The Indian market has a vast consumer base, and the economy grows every year. It offers tremendous potential for businesses looking to expand or establish themselves. India attracts entrepreneurs and investors from all corners of the globe. However, entering the Indian market requires a clear understanding of the laws that control the business entities and regulatory framework. Setting up an onshore company in India is an essential step for entrepreneurs who are aiming to tap into the opportunities available, but this process involves several steps. From understanding the complex legal requirements to ensuring all documentation is in order, every phase of the company registration demands meticulous attention. Whether you are an international entrepreneur or a local visionary, this blog will guide you through the process of registering a company in India, detailing the necessary paperwork, regulations, and steps needed to ensure your business is legally compliant and ready for success in the Indian marketplace.
What is an Onshore Company?
In simple language, an onshore company is a company incorporated in a country to operate a business within that specific border. This is in contrast to an offshore company, which is registered in a foreign country to take advantage of particular benefits, like lower taxes or more relaxed regulations.
An onshore company in India is subject to local laws, regulations, and taxes. It can be set up in various forms, such as a Private Limited company, one-person Company (OPC), sole proprietorship, Limited Liability Partnership (LLP), etc.
Laws Governing Onshore Company Registration in India
It is mandatory for the onshore company to follow the rules, regulations, and procedures set by the Ministry of Corporate Affairs (MCA). The Companies Act of 2013 lays down the legal framework for registering and running a company in India. When it comes to taxes, businesses must comply with the Income Tax Act of 1961, which governs corporate taxes, and the Goods and Services Tax (GST) Act of 2017, which deals with indirect taxes like GST.
Benefits of Registering an Onshore Company in India
- Huge Market: India has over 1.5 billion people, giving onshore businesses a big customer base.
- Government Support: Programs like Startup India and Make in India offer tax benefits and make it easier to start a business.
- Low Costs: Running a business in India is more affordable due to lower labor, rent, and utility costs.
- Skilled Workers: India has a large number of professionals in IT, engineering, finance, and other industries.
- Legal Protection: Strong laws for business, contracts, and intellectual property help protect companies and investors.
- Easy Funding: Businesses can raise money from banks, investors, or government schemes.
Types of Onshore Company Registration in India
You can choose from one of the following business structures to set up an Onshore Company in India:
- Private Limited Company: This type of company is popular among small—to medium-sized businesses. Shareholders’ liability is limited to the amount they invest in the company, meaning their personal assets are protected in case of financial losses.
- Public Limited Company: It is for larger businesses intending to raise funds from the public.
- Sole Proprietorship: This is a type of business entity owned and managed by a single individual. The owner has unlimited liability in the business; that is, the owner’s personal assets can be used to cover business debts.
- One-Person Company (OPC): This is for individual entrepreneurs looking to set up a formal business with limited liability.
- Partnership Firm: This business structure is owned by two or more individuals who share profits and responsibilities. Partners have unlimited liability in the Partnership firm and are personally responsible for business debts.
- Limited Liability Partnership (LLP): This is a flexible business structure that combines the advantages of a partnership and a corporate structure.
Step-by-Step Process for Registering a Company in India
Setting up a company in India involves multiple steps, such as:
Step 1: Obtain a Digital Signature (DSC) and Director Identification Number (DIN)
Before doing anything, the people who will be directors of the company need two things:
- A Digital Signature Certificate (DSC): This is needed because all company registration paperwork is filed online, and a digital signature is required for authentication. You can get it from agencies like e-Mudhra or Sify.
- A Director Identification Number (DIN): It is mandatory for all the directors in the company. You can apply for it online through the MCA portal.
Step 2: Reserve your Company Name
Your business needs a unique name that no one else is already using. Make sure to check name availability on the MCA portal and submit an application to reserve the name of the company. If the name is approved, it will be held for 20 days.
Step 3: Draft Your Company’s Core Documents (MOA & AOA)
Two important documents define what your company is about:
- Memorandum of Association (MOA) – This document lays out the purpose and objectives of the company.
- Articles of Association (AOA) – This outlines the rules for internal management of the company’s shareholder rights and operational guidelines.
These must be signed by the directors and initial shareholders before moving to the next step.
Step 4: File the Application at the MCA portal
Submit an application through the SPICe+ form on the MCA portal. You will need to attach all required documents, including the MOA, AOA, and proof of office address.
Step 5: Certificate of Incorporation
Once the MCA verifies your application and finds everything in order, they will issue a Certificate of Incorporation for your company.
Step 6: Apply for PAN and TAN
Registration is not the end. After incorporation, you have to apply for:
- Permanent Account Number (PAN)
- Tax Deduction and Collection Account Number (TAN)
for your company at the Income Tax Department
Step 7: Register for GST (If Required)
If your business has an annual turnover above the prescribed limit, GST registration is mandatory. This allows you to collect Goods and Services Tax (GST) from customers and claim Input Tax Credit (ITC) on business expenses.
Step 8: Open a Business Bank Account
To carry out financial transactions, your company needs a dedicated business bank account. Most banks require the Certificate of Incorporation, PAN, MOA, AOA, and a proof of registered office address to open the account.
Checklist for Onshore Company Registration in India
- Decide the Business Structure like Private Limited Company, OPC, Sole Proprietorship, or Limited Liability Partnership
- Get a Digital Signature Certificate (DSC) for the Directors of the company
- Obtain Director Identification Number (DIN) for the Directors of the Company
- Reserve the Name for your Company
- Prepare MOA & AOA
- File Incorporation Forms (SPICe+ Form)
- Apply for PAN & TAN
- Register for GST (If Required): It is mandatory if your turnover exceeds the prescribed limit.
- Open a Company Bank Account
- Follow Post-Registration Compliance Conclusion
Conclusion
As India emerges as the top choice for entrepreneurs looking to establish an onshore company, breaking down the registration procedure into simpler parts makes it easier to manage. The business environment is improved by the incentives and programs the Indian government has put in place, such as Startup India and Make in India, which provide tax advantages, lessened compliance requirements, and simpler access to capital. Businesses can easily benefit from India’s sizable market and expanding economy by abiding by the rules and regulations and making sure that the proper documents are attached.
Frequently Asked Questions
1. What is the minimum capital required to register a company in India?
There is no mandatory minimum capital requirement for company registration in India. However, private limited companies usually start with a nominal authorized capital of ₹1 lakh.
2. Can a foreigner wholly own an onshore company in India?
Yes, 100% foreign direct investment (FDI) is allowed under the automatic route in most sectors. However, prior government approval is required in restricted sectors.
3. What is the difference between an onshore and offshore company?
An onshore company is registered in India and operates within the country, while an offshore company is incorporated in a foreign jurisdiction for tax or regulatory benefits.
4. Can I register a company without a business office in India?
No, every company must have a registered office in India. You can use a rented space, co-working space, or even a residential address as long as you provide valid proof.
5. How can I check if my chosen company name is available?
You can verify the availability of your desired company name on the MCA portal using the ‘Check Company Name’ feature before applying for name approval.
6. What are the tax obligations for an onshore company in India?
An onshore company must comply with income tax, Goods and Services Tax (GST), and other applicable taxes based on its business activities and revenue.
7. What happens after I receive the Certificate of Incorporation?
Once you get the Certificate of Incorporation, you must apply for a PAN, TAN, and GST registration (if required) and open a company bank account to start operations.
8. What are the post-registration compliance requirements for an onshore company?
Companies must maintain proper books of accounts, file annual financial statements and returns with MCA, pay applicable taxes, and comply with statutory audits as per law.
