LLP Names Suggestion: Acceptable Name for Company or LLP

Mar 3, 2025
Private Limited Company vs. Limited Liability Partnerships

Choosing the right name for your Limited Liability Partnership (LLP) or company is a crucial step in business registration. Under the Companies Act 2013, your business name must comply with legal guidelines, ensuring it is unique, relevant, and free from restricted or misleading words. A well-chosen name enhances brand identity while meeting regulatory requirements.

The Registrar of Companies (ROC) approves names based on availability and adherence to naming rules. Hence, before finalising a company name, you must conduct a name availability check to avoid rejections.

Table of Contents

Rules for Selecting Company Name Under the Companies Act

When you select a company name, it must comply with the Companies Act to ensure uniqueness and legal approval. Here are the key rules to follow:

Avoid Similar or Identical Names

Your company name must not closely resemble an already registered business. The ROC conducts a company name check, and if the proposed name is found to be too similar to an existing one, it will be rejected. For example, if "GreenTech Solutions Pvt Ltd" is already registered, "GreenTech Solution Pvt Ltd" may be rejected due to similarity.

Restriction on Certain Words

You cannot use words that suggest a connection with the Central or State Government, local authorities, or government bodies, unless prior approval is obtained. For instance, names like "India National Bank Ltd" or "Government Infrastructure Pvt Ltd" require special permissions.

Prohibited Expressions

Some words and expressions are restricted under Rule 8B of the Incorporation Rules. You must seek approval from the Central Government before using them in your LLP or company name.

Mandatory Suffix for Entity Type

The company name must clearly indicate its legal structure.

A Brief About Acceptable Name for LLP

An acceptable LLP or company name in India consists of three key components. The Name Part that gives the business a unique identity, such as "Bright" in Bright Solutions LLP. The Object Part that reflects the company's activity, like "Solutions" indicating a service-based business. The Constitution Part that defines the legal structure, such as "LLP" in Bright Solutions LLP.

Name Part

The Name Part is the unique and distinguishable element of a company or LLP name. It must comply with the Companies Act 2013 or the LLP Act 2008 and should not be identical or deceptively similar to existing companies, LLPs, or registered trademarks within the same industry. The ROC verifies the name to ensure distinctiveness and prevent duplication.

For example, a name like Bluewave Technologies LLP is acceptable because it is unique and clearly identifiable. However, Bluewave Tech LLP may be rejected as it closely resembles an existing name. Similarly, GreenVista Textiles Private Limited is a valid name, but Green Vista Private Limited may be considered too similar to an existing business and could face rejection. Ensuring a distinct name that does not match or closely resemble an existing company improves the chances of approval.

Object Part

The Object Part in a company or LLP name defines its primary business activity. It must be clearly stated to indicate the company's purpose and ensure compliance with naming regulations.

If two companies have similar name parts but different object parts, both names may still be approved, as long as they belong to distinct industries. However, names without a clear object part or with generic words like "dash Private Limited" are too vague and may be rejected by the ROC because it does not specify what the company does.

Related Read: Difference Between LLP and Partnership

Examples of Common Object Parts in Company and LLP Names

Company Name Object Part Reason
AAA Trading Private Limited Trading Clearly defines that the business deals in trade
AAA Hospital Private Limited Hospital Indicates a healthcare-related business, different from “AAA Trading”
Bright Textiles LLP Textiles Specifies that the company operates in the textile sector
GreenVista Construction Pvt Ltd Construction Shows that the company deals with construction activities
Sun Pharma Ltd Pharmaceuticals Clearly states that the company is in the pharmaceutical industry

Constitution Part

The Constitution Part indicates the legal structure of the business. It must match the type of entity being registered, ensuring clarity in compliance and business operations. Here are the specific terms which are used for different entities:

  • Private Limited Company (Pvt Ltd) - For privately held businesses
  • One Person Company (OPC) - For single-owner companies
  • Limited Company (Ltd) - For publicly listed businesses
  • Limited Liability Partnership (LLP) - For partnership-based entities with limited liability

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Minimum Authorised Capital For Certain Words

When registering a company, using specific words in its name requires meeting minimum authorised capital requirements as per the Companies Act 2013. Words like "Corporation," "International," and "Industries" have higher capital requirements to ensure that only financially strong businesses use them. This helps maintain credibility and prevents misuse of these terms by companies with limited resources.

Before you apply to register a company name, verifying the capital requirements is essential to ensure compliance and avoid rejection. The table below outlines the required minimum authorised capital for specific words:

Word Minimum Authorised Capital Required
Corporation ₹5 Crore
International, Globe, Universal, Continental, Inter-Continental, Asiatic, Asia (as the first word) ₹1 Crore
Industries / Udyog ₹1 Crore
International, Globe, Universal, Continental, Inter-Continental, Asiatic, Asia (used within the name) ₹50 Lakhs
Hindustan, India, Bharat (as the first word) ₹50 Lakhs
Enterprises, Products, Business, Manufacturing ₹10 Lakhs
Hindustan, India, Bharat (used within the name) ₹5 Lakhs

When Will Companies House Refuse to Register a Company Name?

Companies House may reject a name if it does not comply with legal guidelines. Below are the key reasons why a company name may be refused:

  • Identical or Too Similar to an Existing Name: If the proposed name is the same or closely resembles an already registered company, it will be rejected.
  • Offensive or Illegal Names: Any name containing offensive, abusive, or illegal terms will not be approved.
  • Implying Government Affiliation: Names suggesting an association with the government, public authorities, or international organisations require special approval.
  • Use of Sensitive Words or Symbols: Certain words, such as "Royal," "Bank," or "Trust," require prior consent before use.
  • Misleading Use of Business Terms: Using terms like "Limited" (Ltd.), "Public Limited Company" (PLC), or "LLP" incorrectly or misleadingly can lead to rejection.

Objections to Company Names

Even after registration, objections to a LLP or company name may arise if it does not comply with legal requirements. Ensuring that the name is unique and non-misleading is crucial to avoiding disputes. Common reasons for objections include:

  • Too Similar to an Existing Business: If a company name closely resembles another registered entity, the affected business can file an objection.
  • Misleading Information During Registration: If false or inaccurate details were provided while registering the name, objections may be raised.
  • Failure to Meet Registration Conditions: A name that does not adhere to naming regulations or lacks necessary approvals may face challenges.
  • Opportunistic Registration: If a name is registered to take advantage of another company’s goodwill, it can be legally disputed.

Related Read: How much does an LLP cost in India?

How to Check Company Name Availability Online?

Before registering a company, you must check whether the proposed name is available to avoid rejection. The Ministry of Corporate Affairs (MCA) portal provides an online tool to verify company name availability. Here’s a step-by-step guide to checking a company name online:

  1. Visit the MCA Website: Go to www.mca.gov.in.
  2. Access the Name Availability Tool: Under the ‘MCA Services’ section, select ‘For Services’ from the drop-down menu and then select ‘Check Company/LLP Name’.
  3. Enter the Proposed Name: Type the desired company name in the search box and click on the ‘Search’ button.
  4. Review the Results: The portal will indicate whether the name is available or already registered.

Additional Checks for Better Approval Chances

  • Trademark Search: Use the Razorpay Rize Name Search Tool to check for potential trademark conflicts.
  • Alternative Name Options: Verify multiple name options to avoid rejection and ensure compliance with naming rules.

Conclusion

Choosing the right company or LLP name is crucial for legal compliance and brand identity. Ensure the name is unique, relevant, and adheres to MCA guidelines to avoid objections. Conduct a thorough name availability check on the MCA portal and verify potential trademark conflicts before finalising a name. A well-chosen name not only simplifies registration but also builds a strong brand identity while ensuring long-term legal compliance.

Frequently Asked Questions

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What are good names for a company?

A good company name is unique, relevant to your business, and easy to remember. It should comply with MCA guidelines and avoid restricted words.

How can I name my company?

To name your company, ensure it is distinctive, reflects your business activity, and follows MCA regulations. Use the MCA name availability tool to check if the name is already registered. Additionally, verify trademark availability to avoid conflicts.

Which name is the best for my company?

The best name for your company is one that aligns with your brand identity, business operations, and legal requirements. It should be simple, professional, and free from misleading or offensive words.

What should a company name be?

A company name should be unique, legally compliant, and descriptive of the business. It must include an appropriate suffix, such as Private Limited (Pvt. Ltd.) or Limited Liability Partnership (LLP), based on the entity type.

Related Posts

Different Types of Companies in India - Complete Guide

Different Types of Companies in India - Complete Guide

Starting a business in India is an exciting and transformative journey, filled with opportunities to bring your ideas to life and create something impactful. However, one of the most crucial decisions you’ll face early on is choosing the proper business structure. Think of it as laying the foundation for your venture—get it right, and it supports your growth; get it wrong, and it could lead to unnecessary challenges down the line.

Each business type has its own advantages, legal responsibilities and operational requirements, making it essential to align your choice with your goals, resources and long-term vision.

In this blog, we’ll simplify the complexities, walking you through the different types of companies in India, their features, benefits and the documents required to get started.

Common types of companies in India and their classification

Table of Contents

What Are the Types of Business Entities?

India’s vibrant economy is home to diverse industries and entrepreneurial ambitions, necessitating a range of business entity options. From solo ventures to large-scale collaborations, the choice of business structure directly impacts a company's growth, legal compliance, tax obligations and operational efficiency.

There are different types of companies in India, ranging from individual ownership models to multi-member organisations, catering to various needs and scales. These include:

Types of Business Structures in India

India offers a variety of business structures to suit different entrepreneurial needs, scales and industries. Each structure has unique features, benefits and drawbacks, making it crucial to choose the right one based on your business goals. Let’s dive deeper into different types of businesses in India:

  1. Sole ProprietorshipA sole proprietorship is the simplest and most commonly adopted business structure in India, especially for small businesses or individual entrepreneurs. It is an unincorporated business owned and managed by a single person.
    Features:
    • No separate legal entity; the business is considered the same as the owner.
    • Unlimited liability: The owner's personal assets are at risk in case of debts.
    • Minimal compliance: Easy to set up and operate with fewer regulations.
  2. PartnershipA partnership is a business structure where two or more individuals share ownership, profits and responsibilities. It is governed by the Indian Partnership Act of 1932 and is ideal for businesses requiring diverse skill sets.
    Features:
    • Joint ownership and decision-making.
    • Unlimited liability for all partners unless specified otherwise in the partnership agreement.
    • No perpetual succession; the partnership dissolves upon a partner's death or withdrawal.
  3. Limited Liability Partnerships (LLP)An LLP blends the advantages of a partnership with the benefits of limited liability. Introduced under the LLP Act of 2008, it is ideal for professionals or small businesses looking for a flexible yet secure structure.
    Features:
    • Combines the flexibility of partnerships with limited liability protection.
    • A separate legal entity from its partners.
    • Requires at least two designated partners.
  4. Private Limited Companies (Pvt Ltd)A Private Limited Company is a favoured structure among startups and small-to-medium enterprises with several advantages. It is governed by the Companies Act of 2013 and allows for limited liability while offering scalability.
    Features:
    • Separate legal identity from its owners.
    • Limited liability for shareholders.
    • Eligibility to issue shares for raising funds.
  5. Public Limited CompaniesA Public Limited Company is suitable for businesses aiming to scale operations and raise public funds through shares. A company whose shares are publicly traded, with ownership open to the general public.
    Features:
    • Requires a minimum of seven shareholders and three directors.
    • No upper limit on the number of shareholders.
    • Vulnerable to market fluctuations.
  6. One Person Companies (OPC)Introduced under the Companies Act of 2013, an OPC caters to solo entrepreneurs seeking limited liability benefits. Simply put, a single individual owns the company while enjoying limited liability protection.
    Features:
    • Mandatory to appoint a nominee.
    • Limited liability for the owner.
    • Not eligible for equity funding.
  7. Section 8 Companies (NGOs)Section 8 Companies are nonprofit organisations formed under the Companies Act of 2013 to promote social welfare activities. These companies focus on charitable objectives like education, healthcare or environmental protection.
    Features:
    • Profits cannot be distributed as dividends.
    • Tax exemptions are available under specific conditions.
  8. Joint-Venture CompaniesA Joint- Venture (JV) combines two or more entities to collaborate on a specific project or goal. Partners share resources, expertise and profits while retaining their individual entities.
    Features:
    • Operates under a joint agreement for a specific purpose.
    • Temporary or long-term collaboration.
    • Shared financial risks.
  9. Non-Government Organisations (NGOs)NGOs are entities dedicated to social welfare causes, operating independently of the government. NGOs can be structured as trusts, societies or Section 8 Companies, focusing on various charitable activities.
    Features:
    • Operates without a profit motive.
    • May qualify for tax exemptions.
    • Drives social change and community development.

Types of Companies Based on Size

In India, companies can be categorized based on their size, typically determined by factors such as turnover, capital investment, and employee count. Here are the main types of companies in India based on size:

Here are the main types of companies based on members:

1. Micro Enterprises

Micro-enterprises are the smallest category of companies, characterized by low investment in plant and machinery or equipment. In India, micro-enterprises are defined as those with an investment of up to Rs. 1 crore in manufacturing and an annual turnover of Rs. 5 crore.

2. Small Enterprises

Small enterprises are slightly larger than micro-enterprises but still fall within the small-scale sector. In India, small enterprises are defined as those with an investment of not more than Rs. 10 crore and an annual turnover of not more than Rs. 50 crore.

3. Medium Enterprises

Medium enterprises are larger than small enterprises but smaller than large corporations. In India, medium enterprises are defined as those with an investment of more than Rs. 50 crore in manufacturing and an annual turnover of not more than Rs. 250 crore.

4. Large Enterprises

Large enterprises are the largest category of companies, characterized by substantial investment, high turnover, and a large workforce. In India, large enterprises have investments exceeding Rs. 50 crore in manufacturing or Rs. 250 crore in services. They often have hundreds or even thousands of employees and operate nationally or multinational.

These categories are defined by the Ministry of Micro, Small, and Medium Enterprises (MSME) in India to provide various benefits and incentives to small and medium-sized enterprises (SMEs), such as priority lending, subsidies, tax exemptions, and easier access to government schemes and programs.

Types of Companies Based on Liabilities

Companies can be categorized based on the extent of liability their members or owners have. Some major types of companies based on liabilities are-

1. Company Limited by Shares

A Company Limited by Shares is a type of company where the liability of its members is limited to the amount unpaid on their shares. This means that shareholders are not personally liable for the company's debts beyond the amount they have agreed to contribute towards the shares they hold.

Companies Limited by Shares can be further classified into private limited companies and public limited companies based on the number of shareholders and other criteria.

2. Company Limited by Guarantee

In a Company Limited by Guarantee, the liability of its members is limited to the amount they agree to contribute to the company's assets in the event of its winding up. This type of company is commonly used for non-profit organizations, clubs, societies, and associations.

3. Unlimited Liability Company

In an Unlimited Liability Company, the members or owners have unlimited personal liability for the company's debts and obligations. This means that their personal assets are at risk to satisfy the company's liabilities, and creditors can pursue the members' personal assets to settle debts owed by the company.

Types of Companies Based on Listing Status

Companies can also be classified based on their listing status, which refers to whether their shares are listed on a stock exchange for public trading.

1. Listed Companies

Listed companies are those whose shares are listed and traded on a recognized stock exchange, such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) in India.

These companies are subject to stringent regulatory requirements and disclosure norms mandated by the Securities and Exchange Board of India (SEBI). Listing provides liquidity to shareholders and enables the company to raise capital by issuing additional shares to the public.

2. Unlisted Companies

Unlisted companies are those whose shares are not traded on any stock exchange. These companies may be privately held, meaning that their shares are owned by a small group of shareholders or closely held by promoters and investors.

Unlisted companies are not subject to the same level of regulatory scrutiny as listed companies but may still be required to comply with certain statutory requirements under the Companies Act.

Types of Companies Based on Holding

Companies can be categorized based on their holding structure, which refers to the relationship between parent companies and their subsidiaries.

1. Parent Company

A parent company is a corporation that owns a controlling interest in one or more subsidiary companies. It typically holds more than 50% of the voting rights in the subsidiary companies and has the power to make decisions affecting their operations and strategic direction.

2. Subsidiary Company

A subsidiary company is a company that is controlled by another company, known as the parent company. Subsidiary companies can be wholly or partially owned by the parent company, depending on the percentage of shares held.

Subsidiary companies operate independently but are subject to the control and influence of the parent company.

3. Holdings Company

A holdings company is a company whose primary purpose is to hold investments in other companies rather than engage in operational activities. Holdings companies typically own shares in subsidiary companies and may provide their subsidiaries with strategic direction and financial support.

Unlike a parent company, a holding company does not engage in business operations of its own.

4. Affiliate Company

An affiliate company is a company that is related to another company through common ownership or control. Affiliate companies may be part of the same corporate group or have a strategic partnership with each other.

5. Associate Company

An associate company is one in which another company holds a significant but not controlling interest, usually between 20% to 50% of the voting rights. While the investing company has influence over the associate company's operations and management, it does not exercise full control.

Documents Required to Open Different Types of Business in India

Here’s a list of documents required to open a company in India:

  • Identity Proof: PAN card, Aadhaar card
  • Address Proof: Utility bill, rent agreement, or property papers
  • Business Registration Forms: Forms based on the business type (SPICe+, FiLLiP, etc.)
  • Digital Signature Certificate (DSC): For online submissions
  • Proof of registered office address: NOC or Rental Agreement

Additional documents may be required based on the business type, such as MOA and AOA for companies, LLP Agreements for LLPs or trust deeds for NGOs.

Conclusion

In India, the variety of business entities ensures there’s a fit for every kind of entrepreneur—whether you're a solo dreamer with a big vision, a small team building something impactful, or an organisation driven by social change.

Each type of entity offers unique features, advantages and challenges. From the simplicity of a sole proprietorship to the robust framework of private limited companies or the flexibility of LLPs, picking the right one can make your journey smoother, protect your personal assets and set you up for growth.

Think about your business goals:

  • Do you want to stay small and agile or scale into a large organisation?
  • Do you need investors or want to keep it self-funded?
  • Are compliance and taxes manageable?

Your answers to these questions will guide you toward the perfect fit. If you’re unsure where to start, don’t worry—many successful entrepreneurs were in the same place when they started. The key is to take it one step at a time.

Frequently Asked Questions

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Register your Business at just 1,499 + Govt. Fee

Register your business
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Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
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Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
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Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What Type of Business Is More Profitable?

The profitability of a business depends on various factors, including the industry, business model and operational efficiency. For instance:

  • Technology startups have high profit potential due to scalability.
  • Service businesses, like consulting or digital marketing, often have low initial costs and high margins.
  • E-commerce can be highly profitable if inventory and logistics are managed efficiently.
  • Real estate and manufacturing tend to yield long-term gains but require significant capital.

Ultimately, the most profitable business aligns with the entrepreneur’s expertise and market demand.

Why Do Different Types of Businesses Exist?

Different types of businesses exist to cater to the diverse needs of entrepreneurs, industries and regulatory requirements.

  • Legal and financial considerations: Some businesses need limited liability, while others prioritise simplicity.
  • Operational scope: A sole proprietor might work well for small-scale operations, while large organisations need a corporate structure.
  • Growth potential: Some structures, like private limited companies, attract investors, while others, like partnerships, foster collaboration.

What Types of Businesses Are in Demand?

Currently, high-demand businesses include:

  • Technology and SaaS: Cloud computing, AI and software solutions.
  • E-commerce: Online retail continues to grow post-pandemic.
  • Health and wellness: Telemedicine, fitness and organic products are booming.
  • Sustainable businesses: Eco-friendly products and renewable energy.
  • Digital services: Marketing, content creation, and app development.

These industries reflect shifting consumer priorities and technological advancements.

What Are the Five Types of Business Organisations?

The five major types of business organisations are:

  • Sole Proprietorship: Owned and managed by one person; simple and cost-effective.
  • Partnership: Owned by two or more individuals sharing responsibilities and profits.
  • Limited Liability Partnership (LLP): A hybrid structure with limited liability and partnership benefits.
  • Private Limited: A separate legal entity that can raise capital by issuing shares.
  • Public Limited: Allows a company to offer shares to the general public, either on the stock market or privately.

What Is the Director Identification Number (DIN)?

The Director Identification Number (DIN) is a unique identification number assigned by the Ministry of Corporate Affairs (MCA) in India to individuals intending to serve as company directors. It is mandatory under the Companies Act of 2013.

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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How to apply for a Director Identification Number (DIN) in India

How to apply for a Director Identification Number (DIN) in India

The Director Identification Number (DIN) is a unique identification number assigned to an individual who is appointed as a director of a company in India. It is issued by the Ministry of Corporate Affairs (MCA) under the provisions of the Companies Act 2013.

The DIN is mandatory for all existing and aspiring directors, and it serves as a way to track the activities and roles of directors across different companies to prevent fraud and ensure transparency.

In the blog, we'll explore the intricacies of the Director Identification Number (DIN) system in India and its crucial role in corporate governance.

Table of Contents

Importance of a Director Identification Number (DIN)

Importance of a Director Identification Number & its application process

The Director Identification Number (DIN) is of significant importance in India's corporate governance framework. Here are some key reasons why DIN is crucial:

•  Unique Identification

  • DIN provides a unique identification number to each director, ensuring there is clarity among individuals holding directorial positions in various companies.

•  Transparency and Accountability

  • DIN enhances transparency by making director-related information publicly available.
    Stakeholders, including shareholders, regulators, and investors, can access the DIN database to verify the credentials and track the activities of directors across different companies.

•  Regulatory Compliance

  • Obtaining a DIN is a mandatory requirement for individuals aspiring to become directors of Indian companies. The DIN system in India was implemented through Sections 266A to 266G of the Companies (Amendment) Act, 2006.

•  Ease of Business Operations

  • DIN streamlines administrative processes related to director appointments and changes.
    By having a standardized identification system for directors, companies can efficiently manage their board compositions, update regulatory filings, and ensure compliance with legal requirements.

•  Investor Confidence

  • The existence of a robust director identification system like DIN instills confidence among investors, both domestic and international.

Format of a Director Identification Number

The DIN is an 8-digit identifier issued by the Ministry of Corporate Affairs (MCA), the regulatory authority overseeing corporate affairs in India.

Each DIN is unique to the individual director and remains valid for their lifetime unless surrendered or revoked by the MCA due to non-compliance or other regulatory reasons.

Example of a DIN: 002345678

Documents required for obtaining a Director Identification Number

For SPICe+:

  • Proof of Identity
  • Proof of Address
  • NOC or Rental Agreement

For DIR 3:

  • Proof of Identity
  • Proof of Residence
  • NOC or Rental Agreement
  • Digital Signature Certificate (DSC)
    Note: The identity proof and Address proof must be attested by the Company Secretary, a CA or, any professional. ,

How to apply for a Director Identification Number?

Obtaining a Director Identification Number (DIN) is mandatory before being appointed as a director of an existing company in India.

While the DIN for directors of a new company is allotted during the company's incorporation through an integrated SPICe+ Form, if you’re seeking directorship in existing companies or LLPs, you must apply for a DIN separately. The application process, known as DIR-3, can be completed online through the official website of the Indian Ministry of Corporate Affairs (MCA).

Application for DIN Through SPICE+

If you don’t have a Director Identification Number (DIN) and intend to serve as the first director in a new company, you must submit an application using the eForm SPICe+.

  • Obtain the Digital Signature Certificates (DSCs) for the proposed Directors,
  • Log in to the MCA portal with valid credentials.
  • Navigate to the 'SPICe+' application from the application history on the user dashboard.
  • Submit the SPICe+ Part A application.
  • Click on the 'Proceed for incorporation' button.
  • Access the SRN dashboard by clicking on the relevant SRN/SPICe+ application with the status as 'Draft.'
  • Click on "Form No. SPICe + Part B”.
  • Complete and Submit the SPICe+ Part B application along with the linked forms.
  • Upload the DSC-affixed PDF document(s).
  • Pay the fees.
  • An intimation mail, along with the Certificate of Incorporation, PAN, TAN, etc., will be generated upon processing the web form.
  • If the forms are uploaded successfully and the payment is made, the Approved DIN will be generated if there are no indications of potential duplication. However, if the details are flagged as potentially duplicate, a Provisional DIN will be generated instead.

Note: A provisional DIN will remain valid for a period of 60 days from the date on which it was generated.

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Application for DIN Through DIR 3

If you intend to become a Director in an existing company, you must submit an application using eForm DIR-3 and adhere to the process outlined below.

  • Visit the official MCA website.
  • Register as a new user if you haven't already done so, or log in using valid credentials.
  • Select the "e-Forms" tab and click on the "e-Form upload" link to access the e-Form DIR-3.
  • Complete the DIR-3 form with accurate details.
  • Scan and upload the necessary supporting documents (attested) as per the requirements specified in the DIR-3 form.
  • Form DIR-3 must be signed by you and digitally verified by a Company Secretary employed full-time by the company or by the Managing Director, Director, CEO, or CFO of the existing company where you intend to be appointed as a director.
  • Pay the prescribed fee for processing.
  • Once the verification process is completed and the application is found to be in order, you will be allotted a DIN.
  • However, if the details are flagged as potentially duplicate, a Provisional DIN will be generated by the MCA.

As a director, you must notify all companies where you hold a directorship about the DIN within one month of receiving it from the central government. Subsequently, the company must inform the Registrar of Companies (RoC) within 15 days from the date when the director notifies them of their DIN. Failure to do so can incur penalties.

Common Causes of Rejection of a DIN

Here are some common mistakes that lead to the rejection of the DIN application:

  • Failure to submit supporting documents
  • Submission of invalid application or supporting documents
  • Lack of attestation on documents
  • Absence of a valid Digital Signature Certificate (DSC) for DIR3 applications

Validity of the Director Identification Number

In India, the Director Identification Number (DIN) remains valid for the lifetime of the individual director unless surrendered or revoked by the Ministry of Corporate Affairs (MCA) due to non-compliance, disqualification, or other regulatory reasons.

Fees for the Director Identification Number in India

If you are applying for a DIN through SPICe+, there are no additional charges as it is included in the fees of the SPICe+ application.

However, if you are applying through DIR-3, a fee of Rs 500 will be associated with it.

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Frequently Asked Questions

Is there any difference between a Director Identification Number(DIN) and a Designated Partner Identification Number (DPIN)?

DIN is for individuals holding or intending to hold directorial positions in companies under the Companies Act, while DPIN is for designated partners in Limited Liability Partnerships (LLPs) under the Limited Liability Partnership Act. However, in terms of functionality, both serve the same purpose.

Can I use my DIN for multiple companies?

Yes, a single DIN can be used to hold directorship positions in multiple companies. However, each company must separately intimate the Registrar of Companies (RoC) about the director's DIN.

Can I hold multiple DINs?

No, you can hold only one DIN at any point in time. It is illegal to possess multiple DINs, and individuals found to have more than one may face penalties and other legal consequences.

How can I change the details provided for my DIN in the future?

In case of any modifications to the particulars provided in form DIR-3/SPICe concerning directors, you can submit e-form DIR-6. For example, if there is an address change, you must notify this change by submitting an e-form DIR-6 along with the necessary attested document.

What happens if my DIN application is rejected?

If your DIN application is rejected, you will receive a communication from the MCA specifying the reasons for rejection. You may have the option to rectify the errors and reapply.

Can I transfer my DIN to someone else?

No, a DIN is non-transferable and is associated only with the individual director to whom it is assigned.

Private Limited Company Tax Rate: Latest PVT LTD Tax Rate Explained

Private Limited Company Tax Rate: Latest PVT LTD Tax Rate Explained

Private limited companies in India are subject to various taxes, with the primary one being the corporate income tax. Understanding the tax rates and compliances is crucial for entrepreneurs and business owners to manage their finances effectively. In this article, we will delve into the intricacies of the private limited company tax rate, along with other key aspects of taxation for these entities.

Table of Contents

Budget 2024 Latest Update on Corporate Tax Rate

Finance Minister Nirmala Sitharaman has proposed a reduction in the corporate tax rate for foreign companies, bringing it down from 40% to 35% in the 2024 budget.

Subdivisions of Direct Taxes

Direct taxes in India are categorized as follows:

  1. Personal Income Tax
    • Paid by individual taxpayers based on their income.
    • Taxed according to predefined slabs at different rates.
  2. Corporate Income Tax (CIT)
    • Paid by domestic and foreign companies on their income earned in India.
    • The CIT is levied at rates specified by the Income Tax Act, subject to annual revisions in the Union Budget.

What is Pvt. Ltd. Tax Rate?

The Pvt. Ltd. tax rate refers to the corporate income tax rate applicable to private limited companies in India. Under the Income Tax Act, 1961, domestic companies are generally taxed at 30% on their total taxable income, with variations based on turnover and certain conditions.

For companies with a turnover of less than ₹400 crore, the tax rates are as follows:

  • Turnover up to ₹1 crore: Taxed at 25%.
  • Turnover between ₹1 crore and ₹10 crore: Taxed at 25% on profits exceeding ₹25 lakh, plus an additional ₹25 lakh.
  • Turnover above ₹10 crore: Taxed at 30%.

A 4% Health and Education Cess is levied on the total tax payable.

Companies may also opt for a reduced tax rate of 22% under Section 115BAA, provided they forgo certain exemptions and deductions. This option also includes the surcharge and 4% cess.

Additionally, new manufacturing companies incorporated after October 1, 2019, can avail a 15% tax rate (plus surcharge and cess) under Section 115BAB, subject to specific conditions.

Corporate Income Tax Rate for AY 2022-23

The Corporate Income Tax Rate for the Assessment Year 2022-23 varies based on the company's turnover and the applicability of surcharge and cess. Here's a table summarising the effective tax rates:

For Companies with Turnover Above ₹400 Crore

Income Slab Tax Rate
Up to ₹1 Crore 30%
Above ₹1 Crore but up to ₹10 Crore ₹3,00,000 + 30%
Above ₹10 Crore ₹3,00,00,000 + 30%

For Companies with Turnover Below ₹400 Crore

Net Income Slab (Gross Taxable Income – Deductions) Tax Rate Rebate u/s 87A (FY 2021-22)
Up to ₹1 Crore 25% Nil
Above ₹1 Crore but up to ₹10 Crore ₹25,00,000 + 25% Nil
Above ₹10 Crore ₹2,50,00,000 + 25% Nil

Key Budget 2022 Updates

1. No Changes in Tax Rates: The corporate tax structure remained unchanged.

2. Updated Surcharge Cap for Cooperatives: Surcharge capped at 7% for cooperatives with income between ₹1 crore and ₹10 crore.

3. Set-Off for Losses in Case of Start-ups: Extended incorporation date for start-ups to claim tax holiday under Section 80-IAC to 31 March 2023.

{{pvt-cta}}

Income Tax Rate for Domestic Manufacturing Companies for AY 2022-23

New manufacturing companies incorporated in India on or after October 1, 2019, and commencing production before March 31, 2023, can avail a concessional tax rate for private limited companies of 15% under Section 115BAB. However, this is subject to certain conditions, such as:

  • The company should be engaged in the business of manufacture or production of any article or thing
  • It should not be formed by splitting up or reconstruction of an existing business
  • It should not use any plant or machinery previously used in India (with certain exceptions)
  • The option to avail Section 115BAB must be exercised in the first year of operation

The applicable tax rates for domestic manufacturing companies for the assessment year 2022–23 are outlined below:

Category Conditions Tax Rate Surcharge Health and Education Cess
Certain Domestic Manufacturing Companies Opted for Section 115BA (effective from AY 2017-18) 25% Not Applicable Not Applicable
All Existing Domestic Companies Opted for Section 115BAA, regardless of incorporation date or activity type 22% 10% of taxable income if net income exceeds ₹1 crore 4% of Income Tax plus Surcharge
New Manufacturing Domestic Companies Opted for Section 115BAB 15% 10% of taxable income if net income exceeds ₹1 crore 4% of Income Tax plus Surcharge

Education Cess for Companies

Private limited companies are required to pay an education cess at the rate of 4% on the total income tax, including the applicable surcharge. Below is a detailed explanation of the corporate income tax rates for FY 2021–22 or AY 2022–23:

For companies with a turnover of up to ₹400 crore:

  • Income up to ₹1 crore is taxed at 25%.
  • Income exceeding ₹1 crore but up to ₹10 crore is taxed at 25% plus ₹25,00,000. A 7% surcharge applies.
  • Income above ₹10 crore is taxed at 25% plus ₹2,50,00,000, with a 12% surcharge.

For companies with a turnover exceeding ₹400 crore:

  • Income up to ₹1 crore is taxed at 30%.
  • Income exceeding ₹1 crore but up to ₹10 crore is taxed at 30% plus ₹3,00,000. A 7% surcharge applies.
  • Income above ₹10 crore is taxed at 30% plus ₹3,00,00,000, with a 12% surcharge.

The education cess of 4% is uniformly applicable to the total tax payable, including any surcharge, regardless of turnover.

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Income Tax Rate for Foreign Company

Foreign companies, i.e., those incorporated outside India but earning income from Indian sources, are taxed at a basic rate of 40% (plus applicable surcharge and cess). The surcharge is levied at 2% on income between ₹1 crore to ₹10 crores and 5% on income exceeding ₹10 crores.

It is important to note that foreign companies can avail beneficial provisions under the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence to minimize their tax liability.

Minimum Alternate Tax for Company

The Minimum Alternate Tax (MAT) provisions apply to companies whose tax payable under the normal provisions of the Income Tax Act is less than 15% of their book profits. In such cases, MAT is levied at 15% (plus applicable surcharge and cess) of the book profits.

However, MAT is not applicable to companies opting for the concessional tax regimes under Section 115BAA and Section 115BAB. Further, the credit for MAT paid is allowed to be carried forward for 15 years to be set off against future tax liabilities.

H2 - How to Calculate Total Income for a Company?

To arrive at the taxable income for a private limited company, the following steps are involved:

Steps Particulars
Step 1 Compute the net profit as per the profit and loss account
Step 2 Add income tax paid or provided
Step 3 Add depreciation charged in the books of accounts
Step 4 Add disallowed expenditures or expenses
Step 5 Subtract depreciation allowable under the Income Tax Act
Step 6 Subtract income exempt under the Income Tax Act
Step 7 Subtract deductions allowable under Chapter VI-A
Step 8 The result is the total taxable income

The Corporate Income Tax Rate is then applied to this taxable income to determine the tax liability of the private limited company.

Returns Applicable for Domestic Company for AY 2022-23

Private limited companies are required to file their income tax returns annually. For the assessment year 2022-23, the following returns are applicable:

1. ITR-6: This return is applicable for companies other than those claiming exemption under Section 11 (income from property held for charitable or religious purposes).

2. ITR-7: This return is applicable for companies claiming exemption under Section 11.

The due date for filing the return is 31st October of the assessment year. However, for companies required to furnish a report in Form No. 3CEB under Section 92E (relating to international transactions), the due date is 30th November of the assessment year. Companies must also ensure timely compliance with advance tax payments, TDS/TCS obligations, and tax audit requirements (if applicable) to avoid penal consequences.

Domestic Company Tax Slab for AY 2024-25

For the Assessment Year (AY) 2024–25, the income tax rates for domestic companies depend on their turnover or gross receipts during the financial year (FY) 2020–21, as well as the tax provisions they choose to apply under specific sections of the Income Tax Act. The applicable rates are as follows:

  • If the total turnover or gross receipts during FY 2020–21 do not exceed ₹400 crores:
    • Tax rate: 25%
  • If the company opts for Section 115BA:
    • Tax rate: 25%
  • If the company opts for Section 115BAA:
    • Tax rate: 22%
  • If the company opts for Section 115BAB:
    • Tax rate: 15%
  • For any other domestic company:
    • Tax rate: 30%

These rates are exclusive of surcharge and cess, which will be applied additionally based on the applicable income slabs.

Frequently Asked Questions

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Private Limited Company
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1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
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1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

How much tax does a private limited company pay?

The tax liability of a private limited company depends on various factors such as its residential status, income sources, turnover, etc. Domestic companies are taxed at a basic rate of 30% (with concessional rates of 25%, 22%, or 15% available subject to conditions) plus applicable surcharge and cess. Foreign companies are taxed at 40% (plus surcharge and cess) on their India-sourced income.

How can I avoid tax in a PVT Ltd company?

While tax planning is permissible, tax avoidance or evasion is illegal. Private limited companies can legitimately minimise their tax outgo by availing deductions, exemptions, and incentives provided under the Income Tax Act. For instance, companies can claim expenditures incurred wholly for business purposes, deductions for hiring new employees (Section 80JJAA), or for undertaking in-house R&D (Section 35(2AB)). Startups can avail a 100% tax holiday for three consecutive years out of their first ten years of operation.

What is 25% tax on a company?

Domestic companies with an annual turnover of up to ₹400 crores in the financial year 2021-22 are eligible for a concessional corporate tax rate of 25% (plus applicable surcharge and cess). This reduced rate aims to provide relief to smaller companies and promote their growth.

What are the tax benefits of Pvt Ltd?

Private limited companies can avail of several tax benefits under the Income Tax Act:

• Expenditure incurred wholly for business purposes is tax-deductible

• Deductions available for hiring new employees (Section 80JJAA), inter-corporate dividends (Section 80M), in-house R&D (Section 35(2AB)), etc.

• 100% profit-linked deductions for specified businesses like startups, affordable housing, agricultural extension, etc.

• Carry forward of business losses for eight years and unabsorbed depreciation indefinitely

• Deductions for CSR expenditure incurred on eligible activities

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