the applicant a token (waiting number). After a short wait, the applicant’s number gets called and the applicant goes to the desk of a sales tax officer. There, all the information on Form 101 is manually entered into the system by the officer. Within 10 minutes, the system generates a Tax Identification Number (TIN) thereafter, the company is considered fully registered to pay taxes. However, the applicant must wait between 10 to 15 days to receive the VAT registration certificate by post.

In addition to Form 101, other accompanying documentation includes:
1) Certified true copy of the memorandum and articles of association of the company.
2) Proof of permanent residential address. At least 2 of the following documents must be submitted: copy of passport, copy of driving license, copy of election photo identity card, copy of property card or latest receipt of property tax of Municipal Corporation, copy of latest paid electricity bill in the name of the applicant.
3) Proof of place of business (for an owner, the case of Doing Business): Proof of ownership of premises viz. copy of property card or ownership deed or agreement with the builder or any other relevant documents.
4) One recent passport size photograph of the applicant.
5) Copy of Income Tax Assessment Order having PAN or copy of PAN card.
6) Chalan in Form No. 210 (original) showing payment of registration fee at INR 5000/in case of voluntary RC and INR 500/in other cases

Future Reform: The whole process will be put online by the spring of 2009. This means that rather than physically having to go to the office, companies will fill in all their details on-line for Form 101 and then go the office only so that the Sales Tax Office can verify the above listed documentation.

Procedure 11

Register for profession tax

Time to complete :2 days, simultaneous with procedure 10

Cost to complete :No charge

Name of Agency :Professional Tax Office

According to section 5 of the Profession Tax Act, every employer (not being an officer of the government is liable to pay tax and shall obtain a certificate of registration from the prescribed authority. The company is required to apply in Form I to the registering authority. The registration authority for Mumbai Area is situated at Vikarikar Bhavan, Mazgaon in Mumbai. Depending on the nature of the business, the application should be supported with such documents as address proof, details of company registration number under Indian Companies Act (1956), details of head office (if the company is a branch of company registered outside the state), company deed, certificates under any other act, and so forth.

Procedure 12

Register with Employees' Provident Fund Organization

Time to complete :12 days, simultaneous with procedure 10

Cost to complete :No charge

Name of Agency :Provident Fund Organization (EPFO)

The Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies to an establishment, employing 20 or more persons and engaged in any of the 183 Industries and Classes of business establishments, throughout India excluding the State of Jammu and Kashmir.

The applicant fills in an application and is then allotted a social security number. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. Provident Fund registration is optional if workforce size is not more than 20.

The employer is required to provide necessary information to the concerned regional Provident Fund Organization (EPFO) in prescribed manner for allotment of Establishment Code Number. No separate registration is required for the employees. Nevertheless all eligible employees are required to become members of the Fund and individual account number is allotted by the employer in prescribed manner.

As per an internal circular, the code number is to be allotted within 3 days from the date of submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number in 12 to 15 days. An online application facility is not provided so far

Procedure 13

Register for medical insurance

Time to complete :9 day, simultaneous with procedure 10

Cost to complete :No charge

Name of Agency :Employees’ State Insurance Corporation (ESIC)

Registration is the process by which every employer/factory and every employee employed for wages are identified for the purpose of the medical insurance scheme and their individual records are set up for them.

As per the Employees' State Insurance (General), Form 01 is the form required to be submitted by Employer for registration. It takes 3 days to a week for the Employer Code Number to be issued. The "intimation letter" containing the Code Number is sent by post to the employer by post and that takes an additional couple of days.

The Employee’s individual insurance is a separate process and occurs after Employer’s registration. The Employer is responsible for submitting the required Declaration Form and employees are responsible for providing correct information to the employer. The employee temporary cards (ESI Cards) are issued on the spot by the local offices in many places. The temporary cards are valid for 13 weeks from the date of appointment of the employees. It takes about 4 to 5 weeks to get a permanent ESI card.

An indicative table on cost of setting up business in Maharashtra