Form DPT-3: Due Date, Purpose, Return Date

Feb 7, 2025
Private Limited Company vs. Limited Liability Partnerships

Running a business in India comes with its fair share of challenges—managing finances, growing revenue, and keeping up with endless compliance requirements. One such crucial yet often overlooked filing is Form DPT-3.

This annual filing is mandatory for all companies in India—except government companies—to report details of deposits, loans, and non-deposit receipts. The Form DPT-3 due date is June 30th each year, making it essential for businesses to meet this deadline to avoid penalties and maintain good standing with regulatory authorities.

Table of Contents

What is Form DPT-3?

Form DPT-3 is an annual return form that companies must file to report deposits and outstanding loan details. It is a statutory requirement under the Companies Act 2013, ensuring that businesses remain compliant and transparent in their financial dealings. The form covers:

  • Deposits received by the company
  • Non-deposit loans taken from directors, shareholders, or other sources
  • Any other amounts that are classified as financial liabilities

The primary objective of this filing is to prevent malpractices related to undisclosed financial transactions and to strengthen corporate governance.

<H2> Applicability and Requirements for DPT-3 Form

Form DPT-3 filing applies to all companies except government companies. This includes:

Key requirements for DP3 include:

  • Annual Filing Deadline: Companies must submit Form DPT-3 by June 30 each year, covering financial transactions for the previous fiscal year.
  • Financial Year Coverage: The form includes details of financial liabilities up to March 31 of the relevant financial year.
  • Auditor Verification: Companies must ensure that the reported figures are verified by auditors to maintain accuracy and compliance.

Penalties for Non-Compliance with Form DPT-3 Filing

Failure to file Form DPT-3 on time can result in significant penalties under the Companies Act 2013. The penalties include:

  • A flat penalty of up to ₹5,000 for the company.
  • Additional daily fines of ₹500 per day for continued non-compliance.
  • Officers responsible for the filing may also be penalised with additional fines.

Ensuring timely submission is essential to avoid legal repercussions and unnecessary financial burdens.

Preparing for the DPT-3 Filing

To ensure a smooth DPT-3 filing process, companies should follow these steps:

  1. Review Financial Transactions: Examine all deposits, loans, and non-deposit receipts received during the financial year.
  2. Obtain Audit Reports: Work with auditors to verify and validate the data before submission.
  3. Gather Necessary Documentation: Collect supporting documents such as loan agreements, receipts, and auditor reports.
  4. Consult Experts: If there are complexities in reporting, seek advice from compliance professionals or legal experts.

Information Required to Fill DPT-3 Form

Companies need to provide the following details while filling out Form DPT-3:

Other financial liabilities as per the balance sheet-

  • Net Worth of the Company: The net worth is calculated as total assets minus total liabilities based on the most recent financial year-end.
  • Particulars of Charge (if any): Companies must disclose any charges or encumbrances on their assets. This includes mortgages, liens, or any other security interests held against company-owned properties or resources.
  • Total Amount Outstanding as of March 31st, 2020 including-  
  • Deposits received from individuals or entities.
  • Loans borrowed from banks, directors, or other companies.
  • Any other non-deposit receipts that need disclosure.
  • Particulars of Credit Rating (If Applicable): Companies with an assigned credit rating should provide: Name of the credit rating agency (e.g., CRISIL, ICRA, CARE, etc.) and the rating assigned

Form DPT-3 Due Date

The due date for filing Form DPT-3 is June 30th of every financial year. Companies should ensure timely submission to avoid penalties and maintain regulatory compliance.

Documents Required to File DPT-3 Form

To complete the Form DPT-3 filing, companies must submit:

  • List of Depositors
  • Deposit Insurance Contract
  • Copy of the Trust Deed
  • Copy of the Instrument Creating Charge
  • Details of Liquid Assets
  • Outstanding Receipts of Money or Loans
  • Auditor’s Certificate

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Conclusion

Form DPT-3 is a critical compliance requirement for companies in India. Filing this might feel like just another compliance task, but it’s actually a crucial step in keeping your business financially transparent and legally sound. Missing the deadline can lead to penalties, unnecessary stress, and last-minute scrambling. Instead of rushing at the last minute, take a proactive approach—review your records, coordinate with your auditors, and get your documents in order well in advance.

Frequently Asked Questions

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

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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

Is Form DPT-3 mandatory?

Yes, Form DPT-3 is mandatory for all companies (except government companies) that have received deposits, loans, or other non-deposit receipts. It must be filed annually, as per the Companies Act of 2013, to ensure financial transparency and regulatory compliance.

What is the penalty for delay in DPT-3?

If a company fails to file Form DPT-3 on time, penalties may include:

  • A fine of ₹5,000 for the company.
  • An additional fine of ₹500 per day for continued non-compliance.
  • Officers in default may also face penalties, which can go up to ₹2 lakh.

What is the fee for DPT-3?

The filing fee for Form DPT-3 depends on the company’s authorised share capital:

  • ₹200 for companies with capital up to ₹1 lakh
  • ₹300 for ₹1-5 lakh
  • ₹400 for ₹5-25 lakh
  • ₹500 for ₹25 lakh-1 crore
  • ₹600 for ₹1 crore or more

Late filing attracts additional fees, increasing with the delay period.

Is DPT-3 applicable to LLPs?

No, Form DPT-3 is not applicable to LLPs (Limited Liability Partnerships). It applies only to private and public limited companies, as LLPs are governed by the LLP Act of 2008 and have different compliance requirements.

Can we file DPT-3 after the due date?

Yes, you can file DPT-3 after the due date, but it will attract late filing fees and penalties. To avoid unnecessary financial and legal consequences, it is advisable to file before the June 30 deadline.

Is DPT-3 mandatory every year?

Yes, DPT-3 is an annual compliance requirement that must be filed every year by June 30, reporting financial data from the previous fiscal year.

What is the purpose of filing DPT-3?

The purpose of Form DPT-3 is to:

  • Ensure financial transparency by reporting deposits, loans, and non-deposit transactions.
  • Help regulators track company borrowings and financial stability.

Ensure compliance with the Companies Act of 2013 and avoid penalties.

Related Posts

Private Limited Company Vs. Limited Liability Partnerships (LLP): Key Differences

Private Limited Company Vs. Limited Liability Partnerships (LLP): Key Differences

Choosing the right business structure is one of the most critical decisions for entrepreneurs. It lays the foundation for how the business will operate, manage liabilities and raise funds, as well as how stakeholders will perceive it.

Among the many options available, Private Limited Companies (Pvt Ltd) and Limited Liability Partnerships (LLP) are two of India's most popular and widely adopted structures.

Both these structures offer the advantage of limited liability while being distinct in their governance, ownership, compliance requirements and suitability for different business types.

This blog provides an in-depth comparison of Pvt Ltd companies and LLPs, delving into their features, compliance requirements, taxation and funding options. By the end, you will have a clear understanding of which structure aligns best with your business goals and aspirations.

Table of Contents

Difference Between Limited Liability Partnership and Private Limited Company

The fundamental difference between a Pvt Ltd and an LLP lies in ownership and management. While a Pvt Ltd company is governed by shareholders (owners) and directors (managers), an LLP is managed by partners who own and operate the business. Additionally, compliance requirements, taxation and funding options differ significantly between the two.

Here is a table outlining the difference between LLP and a private limited Company:

Private Limited Company Limited Liability Partnership
Governing Act Governed by the Companies Act Governed by the Limited Liability Partnerships Act
Suitable For Financial Services, Tech Startups, Medium Enterprises Consultancy firms, Professional Services
Shareholders/ Partners Minimum– 2
Maximum– 200
Minimum– 2
Maximum– Unlimited
Minimum Capital Requirement No minimum capital requirement, but it is often advised to set the authorized capital at ₹1,00,000 (One Lakh) No minimum capital requirement, but it is often advisable to consider an initial capital of ₹10,000
Tax Rates The basic tax rate, excluding Surcharge and Cess – 25% The standard fixed rate – 30% on their generated earnings.
Fundraising Easier to raise funds from Investors Raising funds can be challenging
Transfer of Shares Shares can be easily transferred by amending AOA Transfer of partnership rights may require the consent of other partners and is generally more complex
ESOPs Can issue ESOPs to the Employees Unable to issue ESOPs to the Employees
Agreements Duties, Responsibilities, and other basic clauses outlined in MOA and AOA Duties, Responsibilities and other basic clauses outlined in the LLP Agreement
Compliances • More compliance costs
• Mandatory 4 Board Meetings
• Mandatory Statutory Audits
• Mandatory filings include Annual financial statements in form AOC–4 and annual returns in Form MGT–7, etc.
• Less Compliance Costs
• No mandatory Board Meetings
• Statutory Audits are not required if turnover is less than 40 Lakhs or capital contribution is less than 25 Lakhs.
• Mandatory filings include Annual financial statements in Form 8 and annual returns in Form 11.
Registration Company registration is done by SPICe+ form LLP registration is done by FiLLiP form
Name Reservation Company name reservation is made by SPICe+ Part A LLP name reservation is done by LLP–RUN
Dissolution More complex
Can be initiated by filing STK–2 form
Less Complex
Can be initiated by filing the Form 24

While the differences between LLPs and Private Limited Companies are numerous, they share similarities in key aspects:

  • Limited Liability
  • Separate Legal Identity
  • Registration Process with the MCA
  • Perpetual Succession

Let’s understand the key features and registration process in detail for both Private limited companies and LLPs.

What is a Private Limited Company?

A Private Limited Company (Pvt Ltd) is a privately held business entity that operates under the legal framework of the Companies Act of 2013 in India (or similar laws in other countries). It combines the benefits of limited liability protection for its shareholders with certain restrictions to maintain its private nature.

This structure is popular among startups and small to medium-sized enterprises due to its ability to attract investments while offering limited liability protection and operational flexibility.

Features of Pvt Ltd Company

Listing down some key advantages of a Private Limited Company below:

1. Limited Liability

The liability of Shareholders is limited. Personal assets are generally protected from business debts.

2. Separate Legal Entity

A Private Limited Company is considered a distinct legal entity from its owners (shareholders). It can enter into contracts, own property, and sue or be sued in its own name.

3. Ownership

Owned by shareholders who hold shares in the company. Transfer of ownership is facilitated through the buying and selling of shares.

4. Management

Managed by directors who are appointed by the shareholders. The day-to-day operations are overseen by the management team, while major decisions are often subject to shareholder approval.

5. Number of Shareholders

Requires a minimum of two shareholders and can have a maximum of 200 shareholders.

6. Regulation and Compliance

Governed by the Companies Act and regulated by the Ministry of Corporate Affairs in India. Compliance includes filing annual financial statements, conducting annual general meetings and maintaining statutory records.

7. Investment and Funding

Easier to attract investment and funding compared to other business structures due to the well-defined ownership structure and limited liability.

8. Perpetual Succession

The company continues to exist even if its shareholders or directors in private limited company change, retire, or pass away. Ownership can be transferred seamlessly through the sale of shares.

Private Limited Company Registration

The Ministry of Corporate Affairs (MCA) has introduced a streamlined process for incorporating companies called the Simplified Proforma for Incorporating Company Electronically Plus (SPICe+). It consists of two parts: Part A and Part B.

1. Step 1: Acquire a Digital Signature Certificate (DSC)

• A Digital Signature Certificate (DSC) is a digital method of verifying or attesting documents.
• It is typically issued with one or two-year validity and is mandatory for all witnesses in the Memorandum of Association (MOA) and Articles of Association (AOA).
• Class 2 or 3 DSCs can be obtained through listed Government Certifying Agencies (CAs).

2. Step 2: Apply for Name Approval using SPICe+ Part A

• Part A facilitates 'Name Reservation' with two proposed names and one re-submission (RSUB).
• In case of name rejection due to various reasons, a re-filing with the specified fee is required.

Note: Simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is possible, but only one name can be reserved.

3. Step 3: Apply for Company Registration using SPICe+ Part B

After name approval, Part B completes the registration process, including:

  • • Application for allotment of Director Identification Number (DIN)
    • Incorporation of the new company
    • Submission of e-MoA (INC-33) and e-AoA (INC-34)
    • Application for PAN and TAN (mandatory)
    • Application for EPFO registration (mandatory)
    • Application for ESIC registration (mandatory)
    • Application for Professional tax registration (only for Maharashtra)

The entered information in SPICe+ Parts A and B is automatically transferred to associated forms like AGILE-PRO, eAoA, eMoA, URC1, and INC-9, as applicable.

4. Step 4: Open a Bank Account

Open a current account for your company to facilitate seamless financial transactions and business operations, handling various aspects such as receiving payments, making supplier payments and managing payroll.

5. Step 5: File for the Commencement of Business Certificate

The Commencement of Business Certificate, filed through Form INC-20A within 180 days of incorporation, is a declaration by the Director of the Company submitted to the Registrar of Companies.

{{pvt-cta}}

After the SPICe+ Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

This certificate includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

Example of CIN: U72200KA2013PTC097389

Read more about what each letter in a CIN signifies here.

What is a Limited Liability Partnership?

A Limited Liability Partnership (LLP) is a business structure combining features of a traditional partnership and a limited company.

Limited Liability Partnerships are often chosen by professional services firms, small businesses and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Features of LLP

A Limited Liability Partnership (LLP) is a business structure that combines features of both a traditional partnership and a limited company. Limited Liability Partnerships are often chosen by professional services firms, small businesses, and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Some key characteristics of a Limited Liability Partnership are:

1. Limited Liability

Similar to a private limited company, partners in an LLP have limited liability.

2. Separate Legal Entity

An LLP is a distinct legal entity from its partners. It can own property, enter into contracts, and sue or be sued in its own name.

3. Ownership

Owned by partners, and the ownership structure is defined by the LLP agreement. Transfer of ownership usually requires the consent of other partners.

4. Management

Managed by partners or a designated management team, as specified in the LLP agreement. Each partner typically has an equal say in the management decisions, making it a more collaborative structure.

5. Number of Partners

Requires a minimum of two partners, and there is no maximum limit on the number of partners in an LLP.

6. Regulation and Compliance

Governed by the Limited Liability Partnership Act in India, with less stringent regulatory requirements compared to a private limited company. Compliance involves filing annual returns and maintaining statutory records.

7. Flexibility

Offers greater flexibility in terms of internal management and decision-making processes compared to a private limited company.

Limited Liability Partnerships Registration

Here's a simplified guide on the steps for Limited Liability Partnership (LLP) registration:

1. Step 1: Apply for DSC

  • Obtain a Digital Signature Certificate (DSC) from Government Certifying Agencies with one or two-year validity.

2. Step 2: Name Reservation

  • Reserve the LLP's name using the LLP-RUN form.

3. Step 3: Apply for Registration through FiLLiP

  • Complete the FiLLiP (Form for Incorporation of Limited Liability Partnership) and submit it to the Registrar. Alongside FiLLiP, submit the Subscriber sheet and Partner's consent (Form 9) as additional documentation.

4. Step 4: File LLP Agreement

  • File the LLP Agreement using Form 3 on the MCA portal within 30 days of LLP registration.

After the FiLLiP Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, a crucial legal document confirming the successful registration of your company.

This certificate includes vital information such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and more.

Example of LLPIN: AAA-1234

{{llp-cta}}

LLP vs Pvt Ltd Ownership

  • Shareholders vs. Partners
    • Pvt Ltd Ownership: Shareholders own the company but may not be involved in day-to-day management. Primarily managed by Directors.
    • LLP Ownership: Partners typically manage the business and have a direct role in decision-making.
  • Transfer of Ownership
    • Pvt Ltd: Shares can be easily transferred from private limited company members, making it simpler to onboard or exit shareholders.
    • LLP: Ownership transfer requires the consent of other partners, which can be complex.

LLP vs Pvt Ltd Compliance

  • Compliance for Private Limited Companies
    • Hold the First Meeting of the Board of Directors within 30 days of the Incorporation of the Company. It is compulsory to host four meetings in a year with a gap not more than 120 days.
    • Hold an Annual General Meeting every year, on or before September 30th, during business hours and in the registered office.
    • Appoint the company's first auditor within 30 days of incorporation, who will serve until the end of the first AGM.
    • File Form ADT 1 within 15 days of the appointment of the subsequent auditor.
    • File Annual Returns (AOC 4 and MGT 7) within 30 and 60 days of holding the AGM, respectively.
    • File Form ITR-6 for Income Tax Return annually.
    • File Form DIR-3 KYC to disclose details of the Directors.
  • Compliance for Limited Liability Partnerships
    • File an LLP agreement within 30 days of incorporation. The penalty of ₹100/day will be levied if an LLP fails to comply with this condition.
    • File the form DIR3 for the DIN allotment in case of an existing company.
    • File two annual statements for Annual Return and Statement of Accounts and Solvency using Forms 11 and 8, respectively.
    • Sign, verify and file the Income Tax Return (ITR) annually.
    • Depending on their shareholding capacity, you and your partner must deposit their contribution into the relevant bank account within the specified time frame.
    • Get a GST registration since it is a legal compulsion per the GST Act.
    • Audit your accounts through CAs if the company's annual turnover exceeds Rs 40 lakhs or the contribution surpasses ₹25 lakhs of the threshold limit.
    For businesses that prefer a simpler and cost-effective compliance framework, LLPs are the better option. With fewer regulatory requirements, LLPs reduce the administrative burden, making them ideal for small businesses, professional firms and startups not seeking external funding. However, for companies planning rapid growth, attracting investors or requiring a formal structure for credibility, Pvt Ltd companies are worth the added compliance effort.

LLP vs Pvt Ltd Funding

  • Equity Financing
    • Pvt Ltd Company funding: Easily attracts investors by issuing shares, making it suitable for startups seeking venture capital or private equity.
    • LLP funding: Equity financing is not possible since partners cannot issue shares.
  • Debt Financing
    • Both structures can access loans, but Pvt Ltd companies have additional options like issuing debentures or convertible notes.

LLP vs Pvt Ltd Foreign Direct Investment (FDI)

  • Pvt Ltd Company funding: Easily attracts investors by issuing shares, making it suitable for startups seeking venture capital or private equity.
  • LLP: FDI in LLP is allowed only in sectors where 100% FDI is permitted and is subject to approval in other cases, making it less flexible.

LLP vs Pvt Ltd Taxation

  • Taxation for Pvt Ltd CompaniesIncome tax for Pvt Ltd companies:
    • 25% if the turnover is up to ₹400 crore (as per recent provisions).
    • 30% for larger companies.
    A cess of 4% applies to the tax amount, along with surcharges for higher income levels.
  • Taxation for LLPsLLP taxation rate is 30% on their total income plus a surcharge (if applicable) and cess.Both LLPs and Pvt Ltd companies are treated equally under the GST regime:
    • GST registration is mandatory for businesses with annual turnover exceeding ₹20 lakhs (₹40 lakhs for goods in some states).
    • Compliance includes filing monthly or quarterly GST returns, depending on turnover.

Company Registration with Razorpay Rize

You can experience a hassle-free, 100% online business registration process with Razorpay Rize, featuring the lowest professional fees and absolutely no hidden charges.

Explore the diverse range of services tailored to suit the needs of both startups and established businesses.

{{pvt-llp-cards}}

Our package includes:

  • Company Name Registration
  • 2 Digital Signature Certificates (DSCs)
  • 2 Directors’ Identification Numbers (DINs)
  • Certificate of Incorporation(COI)
  • MoA & AoA [Applicable for Private Limited Companies and OPCs]
  • LLP Agreement [Applicable for LLPs]
  • Company PAN & TAN

*Prices and documents can differ based on the company type.

Which Company Type Should You Register Your Business With?

Before proceeding with the registration of either an LLP or a company, it is crucial to evaluate the following factors carefully.

• Consider the nature and size of your business

  • If you operate a small business with a limited workforce, opting for LLP registration might be more favourable, given the relatively lighter compliance requirements compared to a company. On the other hand, for larger businesses with substantial employee numbers and capital needs, registering as a company provides greater flexibility in raising capital.

• Fundraising requirements

  • If your goal is to raise funds through equity, choosing a company structure is imperative. However, if your fundraising needs are more straightforward, the LLP structure may be a more suitable option.

• Tax rates

  • It's essential to compare the tax rates applicable to both company and LLP structures, as there can be significant differences. Opt for the structure that aligns with your financial goals based on total income or turnover.

Personal liability protection

  • While an LLP offers limited liability protection, a company structure treats the company as a distinct legal entity, safeguarding shareholders' personal assets.

Ultimately, the choice between a company structure and an LLP structure hinges on the unique characteristics of your business, including its nature, size, and capital requirements.

Find Your Ideal Company Type

If you still need more help deciding which company type to register with, don't worry! We’ve got you covered with our latest tool - "Know Your Company Type."

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For the first time in India, simply answer a quick set of questions about your startup, and this tool will leverage your responses to identify the ideal company registration type. Find your perfect fit with just one click!

Explore side-by-side comparisons of popular company types for added clarity and make informed choices effortlessly!

Frequently Asked Questions

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

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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

Which is better, LLP or Pvt Ltd?

The choice between an LLP and a Pvt Ltd company depends on the nature and goals of the business:

  • LLP: Best for small businesses, professional services and firms looking for flexibility and cost-effective compliance. LLPs are ideal for businesses that do not need external investors or plan to scale aggressively.
  • Pvt Ltd: Suitable for businesses planning to raise funds, scale operations or build a more structured and credible entity. Pvt Ltd companies are preferred by startups seeking venture capital or private equity investments.

Refer to the detailed difference between LLP and Pvt ltd company for more context.

Does LLP need to file a tax return?

Yes, all LLPs must file an Income Tax Return annually, irrespective of whether they have generated income or incurred losses. Key requirements include:

  • ITR-5 Form: Used for filing LLP income tax returns.
  • Tax Audit: Mandatory if the annual turnover exceeds ₹1 crore.
  • LLPs must file tax returns by the end of the financial year.

How is the salary from LLP taxed?

  • Partners' Salary: Salaries or remuneration paid to partners of an LLP are treated as business expenses for the LLP and are deductible from its taxable income.
    • The salary received by partners is taxed as personal income under the Income Tax Act, based on their applicable income slab rates.
  • Employee Salary: Salaries paid to employees of an LLP are subject to TDS (Tax Deducted at Source) and standard income tax rules.

Can an LLP have employees?

Yes, an LLP can hire employees just like any other business entity.

  • Employees of an LLP are entitled to all statutory benefits, such as Provident Fund (PF), Employee State Insurance (ESI) and gratuity, if applicable.
  • Salaries paid to employees are subject to payroll taxes, such as TDS and GST compliance (for specific payments like consulting fees).

Why do people prefer LLP?

Many small businesses and professional firms prefer LLPs due to their unique advantages:

  1. Low Compliance
  2. Cost-Effective
  3. Limited Liability
  4. Tax Efficiency
  5. Flexibility in Management
  6. Separate Legal Entity

LLPs are especially favoured by professionals (like consultants, lawyers, or accountants) and small businesses that prioritise simplicity and operational control.

Startup India Seed Fund Scheme for Startups | Razorpay Rize

Startup India Seed Fund Scheme for Startups | Razorpay Rize

As a part of the “Startup India” program, the Startup India Seed Fund Scheme was introduced in 2021 to facilitate the process of creating a robust startup ecosystem and providing financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization.

Description Who is it for? Benefits
To provide monetary support for proof of concept, prototype development, product trials, market, and commercialization Startups using Technology as their core product or service Under this scheme, Financial assistance up to Rs. 50 lakh will be provided to startups at an early stage through incubators
Startup India Seed Fund Scheme

Table of Contents

Eligibility

  • Should be recognised by DPIIT.
  • Startups should not have received more than Rs 10 lakh of monetary support under other significant government schemes.
  • The Startup shall have been in existence for no more than two years at the time of application.
  • Should be using technology as its core product or service to create innovative solutions in different sectors.
  • Must have a business idea to develop the product with a scope of scaling
  • According to the Companies Act of 2013 and the SEBI (ICDR) Regulations of 2018, Indian promoters must own at least 51 percent of the company at the time of application to the incubator.
  • The seed support is generally available in grants and debt/convertible debentures.

Application procedure for Startups

The application procedure for availing the seed fund from the incubators by the startups under the StartUp India Seed Fund Scheme is as follows:

Startup India Registration

  • Go to https://seedfund.startupindia.gov.in/.
  • On the top right side of the homepage, click the 'Login' button, then the 'Create an Account' option at the bottom of the "Login" tab.
  • The ‘Startup India’ registration page will open.
  • After filling out the form, click the 'Register' button.
  • An OTP will be sent. Enter the OTP and click the ‘Submit’ button.

Startup India Seed Fund Application

  • Go to the website again and click on the ‘Apply Now’ button on the right-hand side of the homepage.
  • Click on the ‘Apply Now’ button under the ‘For Startups’ option and log in using the username and password registered.
  • The application form will open. Put in all the details, upload the documents, and click on the ‘Submit’ button.
  • The application will be submitted for the selection of the startup.

Selection of Startups for the Scheme

The Eligible Incubator will select startups for this scheme based on the following criteria:

  • Idea
  • Feasibility
  • Novelty
  • Fund Utilization Plan
  • Business Plan
  • Presentation
  • Potential Impact

Benefits

To register a company in the U.S., several essential criteria must be met.

  • Under this scheme, up to Rs 50 lakh in financial assistance will be provided to startups at an early stage through incubators.
  • The incubator will disburse the seed fund to an eligible startup:
    - As a grant for validation of “prototype development, proof of concept or product trials”-  
    Up to Rs. 20 Lakh        
    - Investment for commercialization, market-entry, or scaling up through debt-linked instruments -
    Up to Rs. 50 Lakh
  • Once incubated, physical infrastructure, testing support, mentoring for prototype or commercialization, human resources, and legal compliances are provided to the startups, all by the incubators.
  • For eligible startups, income tax and capital gains tax exemptions are available.

Post funding process

Each incubator must track specific criteria for each beneficiary startup. Every beneficiary startup must present the reports to its incubators periodically. The data is submitted to Startup India in real-time via their web dashboards and further to the EAC quarterly. Each Startup’s return on investment is also reported by the designated incubator.

  • Proof of concept
  • Prototype development
  • Progress of product development & field trials
  • Turnover of startup
  • Progress of market launch
  • Quantum of loan, angel, or VC funding raised
  • Jobs created by startup

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What is a Shelf Prospectus? Meaning & Provisions Under the Companies Act, India

What is a Shelf Prospectus? Meaning & Provisions Under the Companies Act, India

A shelf prospectus is a legal document under the Companies Act of 2013 that allows a company to issue multiple rounds of securities without filing a new prospectus for each offering.

Once a company gets approval for a shelf prospectus, it can issue securities in tranches over a period (usually one year) without repeating the regulatory approval process. This mechanism is particularly beneficial for businesses that require frequent access to capital markets.

Simply put, a company gets approval for a prospectus and "shelves" it for use when needed. Just like a store keeps items on a shelf, ready to be picked up when required, companies can tap into their shelf prospectus whenever they decide to issue securities within the approved period.

Table of Contents

Shelf Prospectus Meaning

A shelf prospectus is a document issued by companies intending to offer securities in multiple tranches over a specified period without filing a new prospectus for each offering. Governed by the Companies Act of 2013, it serves as a framework to streamline capital-raising activities while ensuring regulatory compliance.

This approach helps all types of companies save time and resources while maintaining transparency in financial disclosures.

What Is The Validity Period of Shelf Prospectus?

As per the Companies Act of 2013 and SEBI regulations, a shelf prospectus is valid for one year from the issue date. During this period, the company can make multiple security offerings without submitting a fresh prospectus.

However, an Information Memorandum must be filed for each subsequent offering to ensure updated financial and operational disclosures.

What Are The Requirements For Shelf Prospectus?

To issue a shelf prospectus, a company must fulfil specific requirements under the Companies Act, 2013:

  • Eligibility Criteria: The company must be a public financial institution, a bank, or a company notified by SEBI.
  • SEBI Approval: Approval from the Securities and Exchange Board of India (SEBI) is mandatory before issuance.
  • Financial Disclosures: The prospectus must include audited financial statements, business details, and risk factors.
  • Regulatory Compliance: The company must adhere to statutory provisions and filing requirements.

Who Can Issue Shelf Prospectus?

Not all companies are eligible to issue a shelf prospectus. As per SEBI regulations, only specific entities can do so, including:

  • Public Financial Institutions such as banks and NBFCs.
  • Scheduled Banks that meet regulatory criteria.
  • Other Companies notified by SEBI, provided they meet compliance standards.

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What Are The Eligibility Criteria For a Company to Issue a Shelf Prospectus?

To issue a shelf prospectus, a company must meet the following key eligibility criteria:

  • Strong Financial Performance: A consistent and positive financial track record is essential.
  • Regulatory Compliance: The company must have a history of timely filings and adherence to statutory norms.
  • Market Reputation: A credible and trustworthy market presence is necessary.
  • Clear Disclosure of Fund Utilization: The company must provide transparency regarding how the raised funds will be used.

5 Incredible Advantages of Shelf Prospectus

A shelf prospectus offers several benefits to companies and investors:

  1. Flexibility: Companies can issue securities as needed without additional regulatory approvals.
  2. Cost Efficiency: Reduces administrative and compliance costs associated with repeated filings.
  3. Faster Time to Market: Companies can respond quickly to market conditions.
  4. Improved Investor Relations: Provides transparency and trust through consistent financial disclosures.
  5. Strategic Financial Planning: Enables better capital-raising strategies over time.

How Does an Investor Benefit from a Shelf Prospectus?

Investors gain multiple advantages from a shelf prospectus:

  • Greater Transparency: A single document offers comprehensive details about the company.
  • Consistent Access to Securities: Investors can participate in multiple offerings from a single prospectus.
  • Time-Saving: Reduces the need to analyse multiple prospectuses for each security issuance.
  • Better Investment Planning: Enables informed decision-making with consistent financial disclosures.

Difference Between Shelf Prospectus and Red Herring Prospectus?

Parameter Shelf Prospectus Red Herring Prospectus
Purpose Used for multiple securities offerings over time Used for IPOs before the issue price is finalised
Validity Period Valid for one year from the issue date Valid only for a single IPO
Flexibility Allows multiple issuances without a new prospectus Only valid for a one-time offering
Information Contains comprehensive details about the company and financials Lacks finalised share price details
Regulatory Requirement Requires filing of Information Memorandum Needs SEBI approval before IPO launch

Financial Securities and Shelf Prospectus

A shelf prospectus allows companies to issue various types of financial securities, including:

  • Equity Shares: Ownership stakes in a company.
  • Debentures: Debt instruments issued by companies.
  • Bonds: Fixed-income securities providing periodic interest payments.

This streamlined approach reduces delays and administrative hurdles for issuing these securities over multiple tranches.

What Is an Information Memorandum?

An Information Memorandum is a document containing essential details about a company’s financials, operations, and business strategy. It is a key resource for investors, offering in-depth insights into the company's capital-raising plans.

When a company issues securities under a shelf prospectus, it must file an Information Memorandum before each offering to ensure updated and accurate disclosures.

Procedure to Fill Form PAS-2

Form PAS-2 is required to be filed as per the Companies (Prospectus and Allotment of Securities) Rules, 2014. Here’s how to fill it:

  1. Company Details: Enter the name, registered office, and CIN.
  2. Security Details: Specify the type and number of securities being offered.
  3. Offer Details: Mention the issue price, purpose, and utilisation of funds.
  4. Financial Statements: Attach recent audited financial reports.
  5. Declaration: Ensure proper authorisation and sign the form.

Procedure to Upload Form PAS-2

Once Form PAS-2 is completed, follow these steps to upload it to the MCA (Ministry of Corporate Affairs) portal:

  1. Prepare the Form: Ensure all required fields are filled out correctly and attach the necessary documents.
  2. Log in to the MCA Portal: Use company credentials to access the e-filing section.
  3. Upload the Form: Select Form PAS-2, attach supporting documents and verify details.
  4. Payment of Fees: Pay the prescribed filing fee through the portal.
  5. Submit and Confirm: After submission, a confirmation receipt and acknowledgement are generated.

Conclusion

For companies, a shelf prospectus eliminates the repetitive, time-consuming regulatory hurdles that come with multiple capital raises.

Instead of drafting and filing a new prospectus each time, businesses can plan their fundraising strategically, issuing securities when market conditions are favourable. This saves time, reduces administrative costs, and provides the flexibility needed to stay competitive.

For businesses, this means less paperwork, faster fundraising, and more flexibility to raise funds when needed. For investors, it provides greater transparency and clarity, helping them make better financial decisions.

By using a shelf prospectus wisely, companies can focus on growth, and investors can confidently explore opportunities—making it a win-win for everyone in the financial market.

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Frequently Asked Questions

What is meant by Shelf Prospectus?

A Shelf Prospectus is a type of prospectus that allows a company to issue securities in multiple tranches over a period of time without needing to file a separate prospectus for each offering. It provides flexibility for companies to raise funds as needed, reducing administrative burdens and costs.

What is Shelf Prospectus in Company Law Section 1?

In the context of Company Law (India - Companies Act, 2013, Section 31), a Shelf Prospectus is a prospectus issued by public financial institutions, banks, or listed companies for raising capital through multiple offerings. The prospectus remains valid for a specified period, and the company only needs to file an Information Memorandum before each tranche of issuance.

Does the Shelf Prospectus Require a Different Prospectus for Each Offering?

No, a Shelf Prospectus eliminates the need to file a separate prospectus for each offering. Instead, an Information Memorandum is submitted before each issuance, updating investors with relevant details about the specific tranche.

Is Shelf Prospectus Valid for Years?

In India, a Shelf Prospectus is typically valid for one year from the date of filing). Within this period, the company can issue securities in multiple tranches without filing a fresh prospectus each time.

Why Would a Company File a Base Shelf Prospectus?

A company files a Base Shelf Prospectus to:

  • Streamline Fundraising: Raise capital efficiently over time without repetitive regulatory approvals.
  • Reduce Costs: Minimize administrative and legal expenses associated with frequent filings.
  • Enhance Flexibility: Issue securities when market conditions are favourable.
  • Ensure Compliance: Maintain transparency while avoiding delays in capital raising.

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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