India is a big country with a well-developed economy and lots of natural resources available. It introduces numerous opportunities both for local and foreign businessmen, including thanks to creating favorable conditions for investments and getting tax benefits. These advantages are usually associated with an option of company registration in India.
Advantages of the Jurisdiction
Starting company in India is a promising endeavor in view of the following benefits this jurisdiction offers:
- easy process of establishing a business presence that is not costly;
- lots of local opportunities to handle business and entering global markets;
- moderate and even low costs to involve local employees;
- availability of diversified asset protection options;
- favorable tax conditions.
If you wish to know more about the benefits you may enjoy after establishing a company in India, provide the details of your case to Prifinance lawyers.
Major Forms of Legal and Business Presence
If you plan to register company in India or establish your activity in India in any other way, this business objective can be practically realized in these forms:
- Private company – a business entity that may be founded by two persons at least whose financial commitments are constricted to the investments made solely. The maximal number of shareowners is 200 for this corporate entity. Specific restrictions on the transfer of shares are applied in this case and are fixed in the company’s statutory documents.
- Public company – a corporate formation that may be established by 7 persons at least. These shareholders are allowed to transfer their shares without restrictions. An entity itself can also offer its shares to the general public. The liability of shareowners is also limited in this case to the investments made.
- Branch – an option suitable for abroad business that intends to carry out commercial activities in the territory of India without registering a separate legal entity. This is a more suitable option for non-resident entrepreneurs who wish to test local business opportunities prior to entering India with greater amounts of investments.
- Liaison office – a type of formation suitable for overseas enterprises who wish to carry out in the territory of India research and promotional tasks only. Registration is required in this case.
Registration Requirements and Steps
The process of company formation in India is carried out in a couple of stages and it requires knowledge and time. The representatives' support reduces the term and saves the strength of entrepreneurs, but it will be necessary to pass all instances. Approximately, company incorporation in India covers these stages:
- Defining your business priorities and creating a business plan for a future Indian enterprise.
- Developing, checking, and choosing a business name for an Indian business entity.
- Gathering details about the founders, beneficiaries, and managers of the future Indian company.
- Choosing and formalizing a registered address for a future Indian enterprise.
- Preparing the constituent documentation (Corporate Charter, a list of management and secretariat, the responsible persons-residents, data on the registered capital, the name of the company) and notarizing translations into English.
- Submitting an application for registration along with documents required. Paying applicable duties and fees. Obtaining a registration certificate in the case of a positive decision.
- Registration for tax and social security purposes.
- Opening a corporate bank account.
- Obtaining licenses and authorizations in the cases foreseen by the local laws.
Contact Prifinance lawyers to get more details on how company formation in India will be carried out in your concrete case.
Legal and Regulatory Framework
Entrepreneurs are increasingly studying India as a jurisdiction for transnational business. The country has the Anglo-Saxon common law system, so it is convenient to build low-tax schemes.
The registry in the country is open, and business data is entered into it and disclosed to Indian registered agents - their involvement is mandatory. Therefore, the international status of enterprises registered in the jurisdiction is convincing enough. A firm established in India must:
- hire at least two directors - private entities (residence is insignificant) and a secretary - a local resident;
- rent a "physical" office and register it at the address;
- keep accounting records, prepare and submit to the control authorities annual, profit, and accounting reports;
- perform audits and provide audit reports to the authorities;
- indicate the country of registration and the name of the company in the correspondence.
If the capital of the founders is of foreign origin, the company in India is opened as a private company or an open type company. It is allowed to use either representative offices or subsidiaries for international business. They are controlled by a foreign parent company, and all financial flows to accounts from abroad are converted into rupees.
Tax System in India
If you plan to buy or setup company in India, the following tax features should be taken into consideration, among others:
- Corporate income tax rate – (i) resident companies – (a) 25% or 30% - vary based on the turnover, (b) 15% or 22% - provided that specific conditions are observed (ii) non-resident companies (through their permanent establishments) – 40%
- Personal income tax rate – 42.744%
- GST tax (instead of VAT) – 5-28% in view of the category of goods and services
- Withholding tax rates (for non-residents) – (i) dividends – 20% (ii) interests – 5-40% (iii) royalties – 10%
- Capital gains tax rate – may vary in view of the terms of obtaining gains, types of transactions, and taxpayers.
How Prifinance Specialists May Help You
If you think about India as your target jurisdiction, Prifinance specialists may consult more precisely about what peculiarities are usually attributed to the option of opening a company in India: what is the incorporation route, requirements, documents needed, etc. Lawyers are also ready to carry out the incorporation procedure and open a bank or EMI account for a future Indian enterprise. Prifinance lawyers will be also glad to assist you with resolving all other issues that your company may face in the course of its operation.
We offer prompt company registration and bank account opening services in India and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.