Startup Registration vs MSME Registration: Key Differences Explained

Jun 18, 2025
Private Limited Company vs. Limited Liability Partnerships

As India’s entrepreneurial ecosystem grows rapidly, so does the need to understand the different pathways to formalise a business. Two common routes available to new and small businesses are Startup Registration (under the Startup India initiative) and MSME Registration (now Udyam Registration under the Ministry of MSME).

While both offer government recognition and support, their purpose, growth models, funding access, and compliance paths are distinct. Whether you're building a tech-driven disruptor or running a traditional service business, knowing the difference can help you make better strategic decisions.

Table of Contents

What is a Startup?

A startup is a young company founded to solve a problem through innovation, technology, or a novel business model. Unlike traditional businesses, startups are designed to grow quickly, scale globally, and often operate in uncertain or untested markets.

Key traits of a startup include:

  • Innovation-first approach: Either in product, process, or business model
  • Scalability: Designed to serve large or global markets with minimal incremental costs
  • Technology-driven: Often built on tech platforms or software solutions
  • High risk, high reward: Operates in dynamic environments with a focus on fast growth

Startups registered under the Startup India scheme receive benefits such as tax exemptions, fast-track IP protection, and easier compliance processes.

What is an MSME?

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s economy. They focus more on incremental growth, cost efficiency, and local market needs. MSMEs are generally rooted in traditional sectors, such as manufacturing, retail, and services, and aim for sustainable profitability over rapid scaling.

Unlike startups, MSMEs usually:

  • Focus on improving existing processes or delivering standard products/services
  • Operate with limited risk appetite
  • Prioritise steady revenue and employment generation
  • Leverage known technologies and business models
Classification Micro Small Medium
Investment Investment in Plant and Machinery or Equipment:
Not more than Rs. 2.5 crore
Investment in Plant and Machinery or Equipment:
Not more than Rs. 25 crore
Investment in Plant and Machinery or Equipment:
Not more than Rs. 125 crore
Turnover Annual Turnover not more than Rs. 10 crore Annual Turnover not more than Rs. 100 crore Annual Turnover not more than Rs. 500 crore

MSMEs are recognised under the Udyam Registration system and benefit from credit schemes, subsidies, and easier access to bank loans.

Growth and Scalability

  • Startups are designed for rapid growth, often scaling 10x in short timeframes, especially in sectors like fintech, SaaS, healthtech, or edtech. Growth is typically fueled by technology, network effects, and venture funding.
  • Conversely, MSMEs prioritise gradual, sustainable growth, often within a well-defined geographic or sectoral niche. Their scaling is rooted in stability, profitability, and local expansion, not exponential leaps.

Risk Appetite and Funding

  • Startups thrive in high-risk environments, betting on new ideas or technologies. They actively seek external funding from angel investors, venture capitalists, or startup-specific government schemes (like Fund of Funds for Startups).

  • MSMEs are typically risk-averse, aiming for consistent revenue. They rely on traditional funding like bank loans, government subsidies, and schemes like CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises).

Ready to launch your business? Get expert assistance with Startup registration and unlock exclusive benefits today.

Innovation and Adaptability

  • Startups focus on disruption; they aim to change how industries work by introducing new tools, services, or models. Agility, rapid experimentation, and quick pivots are part of their DNA.

  • MSMEs tend to prioritise adapting existing technologies or methods to improve efficiency. Their innovation is often incremental, refining what already works rather than reinventing it.

Regulations and Compliance

Both startups and MSMEs benefit from supportive government policies, but the nature of compliance and regulatory support varies.

For Startups:

  • Eligible for benefits under the Startup India scheme
  • Tax holiday for 3 years under Section 80-IAC
  • Faster IP protection and easier public procurement norms
  • More legal scrutiny as they scale, especially in sectors like fintech, health, or data

For MSMEs:

  • Registered under Udyam Registration
  • Access to collateral-free loans, subsidies, and credit guarantees
  • Simplified compliance norms, especially for micro and small enterprises
  • Priority in government tenders and incentives for manufacturing/export

Employment Contribution

  • Startups create fewer but highly skilled jobs, especially in product development, data science, marketing, and growth. Their contribution lies in creating future-ready roles and digital talent.

  • MSMEs are India’s largest employers after agriculture. They generate mass employment, particularly in manufacturing, services, and rural sectors, contributing significantly to India’s GDP and industrial base.

Market Reach

  • Startups often think global from day one. Companies like Freshworks, Byju’s, and Zerodha are built to serve a digital-first, borderless audience.
  • MSMEs typically cater to local or regional markets, with products tailored to domestic demand. Some medium-sized enterprises expand globally through exports, especially in textiles, handicrafts, or auto components.

Advantages of a Startup

  • High innovation potential and the ability to disrupt industries
  • Agility in decision-making and operations
  • Rapid scalability with lower marginal costs via digital tools
  • Access to VC funding, tax benefits, and government grants
  • Lean teams and remote-first models reduce operational overhead

These traits make startups ideal for solving complex problems at scale, especially with technology as a lever.

Advantages of an MSME

  • Consistent contributors to India’s economic growth
  • Flexibility to adapt to local market changes and demands
  • Support regional employment and entrepreneurship
  • Strengthen local supply chains and ecosystem resilience
  • Benefit from low compliance burdens and cost-effective operations

MSMEs play a foundational role in inclusive growth, uplifting rural economies and providing livelihood opportunities at scale.

Frequently Asked Questions

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  • Businesses looking to issue shares
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  • Businesses seeking investment through equity-based funding


One Person Company
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  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
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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

Can a startup register as an MSME?

Yes, a startup can register as an MSME (now called Udyam Registration) as long as it meets the investment and turnover criteria defined for Micro, Small, or Medium Enterprises under the MSME classification.

What are the benefits of registering startups as MSMEs?

Registering a startup under the MSME (Udyam) scheme offers several advantages, especially in terms of financial and operational support. Key benefits include:

  • Access to Collateral-Free Loans
  • Subsidised Patent and Trademark Fees
  • Priority in Government Tenders
  • Interest Subsidies on Loans
  • Easier Access to Credit and Finance
  • Eligibility for Government Incentives and Subsidies

Who cannot register under MSME?

Not all businesses or entities are eligible for MSME registration. The following cannot register as an MSME under the Udyam scheme:

  • Non-business Entities
  • Foreign Companies and Subsidiaries
  • Large Enterprises
  • Agricultural Activities
  • Duplicate or Multiple Registrations

Related Posts

How to Remove a Director From a Company in India [2025 Guide]

How to Remove a Director From a Company in India [2025 Guide]

Directors are at the heart of any company- they make strategic decisions, guide operations, and represent the business to the outside world. But sometimes, things don’t go as planned. A director may stop attending meetings, lose eligibility, face legal trouble, or even choose to step down. In such cases, shareholders, the real decision-makers, have the right to remove or replace a director under the Companies Act, 2013.

The law lays down a straightforward process to ensure that director removal is done fairly, transparently, and in compliance with regulations.

In this blog, we’ll explain why directors are removed, the legal provisions that apply, the compulsory requirements you need to follow, the detailed step-by-step procedure, the role of Form DIR-12, and the implications of removing a director.

Table of Contents

Reason for Director Removal

Under the Companies Act, 2013, a director may be removed for several reasons, such as:

  • Disqualification under Section 164 (e.g., insolvency, unsound mind, etc.)
  • Prolonged absence from board meetings for 12 consecutive months
  • Violation of Section 184, which relates to disclosure of interest in contracts or arrangements
  • Court or tribunal orders requiring removal
  • Criminal conviction resulting in imprisonment for more than six months
  • Regulatory non-compliance is impacting the company’s functioning
  • Voluntary resignation by the director themselves

Relevant Provisions of the Companies Act, 2013 to Remove a Director

Several provisions govern the process of removing a director:

  • Section 169: Grants shareholders the right to remove a director by passing an ordinary resolution.
  • Section 115: Relates to giving special notice for such resolutions.
  • Section 163: Provides rules for proportional representation in the Board of Directors (if applicable).
  • Rule 23 of the Companies (Management and Administration) Rules, 2014: Specifies the procedure for filing and notices.

Related Read: Independent Directors: Appointment, Roles And Duties

Compulsory Criteria for Director Removal

The removal of a director requires strict adherence to specific legal criteria:

  • Special Notice: A special notice of the resolution must be given to the company.
  • Opportunity of Representation: The concerned director must be allowed to present their case before removal.
  • Restriction on Reappointment: The board cannot reappoint the director once removed.

Procedure for Director Removal

The removal process depends on the circumstances:

1. Voluntary Resignation by the Director

  • The director submits a resignation letter.
  • The company accepts and records it in the minutes of the meeting.
  • Form DIR-11 (by the director) and Form DIR-12 (by the company) are filed with the ROC.

2. Absence from Board Meetings for 12 Months

  • As per Section 167(1)(b), the office becomes vacant if a director fails to attend any board meetings for 12 months.
  • The company files Form DIR-12 to update the ROC.

3. Removal Initiated by Shareholders

  • Board Meeting: The Board convenes a meeting to approve the notice of removal.
  • Extraordinary General Meeting (EGM): Shareholders pass an ordinary resolution for removal.
  • Right to Representation: The director is allowed to defend their case before voting.
  • Filing with ROC: The company files Form DIR-12 within 30 days of the resolution.

Once the ROC updates the records, the director’s name is officially removed from the MCA database.

Form DIR-12 to Remove a Director

Form DIR-12 is a mandatory filing under the Companies Act, 2013. It must be filed with the ROC to record the appointment or cessation (resignation/removal) of a director. The form must include:

  • Details of the director being removed/resigned
  • Relevant board/EGM resolutions
  • Digital signature of an authorised director or company secretary

Consequences of Failing to File Form DIR-12 to Remove a Director

If Form DIR-12 is not filed within 30 days of a director’s removal or resignation, the company can face financial penalties:

  • Up to 30 days delay: Penalty of twice the standard filing fees
  • 30–60 days delay: Penalty of four times the regular fees
  • 60–90 days delay: Penalty of six times the regular fees
  • Beyond 180 days: Penalty of twelve times the standard fees, along with possible compounding of offences

Implications of Director Removal

Once a director is removed:

  • Their duties and responsibilities terminate immediately.
  • They lose the authority to represent the company in any legal, financial, or operational matters.
  • If procedures are not correctly followed, it may lead to legal disputes or tribunal intervention.
  • Mishandling director removal can create reputational risks for the company, affecting investors and stakeholders.

Frequently Asked Questions (FAQs)

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Private Limited Company
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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
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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 happens after a director is removed?

Once a director is removed:

  • They lose all authority to act on behalf of the company, including signing contracts, bank transactions, or representing the company legally.
  • Their duties and responsibilities as a director terminate immediately.
  • The company must update the Ministry of Corporate Affairs (MCA) records by filing Form DIR-12.

If the removal process wasn’t properly followed, it could lead to legal disputes or claims from the director.

Can a removed director be reappointed to the same company?

Generally, a director removed by shareholders cannot be reappointed by the Board unless the shareholders pass a fresh resolution allowing it.

How long does it take for a director's name to be removed from the Ministry of Corporate Affairs (MCA) database after removal?

Once Form DIR-12 is filed with the ROC:

  • The MCA database is usually updated within 7–15 working days.
  • The director is officially removed, and the company can verify the update on the MCA portal.

Can a director challenge their removal?

Yes, a director can challenge removal if:

  • The legal procedure was not followed, such as no opportunity to represent their case or lack of proper notice.
  • The challenge can be made through the National Company Law Tribunal (NCLT) or an appropriate court.

What alternatives should be considered before resorting to director removal?

Removing a director can be disruptive and sensitive, so consider alternatives first:

  • Voluntary resignation: Sometimes the director may step down on mutual understanding.
  • Reassigning responsibilities: Limit their operational authority if their role is not aligned with company goals.
  • Mediation or board discussions: Resolve conflicts internally before escalation.
  • Shareholder agreements or buyouts: If there is a dispute between co-founders or directors, a buyout or stake adjustment can avoid legal removal.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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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.

Ready to incorporate your company? Start your journey with Private Limited Company Registration through Razorpay Rize today!

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

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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

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

MCA eForm MR-1: Appointment of Managerial Personnel Explained

MCA eForm MR-1: Appointment of Managerial Personnel Explained

MCA eForm MR-1 is a mandatory compliance requirement under the Companies Act, 2013. It is filed to record the appointment or reappointment of managerial personnel, such as a managing director (MD), whole-time director (WTD), or manager

The filing must be completed online through the MCA portal, ensuring transparency, regulatory compliance, and adherence to corporate governance standards.

In this blog, we’ll cover what eForm MR-1 is, the laws governing it, eligibility criteria, its purpose, documents required, the step-by-step filing process, and common errors to avoid.

Table of Contents

What is MCA eForm MR-1?

MCA eForm MR-1 is a statutory filing under Section 196 of the Companies Act, 2013. It is used to record the appointment or reappointment of key managerial personnel, namely:

  • Managing Director (MD)
  • Whole-Time Director (WTD)
  • Manager

Filing MR-1 is mandatory for both public and private limited companies. It ensures compliance with corporate governance norms. The form must be filed within 60 days of appointment.

Laws Governing the eForm MR-1

The legal framework for filing MR-1 is governed by:

  • Sections 196 & 197 of the Companies Act, 2013
  • Schedule V of the Companies Act, 2013
  • Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Key provisions include:

  • The appointment/reappointment of MD, WTD, or Manager must be filed with the Registrar of Companies (RoC) within 60 days.
  • A person cannot be an MD or a Manager in more than one company simultaneously (except subsidiaries with Board approval).
  • The maximum tenure is 5 years, and reappointment can only be made within one year of the expiry of the current term.

Eligibility Criteria for Filing MCA eForm MR-1

To be eligible for appointment via MR-1, the following conditions must be met:

  • Age requirement: The appointee must be between 21 and 70 years. Appointment above 70 years is allowed only through a special resolution passed by shareholders.
  • Must comply with the Articles of Association (AoA) of the company.
  • The appointment must be approved by both the Board of Directors and shareholders in the general meeting.
  • The appointee must not be disqualified under Section 164 of the Companies Act, 2013 (e.g., insolvent, convicted of an offence, or default in filing returns).

Purpose of the eForm MR-1

The primary purpose of filing eForm MR-1 is to intimate the Registrar of Companies (RoC) about the appointment or reappointment of managerial personnel.

  • It serves as the official record of managerial appointments.
  • Filing ensures compliance with Schedule V of the Companies Act.
  • The form must be filed within 60 days of such appointment.

Documents Required for Filing MCA eForm MR-1

The following documents must be attached to MR-1 while filing:

  1. Certified true copy of the Board Resolution approving the appointment.
  2. Certified true copy of the Shareholders’ Resolution (if applicable).
  3. Central Government approval (if required under Section 196/197).
  4. Letter of consent from the appointee.
  5. Certificate from the Nomination and Remuneration Committee (if applicable).

Step-by-Step Procedure for Filing MCA eForm MR-1

Here’s how to file eForm MR-1 online:

  1. Log in to the MCA portal.
  2. Download eForm MR-1 from the MCA forms section.
  3. Fill in company details (CIN, name, registered office, etc.).
  4. Enter appointment details (DIN/PAN of appointee, designation, tenure, remuneration).
  5. Attach required documents such as resolutions and consent letters.
  6. Digitally sign the form using a valid Director/Professional DSC.
  7. Upload the form to the MCA portal.
  8. Pay the prescribed filing fee.
  9. Generate and save the Service Request Number (SRN) to track status.

Once processed, an acknowledgement of filing is sent by the MCA.

Common Errors in Filing MCA eForm MR-1

Many companies face rejections or delays due to mistakes. Common errors include:

  • Entering incorrect DIN/PAN details of the appointee.
  • Failure to attach mandatory resolutions.
  • Missing the 60-day filing deadline.
  • Using an unauthorised or expired DSC.
  • Non-compliance with age or disqualification criteria.

Frequently Asked Questions

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Frequently Asked Questions

What is the MCA eForm MR-1 used for?

MCA eForm MR-1 is used to file the return of appointment or reappointment of managerial personnel with the Registrar of Companies (RoC). This includes the appointment of a Managing Director (MD), Whole-Time Director (WTD), or Manager.

Who must file E-Form MR-1?

Every company (public or private) that appoints or reappoints:

  • Managing Director (MD)
  • Whole-Time Director (WTD)
  • Manager

Form MR-1 with the RoC must be filed within 60 days of appointment.

Can MR-1 be filed for a private company?

Yes. Both public and private limited companies must file MR-1 if they appoint a Managing Director, Whole-Time Director, or Manager.

What is the fee for filing eForm MR-1?

The filing fee for MR-1 depends on the nominal share capital of the company, as per the Companies (Registration Offices and Fees) Rules, 2014:

  • Up to ₹1,00,000: ₹200
  • ₹1,00,000- ₹4,99,999: ₹300
  • ₹5,00,000- ₹24,99,999: ₹400
  • ₹25,00,000- ₹99,99,999: ₹500
  • ₹1 crore or more: ₹600

What happens if eForm MR-1 is not filed within the prescribed time?

Failure to file MR-1 within 60 days can result in:

  • Additional fees/penalties depending on the delay.
  • Possible treatment of the appointment as invalid for non-compliance.
  • The company and its officers become liable for penalties under Section 450 of the Companies Act, 2013.

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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