Over the past few years, India’s popularity as a jurisdiction for incorporating companies and doing business has increased significantly. The country has an Anglo-Saxon common law system. The register is open, business data is entered into it and disclosed to Indian registered agents – their involvement is mandatory.
A prerequisite for incorporation of a company in India is that each director obtains a Digital Signature Certificate (DSC) and Identification Number (DIN).
Types of legal forms available for registration
Company Limited by Shares
The permissible number of founders is from 2 to 50 persons. The members of the company are liable for the obligations of the company only to the extent of their shares. Taxes are prescribed at the maximum rates. It is necessary to have
2 directors (no residency restrictions) and a local resident secretary;
A “real” office.
A public type of private company is recognised if:
at least a quarter of the paid-up capital is held by a public type company;
the company is engaged in accepting deposits from individuals;
the average annual turnover is more than $ 2.5 million.
An open-ended company
free transfer of shares is allowed;
the minimum number of founders is 7 persons;
no restrictions on attracting private investments;
taxes are set at lower rates.
Taxation
30% corporate tax (plus up to 10% additional levy) for Indian companies (incorporated in the jurisdiction);
40% corporate tax (plus up to 2.5% surcharge) for foreign companies;
15-30% income tax on salaries of foreign professionals;/li>
Education tax increases the sum of all taxes by 2%;
1% tax on the aggregate value of all company property (this does not include debts).
There are also types of excise duties:
Base duty;
education levy.
VAT in India is different in each state. The tax is levied on every act of purchase/sale
Registration procedure
1. Before registration of the company it is necessary to define:
Company name to check for uniqueness (at least 4 variants).
Company structure (director, shareholder, beneficiary, attorney).
Amount of authorised capital and distribution of shares between shareholders/participants.
Type of the company’s activity.
2. Documents on directors/shareholders/beneficiaries/attorneys should be provided:
Copy of passport with registration page and proof of address – not older than 3 months (UB).
Additional details for each promoter as required under Indian law (father’s name, profession, education, telephone, e-mail etc).
All documents and data must be in English.
3. Filing an application for company registration
(the time for registration of a new company is about 2-6 weeks).
Accounts
Chapter 9 of the Companies Act makes provision that every company incorporated in India shall prepare and keep at its office (at the address specified in the registration documents) books of account and other relevant documents and a financial statement for each financial year which, taken together, give a true and fair view of the state of affairs of the company, including its branches and other offices, if any, and explain the transactions of the company.
All accounting records must be kept at the registered address, but if the Board of Directors chooses a different place to keep them, the Registry must be notified of it no later than 7 days after the Board has decided on the different address.
The financial statement of each company shall contain:
Balance Sheet;
Statement of Profit and Loss;
A cash flow statement;
Notes and comments to the report.
All financial statements are filed with the Ministry of Corporate Affairs of India.
The accounting period of companies in India generally runs from 1 April to 31 March of the following year, unless otherwise stated in the Articles of Association of the company. The deadline for filing the accounts is 6 months after the end of the accounting period.
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