One Person Company Registration is a unique and progressive concept in India that allows a single entrepreneur to start and operate a corporate entity with limited liability; it is beneficial for a single person to start a business and grow it in a fruitful manner. Under the Companies Act, 2013, OPCs aim to boost and provide financial assistance to entrepreneurship, especially among small business owners and startups. The potential of OPCs, the Government of India has introduced various schemes and incentives to encourage their growth and let them contribute to the economy.
Understanding One Person Company (OPC)
A One Person Company (OPC) is a company incorporated with a single shareholder who also acts as the director and who must be an Indian citizen and resident. It enjoys the benefits of limited liability, separate legal identity, perpetual succession, and other like nature. Unlike a sole proprietorship, an OPC offers a clear legal distinction between the business and the owner; both identities have different roles and liabilities, ensuring limited liability protection. The one-person company structure is unique for entrepreneurs who want to operate the business independently while benefiting from a corporate framework.
Some Major Government Schemes and Their Benefits for OPCs
1. Startup India Initiative
This scheme was launched in 2016. The Startup India initiative’s main objective is to nurture innovation and entrepreneurship in India and to promote start-ups and businesses so that they can contribute to the economy of the nation. OPCs, if recognized as startups, can avail of multiple benefits under this scheme:
- Tax Benefits: Eligible OPCs receive a tax holiday for three consecutive years under Section 80-IAC of the Income Tax Act.
- Self-Certification Compliance: Start-ups can self-certify compliance for labour and environmental laws.
- Fast-Track Patent Processing: OPCs under Startup India can avail expedited patent filing with an 80% rebate on patent fees.
- Funding assistance: Startups can access the Fund of Funds for Startups (FFS) managed by SIDBI, so that they can run business without financial constraint.
- Ease of Winding Up: Startups, including OPCs, can be wound up within 90 days under the Insolvency and Bankruptcy Code, 2016.
2. Make in India Scheme
The Make in India scheme encourages domestic manufacturing to manufacture the product in India itself and business setup, benefiting OPCs engaged in production, trade, and services.
- Simplified Compliance: Government efforts to ease business regulations benefit OPCs.
- Financial Assistance: Various financial incentives and tax exemptions for businesses in manufacturing and service sectors.
- Subsidized Loans: The support or assistance of financial organizations provides standard loans to startups and MSMEs, including various OPCs, so that they can run their business without financial constraint, and in that entire process, the government backs the scheme.
3. Micro, Small, and Medium Enterprises
- Priority Lending: Banks usually offer priority lending to registered MSMEs as per the prescribed manner.
- Lower Interest Rates: MSMEs enjoy reduced interest rates on business loans.
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): Provides collateral-free loans to OPCs.
4. Tax Benefits and Exemptions
- Lower Corporate Tax Rates: The corporate tax rate for domestic companies, including OPCs, has been reduced to 22% (without exemptions) and 15% for new manufacturing units.
- GST Exemptions for Small Businesses: OPCs with an annual turnover of up to ₹40 lakh (for goods) and ₹20 lakh (for services) are exempt from GST registration.
- Presumptive Taxation (Section 44AD and 44ADA): OPCs with a turnover limit of up to ₹2 crore can benefit from presumptive taxation, which helps them run the business easily and reduces compliance burdens, helping them run their business properly.
5. Mudra Loan Scheme
The Pradhan Mantri Mudra Yojana (PMMY) provides collateral-free loans to OPCs under three categories:
- Shishu: It provides the loans amount to OPCs up to ₹50,000 for startups and to the new businesses.
- Kishor: It provides loans in amounts between ₹50,000 and ₹5 lakh for growing businesses and the Indian economy.
- Tarun: It provides loans amounting to between ₹5 lakh and ₹10 lakh for established businesses.
6. Stand-Up India Scheme
Introduced in 2016, Startup India aims to promote entrepreneurship, support innovation, and create an ecosystem conducive to the growth of startups.
- Simplified registration process and self-certification compliance.
- Tax exemptions for eligible startups for three consecutive years.
- Establishment of the Startup India Hub for mentoring and networking.
- Fund of Funds for Startups with a corpus of ₹10,000 crores to support venture capital funding for the high growth of business.
- Encouragement of incubation centres and research parks.
7. Digital India Initiative
The Digital India campaign promotes and boosts the digitization of business processes.
- Online company registration can be done through the MCA website portal.
- Digital Payment incentives and reduced transaction fees.
- Government support for e-commerce and IT-based businesses.
8. E-Governance and Ease of Doing Business Initiatives
- SPICe+ (Simplified Proforma for Incorporating a Company Electronically): OPC registration is simplified through a single online form.
- Zero MCA Fees for OPC Incorporation: Government waives fees for OPCs with an authorized capital up to ₹15 lakh.
- Relaxation in Compliance: OPCs are exempt from holding Annual General Meetings (AGMs) and require only minimal filings with the Ministry of Corporate Affairs (MCA).
9. Financial Assistance from SIDBI
The Small Industries Development Bank of India (SIDBI) provides financial aid to OPCs through:
- Startup Loans: Special funding for innovative startups.
- SIDBI Make in India Soft Loan Fund for MSMEs (SMILE): Concessional loans for manufacturing and service sector enterprises.
- SIDBI Revolving Fund for Technology Innovation (SRIJAN Scheme): This is Funding support for technology-driven startups.
10. Public Procurement Policy for MSMEs
- OPCs registered as MSMEs get a 25% reservation in government tenders.
- Exemption from Earnest Money Deposit (EMD) while bidding for contracts.
- Preference in public procurement contracts under the Make in India initiative.
Conclusion
The Indian government has introduced the initiative with the help of several schemes and benefits to promote the growth of OPCs and the growth of the Indian economy while making them an attractive option for solo entrepreneurs so that they can properly run their business without financial constraint. During the journey from tax incentives and financial support to ease of compliance and digital integration, OPCs enjoy multiple advantages that help companies and OPCs grow faster. Entrepreneurs looking to establish an OPC should leverage these government schemes to enhance their business operations and drive growth.
Frequently Asked Questions
1. What is the minimum capital required to start an OPC?
There is no minimum limit for capital requirement for setting up an OPC in India.
2. Are OPCs eligible for tax benefits under Startup India?
Yes, if recognized as a startup, OPCs can avail of tax exemptions for three years under Section 80-IAC.
3. Can an OPC register under MSME and avail of the benefits?
Yes, the OPCs can register as MSMEs and enjoy priority lending, loans, subsidies, and other financial benefits to grow their business.
4. Is GST registration mandatory for OPCs?
GST registration is essential only if the turnover exceeds ₹40 lakh for goods and ₹20 lakh for services.
