Revised Form URC-1 - Company Registration under section 366

Jun 15, 2025
Private Limited Company vs. Limited Liability Partnerships

If you run a business like a partnership firm, LLP, or a registered society and want to turn it into a private or public limited company, you can do so under Section 366 of the Companies Act, 2013. To support such conversions, the Ministry of Corporate Affairs (MCA) notified the Companies (Authorised to Register) Second Amendment Rules, 2018 on 20th September 2018, which became effective from 2nd November 2018.

These rules introduced a revised version of eForm URC-1, a crucial form used to initiate the registration of an existing entity as a company. The form is prescribed under the Companies (Authorised to Register) Rules, 2014, and is directly linked to the provisions of Section 366. The amendment aimed to simplify the conversion process, provide legal clarity, and strengthen regulatory compliance. The following section explains the purpose and significance of filing Form URC-1 in detail.

Table of Contents

Form URC-1

Form URC-1, also known as the "URC 1 form", is an e-form prescribed under Rule 3(2) of the Companies (Authorised to Register) Rules, 2014. It enables various business entities, including partnerships, LLPs, societies, and others, to register as companies under Section 366 of the Companies Act, 2013. The form plays a crucial role in facilitating the formal registration process when an entity decides to transform its business structure into a company.

Filing Form URC-1 is mandatory for entities opting to convert into a company under the provisions of the Companies Act. It captures comprehensive details about the existing entity, the proposed company, and the compliance requirements for a smooth transition. By submitting this form, entities can initiate the company registration process and ensure adherence to the legal framework governing such conversions.

What is Section 366 of the Act?

Section 366 of the Companies Act, 2013 is a pivotal provision that allows various business entities, such as partnerships, LLPs, and societies, to register as companies under the Act. A significant amendment to this section, based on the recommendations of the Company Law Committee, reduced the minimum member requirement from seven to two, making it easier for smaller entities to convert into companies.

The scope of Section 366 has evolved since its introduction in the Companies Act, 1956. The 2017 amendments aimed to widen the eligibility criteria for registration, enabling more businesses to benefit from the advantages of operating as a company. This provision offers a streamlined pathway for entities formed under other laws to transition into the corporate structure governed by the Companies Act.

By registering under Section 366, entities can enjoy benefits such as limited liability protection, better access to capital, and enhanced credibility in the market. The provision creates a bridge between different legal frameworks, allowing businesses to adopt a more formal and regulated structure that aligns with their growth aspirations.

Companies that can be Registered under Section 366

Section 366 of the Companies Act, 2013 allows a wide range of entities to register as companies, including:

These entities must have a minimum of two members to be eligible for registration under Section 366. They can convert into companies limited by shares, guarantee, or as unlimited companies.

It's important to note that Section 366 applies to entities originally formed under laws other than the Companies Act. It provides a pathway for these businesses to transition into the corporate structure and operate under the purview of the Companies Act, 2013.

This provision provides a legal pathway for such organisations to adopt a corporate structure, enabling them to operate under a more regulated framework while enjoying benefits like limited liability, perpetual succession, and enhanced legal status.

Purpose of Form URC-1

The primary purpose of Form URC-1 is to facilitate the registration of certain entities, such as partnerships, LLPs, and societies, as Part I Companies under the Companies Act, 2013. When an entity has seven or more members, Form URC-1 is filed along with Form INC-7 to initiate the company registration process.

Form URC-1 simplifies the online registration procedure by capturing all the necessary details and documents required for the conversion. It serves as a comprehensive application form that enables entities to provide information about their existing structure, proposed company details, and compliance with the legal requirements.

By filing Form URC-1, entities can ensure a smooth transition from their current legal status to a company registered under the Companies Act. The form helps in maintaining transparency and accuracy in the registration process, as it requires the submission of relevant documents and disclosures.

For entrepreneurs and startups, Form URC-1 acts as a practical tool, guiding them through the registration process and helping them understand the documents and disclosures needed for conversion.

Key Amendments and Implications

The Companies (Authorized To Register) Amendment Rules, 2023, introduced several significant changes to Form URC-1. The amended form now requires additional details, including:

Information Category Required Details
Existing and Proposed Entity Name, address, registration number, PAN, etc.
Legal and Financial Disclosures Consent of members, creditors, and debenture holders; assets and liabilities; pending legal proceedings
Resolution and Meeting Specifics Date of resolution, meeting details, approval of conversion
Compliance-related Data Advertisement dates, affidavits, indemnity bonds, NOCs

The amendments aim to strengthen the due diligence process and ensure that all relevant information is disclosed during the registration process. By mandating the submission of these details, the MCA seeks to enhance the integrity and reliability of the information provided by the entities seeking to convert into companies.

The implications of these amendments are significant for entities considering registration under Section 366. They must ensure compliance with the new disclosure requirements and maintain proper documentation to support their application. The increased transparency and disclosures help in preventing any misrepresentation or concealment of material facts during the registration process.

Entities should carefully review the amended Form URC-1 and ensure that they have all the necessary information and documents ready before initiating the filing process.

Attachments to be submitted for Form URC-1

The amended Form URC-1 requires several mandatory attachments to be submitted along with the application. These documents provide supporting evidence and ensure compliance with legal and regulatory requirements. The key attachments include:

  • Particulars of members/partners: A list of all members or partners of the existing entity, along with their details and shareholding pattern.
  • Declaration by directors: A declaration by two or more proposed directors of the company, verifying the particulars of all members/partners.
  • Affidavit for dissolution: An affidavit from all members/partners, confirming the dissolution of the existing entity.
  • Instrument constituting the entity: A copy of the partnership deed, LLP agreement, or other instrument constituting or regulating the existing entity.
  • Certificate of registration: A copy of the certificate of registration of the existing entity, issued by the relevant authority.
  • No Objection Certificates (NOCs): NOC from any sectoral regulators or authorities, if applicable, depending on the nature of the business and the sector in which it operates
  • Newspaper advertisement: A copy of the newspaper advertisement published in a English and a vernacular language newspaper, giving notice of the proposed registration.
  • Compliance certificate: A certificate from a practicing professional (CA/CS/CWA), confirming compliance with the provisions of the Stamp Act, to the extent applicable.
  • Consent of majority members: A resolution passed by a majority of members, agreeing to the registration of the entity as a company.
  • Statement of Accounts: Optionally, a statement of accounts and a valuation report determining the value of assets and liabilities of the existing entity

These attachments provide critical information about the existing entity, its members, and the proposed company. The affidavit from members ensures their consent and commitment to the conversion process. NOCs from regulatory authorities help in identifying any sector-specific compliance requirements or approvals needed for the conversion. The consent and declarations from the first directors establish their eligibility and willingness to take on the responsibilities of directors in the newly registered company. The copies of incorporation documents and constitutional papers provide proof of the existing entity's legal status and governance framework.

Entities should ensure that all the required attachments are duly prepared, signed, and submitted along with Form URC-1. Incomplete or missing attachments may lead to delays or rejection of the registration application. It is advisable to maintain proper records and documentation to support the information provided in the form and the attachments.

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 is a company for registration under section 366?

A company for registration under Section 366 refers to an entity, such as a partnership firm, LLP, or society, that seeks to convert and register itself as a company under the Companies Act, 2013. This provision allows these entities to transition into the corporate structure and be governed by the regulations and compliance requirements specified in the Act.

What is Form 1 of the Companies Act?

Form 1 of the Companies Act, also known as Form INC-1, is an application form used for reserving a name for a proposed company. It is the first step in the company incorporation process, where the promoters or applicants propose a name for the company and seek approval from the Registrar of Companies (ROC) before proceeding with the incorporation formalities.

What are the Authorised to register rules for companies?

The Authorised to Register Rules for companies are a set of rules prescribed under the Companies Act, 2013, which govern the registration of entities as companies under Section 366. These rules provide the eligibility criteria, procedures, and requirements for entities seeking to convert into companies. The rules specify the forms to be filed, attachments to be submitted, and the overall process to be followed for a successful registration under Section 366.

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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Which ITR Form is Applicable for a Company?

Which ITR Form is Applicable for a Company?

Filing an Income Tax Return (ITR) is mandatory for all companies in India, regardless of profit or business activity. Even if your company is dormant, you must comply with tax regulations. The applicable ITR form depends on factors such as income source, earnings, and business structure. Most companies file ITR-6, while ITR-5 is used for LLP companies and partnership firms. If you own a company, choosing the right ITR is essential to ensure compliance and avoid penalties. Proper company tax return filing helps meet legal obligations efficiently.

Table of Contents

Income Tax Return

An Income Tax Return is a document submitted to the Income Tax Department to report your income, deductions, and tax payments for a financial year. There are seven types of ITR forms, including ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, and ITR-6, each applicable to different taxpayers. Filing ITR before the due date is essential to avoid penalties and legal issues.

Applicable ITR Forms for Companies

The type of ITR for a company depends on its structure and income classification. Different business entities must file specific ITR forms to comply with tax regulations:

  • ITR-4: Suitable for firms (excluding LLPs) with income up to ₹50 lakhs under Sections 44AD, 44ADA, and 44AE.
  • ITR-5: Applicable for LLPs and partnership firms, except those required to file ITR-7.
  • ITR-6: Used by companies that do not claim tax exemptions under Section 11 (income from property used for charitable or religious purposes).
  • ITR-7: Mandatory for entities filing under Sections 139(4A), 139(4B), 139(4C), and 139(4D), such as trusts and political parties.

ITR-4 Form (Sugam) – For Firms Other Than LLPs

ITR-4 is designed for individuals, Hindu Undivided Families (HUFs), and partnership firms (excluding Limited Liability Partnerships) that opt for the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE. This scheme simplifies tax calculations for small businesses and professionals.

Applicability Criteria:

  • Eligible Taxpayers: Individuals, HUFs, and firms (excluding  Limited Liability Partnership) with business or professional income.
  • Residency Requirement: Only applicable to a resident other than not ordinarily resident.
  • Income Sources:
    • Business income under Section 44AD (small businesses).
    • Professional income under Section 44ADA (specified professions).
    • Income from goods transportation under Section 44AE.

In certain cases, if your business meets specific conditions, you may also need to submit Form 3CA/3CB and Form 3CD for a tax audit.

ITR-5 – For LLPs and Partnerships

ITR-5 is an income tax return form applicable to Limited Liability Partnerships, partnership firms, and other non-individual entities such as Associations of Persons (AOPs), Bodies of Individuals (BOIs), artificial juridical persons, and investment funds.

These entities must file ITR-5 to report their income, deductions, and tax liabilities to the Income Tax Department. Filing this form ensures compliance with tax laws and helps avoid penalties. However, companies required to file ITR-7 cannot use ITR-5 for tax filing.

ITR-6 – For Companies That Are Not Claiming Exemption Under Section 11

ITR-6 is an income tax return form for companies that are not claiming exemptions under Section 11, which applies to income from property held for charitable or religious purposes.

Filing ITR-6 accurately is compulsory for all companies that do not qualify for exemptions under Section 11. Timely filing is essential to avoid penalties and ensure compliance.

ITR-7 – For Companies

ITR-7 is an income tax return form for companies, firms, trusts, and other entities required to file returns under Sections 139(4A), 139(4B), 139(4C), and 139(4D) of the Income Tax Act, 1961. It applies to organisations that do not qualify for other ITR categories but must still comply with tax regulations.

Entities Required to File ITR-7:

  • Registered charitable or religious trusts
  • Societies and other institutions for charitable purposes
  • Educational institutions and universities
  • Scientific research associations
  • News agencies
  • Political parties registered under Section 29A of the Representation of the People Act, 1951
  • Bodies set up for religious or charitable purposes

Filing ITR-7 is essential for these entities to comply with tax laws, report income, and claim applicable exemptions.

Details Required in an ITR Form

The information required in an Income Tax Return form depends on the type of taxpayer and income sources. However, certain key details must be included in all ITR filings.

  • Personal Information: Name, PAN, date of birth, contact details, and residential address and other personal details.
  • Income Sources: Details of salary, business or profession, capital gains, rental income, interest, and other earnings.
  • Deductions & Exemptions: Deductions and exemptions include the tax benefits you claim under different sections of the Income Tax Act, 1961.
  • Tax Payments: Information on the taxes you have already paid, such as advance tax, self-assessment tax, and Tax Deducted at Source (TDS).
  • Foreign Assets & Income: If applicable, disclosure of overseas bank accounts, investments, and earnings.

Filing an ITR with correct details ensures timely processing and avoids unnecessary scrutiny from tax authorities.

Important Deadlines for Filing Company ITR

Due Dates for Filing ITR-6

  • If audit is required under the Income Tax Act – 31st October of the assessment year.
  • If a report in Form No. 3CEB (for international transactions) is required – 30th November of the assessment year.
  • If audit is not required – 31st July of the assessment year.

Due Dates for Filing ITR-7

  • For entities not requiring an audit – 31st July of the assessment year.
  • For entities requiring an audit – 30th September of the assessment year.

It is important to note that ITR filing deadlines may change based on updates or extensions announced by the Income Tax Department. You should stay informed about official notifications to avoid missing any revised due dates.

As per Section 234F, a late filing fee of ₹5,000 is applicable if the return is filed after the due date under Section 139(1). However, if the total income is ₹5 lakh or less, the penalty is reduced to ₹1,000.

Common Mistakes to Avoid While Filing Company ITR

Incorrect Form Selection

Selecting the wrong ITR form is one of the most frequent mistakes companies make. The type of ITR form a company must file depends on its structure and nature of operations. ITR-5 is applicable for LLP and partnership firms, whereas ITR-6 is meant for most companies except those claiming exemptions under Section 11. ITR-7 is required for entities like trusts and NGOs. Filing the incorrect form can lead to rejection or discrepancies in tax assessment.

Incomplete Financial Disclosures

A company is required to disclose all sources of income, deductions, and financial transactions in its ITR. Failing to provide complete details of revenue, expenses, capital gains, investments, liabilities, and foreign assets can result in tax penalties or audits. Accurate disclosure ensures that tax authorities have a clear understanding of the company’s financial position.

Missing Audit Report Submission

Companies that meet specific turnover or income thresholds are required to undergo a tax audit as per the Income Tax Act. If a tax audit is applicable, the company must submit the audit report before filing the ITR. Missing this step can lead to legal consequences, penalties, or delays in return processing. It is important to verify whether the company falls under the audit requirement and ensure timely submission of audit reports.

Frequently Asked Questions

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Register your One Person 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

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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

Can a company file ITR-7?

No, a company cannot file ITR-7. This form is applicable only to entities such as trusts, political parties, religious institutions, and charitable organisations that are required to file returns under Sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income Tax Act.

Can a company file ITR-4?

No, ITR-4 filing is not meant for companies. It is designed for individuals, Hindu Undivided Families, and partnership firms (excluding limited liability partnership) that opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE. Companies must file either ITR-5 or ITR-6, depending on their structure.

Is ITR-3 for business income?

Yes, ITR-3 is for individuals and HUFs earning income from a proprietorship business or profession that does not fall under presumptive taxation. It also applies to those with investments in unlisted shares or income as a partner in a firm.

Who should file ITR-1 and ITR-2?

  • ITR-1 (Sahaj): This form is for resident individuals with total income up to ₹50 lakh from salary, pension, one house property, and other income (like interest). However, if you have business income, you cannot file ITR-1.
  • ITR-2: This form is for individuals and HUFs who do not have income from business or profession but may have income from capital gains, multiple house properties, foreign assets, or high earnings.

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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 Difference Between Sole Proprietorship and One Person Company

Difference Between Sole Proprietorship and One Person Company

When deciding between a One Person Company (OPC) and a Sole Proprietorship (SP), understanding their core differences is crucial. An OPC is a legal entity with limited liability, separate from its owner, which can be beneficial for protecting personal assets. In contrast, a Sole Proprietorship is not a separate legal entity; here, the owner bears full responsibility for business liabilities, making it simpler but riskier.

Factors such as liability, compliance requirements and tax benefits may impact your choice between OPC and SP. While OPC offers better legal protection, SP provides simplicity and minimal regulatory obligations.

This guide will evaluate opc vs sole proprietorship in detail. 

Table of Contents

What is One Person Company (OPC)?

A One Person Company (OPC) is a company structure in India that allows a single individual to establish a business with limited liability. It provides the benefits of a corporate entity while retaining the simplicity of sole ownership.

Unlike a sole proprietorship, an OPC is a separate legal entity. This means it can own assets, enter into contracts, and protect the owner's personal assets from business liabilities.

OPCs operate under regulatory requirements similar to private limited companies but are tailored for single ownership. Additionally, the member must appoint a nominee to take over the business in case of the owner's incapacity or death.

What is Sole Proprietorship?

A sole proprietorship is a simple business structure, where the business is owned and managed by one individual. This makes it ideal for small businesses or individual entrepreneurs. The meaning of a sole proprietor is essentially someone who is the sole beneficiary of all business profits and is personally liable for any debts incurred by the business. There is no particular Sole Proprietorship Act in India. 

Unlike a One Person Company, a sole proprietorship does not separate the business entity from the owner. This means that all legal, financial and operational responsibilities rest with the proprietor, who has full control over decision-making and retains all profits.

Operating as a sole proprietor allows for flexibility and ease in starting or closing a business. There are minimal regulatory formalities, although certain licences may be required for specific sectors, like medical or food services. 

One Person Company vs Sole Proprietorship

Here is a detailed analysis of the difference between sole proprietorship and one person company:

Criteria Sole Proprietorship One Person Company (OPC)
Definition An unincorporated business owned and operated by a single individual, making it the simplest business form. A business structure introduced under the Companies Act 2013, allowing a single person to own a company with limited liability.
Liability The owner has unlimited personal liability, meaning their personal assets are at risk for business debts. Offers limited liability protection to the owner, so personal assets are generally safeguarded from business liabilities.
Formation and Compliance Minimal formalities required for setup, as it is not registered under any specific act. Requires registration with the Registrar of Companies (RoC) and submission of documents like MoA and AoA.
Continuity Business depends entirely on the owner’s existence; it ends if the owner dies or is incapacitated. Separate legal entity status allows the OPC to continue even if the owner passes away, with a nominee assuming control.
Fundraising Limited to personal savings, bank loans or funds from informal sources, which can hinder growth. Better positioned for fundraising through equity shares, allowing more potential for expansion.
Taxation Income is taxed as per individual income tax slabs, making tax management straightforward. Taxed as a company with applicable corporate tax rates, requiring additional annual filings with RoC.
Business Name Generally uses the owner’s name or a trade name, with no specific suffix required. Must include “OPC” in the company name, as mandated by law.

Sole Proprietorship Advantages and Disadvantages

Advantages of Sole Proprietorship

Quick Decision-Making

With full control, the sole proprietor can make prompt decisions, aiding responsiveness and agility in business operations.

Confidentiality

All business information remains private to the owner, enhancing operational discretion.

Ease of Formation and Low Costs

Starting a sole proprietorship involves fewer legal requirements, keeping setup costs low.

Direct Incentives

The owner retains all profits, providing direct motivation for business success.

Disadvantages of Sole Proprietorship

Unlimited Liability

The proprietor’s personal assets can be used to cover business debts, increasing financial risk.

Limited Access to Capital

Raising funds can be challenging, as sole proprietors often rely on personal savings or small loans.

Lack of Business Continuity

The business may end with the owner's incapacity, death or insolvency, impacting long-term stability.

Limited Specialisation

Managing all aspects of the business alone can hinder growth and focus on key areas.

One Person Company (OPC) Advantages and Disadvantages

Advantages of One Person Company

Limited Liability

The owner's liability is limited to the capital invested, safeguarding personal assets from business debts.

Separate Legal Entity

Being legally distinct enhances the company's credibility and professionalism.

Tax Benefits

OPCs enjoy certain tax benefits, such as lower rates and deductions on business expenses.

Single Ownership with Control

The owner retains full control over operations, simplifying decision-making.

Disadvantages of One Person Company

Limited Funding Options

OPCs cannot raise funds from the public, which may restrict growth opportunities.

Compliance Requirements

Annual filings, account maintenance and meetings are required, adding to operational tasks.

Nominee Requirement

The need for a nominee can be limiting for owners wanting complete control.

Naming Restrictions

"One Person Company" must be part of the company’s name, reducing flexibility in branding.

Frequently Asked Questions:

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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
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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, OPC or sole proprietorship?

When evaluating one person company vs sole proprietorship, the decision depends on your business goals. An OPC offers limited liability, protecting personal assets and provides credibility as a separate legal entity, which may attract investors. In contrast, a sole proprietorship is simpler to set up with fewer compliance requirements, but the owner is personally liable for business debts. 

Can a sole proprietorship be converted to OPC?

Yes, a sole proprietorship can be converted to an OPC. The process involves registering a new OPC and transferring the business’s assets and liabilities, following the regulations laid out by the Ministry of Corporate Affairs (MCA).

What are the tax benefits of OPC?

An OPC enjoys various tax benefits compared to a sole proprietorship. For example, OPCs can claim deductions on business expenses, such as salaries, office rent and travel costs. Additionally, OPCs benefit from lower corporate tax rates compared to individual tax rates applicable to sole proprietorships. 

How is OPC taxed?

An OPC is taxed as a private limited company, subject to corporate tax rates rather than individual tax rates. The current corporate tax rate in India for domestic companies is typically lower than the personal income tax rate applicable to sole proprietorships. 

Why is OPC a private company?

An OPC is classified as a private company because it operates with a single owner and has similar structural features to a private limited company, such as limited liability, a separate legal entity and compliance requirements. 

Can a sole proprietorship have employees?

Yes, a sole proprietorship can hire employees. The business owner, however, remains personally liable for any obligations or liabilities arising from employment, as the structure lacks limited liability protection.

Is a one person company the same as sole proprietorship?

No, a one person company is not the same as a sole proprietorship. While a one person company has a separate legal entity, a sole proprietorship does not have it. Moreover, the liability of the owner is limited in a one person company, as opposed to a sole proprietorship, where the owner’s liability is unlimited. 

Mukesh Goyal

Mukesh Goyal is a startup enthusiast and problem-solver, currently leading the Rize Company Registration Charter at Razorpay, where he’s helping simplify the way early-stage founders start and scale their businesses. With a deep understanding of the regulatory and operational hurdles that startups face, Mukesh is at the forefront of building founder-first experiences within India’s growing startup ecosystem.

An alumnus of FMS Delhi, Mukesh cracked CAT 2016 with a perfect 100 percentile- a milestone that opened new doors and laid the foundation for a career rooted in impact, scale, and community.

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Minimum Paid-Up Capital for Private Limited Company

Minimum Paid-Up Capital for Private Limited Company

The concept of "Minimum Paid Up Capital" is key to understanding how a private limited company is financially structured. In simple terms, paid-up capital is the money that a company receives from its shareholders in exchange for ownership (shares). 

In most cases, in India, there’s no fixed minimum paid-up capital for private limited companies. Even though it’s not a legal requirement to have a high paid-up capital, having a reasonable amount can make the company appear more financially sound, which could be crucial for attracting investors or lenders down the road.

Table of Contents

Eligibility Criteria for Private Limited Company Registration in India

  1. Number of Directors

A private limited company must have at least two directors. The directors can be Indian citizens, and one of them must be a resident of India.

  1. Shareholders

A minimum of two shareholders is required to register a private limited company. Shareholders can be individuals or corporate entities, with a maximum of 200 shareholders allowed.

  1. Citizenship Requirements

While directors must be Indian citizens, shareholders can be from any nationality. The company must have at least one Indian director to ensure it meets the statutory requirements.

  1. No Minimum Capital Requirement

Unlike earlier regulations that prescribed a minimum paid-up capital, the current rules under the Companies Act of 2013 do not mandate a minimum paid-up capital for private limited companies. Companies are free to decide on a capital structure according to their requirements.

Purpose of an Authorised Capital

Authorised capital is the financial ceiling within which a company can issue shares to its investors. It is the maximum amount of capital a company is permitted to raise by issuing shares, as stated in its Memorandum of Association (MOA)

The private limited company;s authorised capital provides clarity on the company's financial structure, preventing any future confusion over the number of shares it can issue and the value it represents.

Salient Features of an Authorised Capital 

The defining features of authorised capital include:

  • Fixed Limit: The company cannot issue shares beyond this limit without altering the MOA.
  • Inflexibility: Authorised capital is typically set at the time of company registration and can only be changed by passing a special resolution and amending the MOA.
  • Not Necessarily Paid: Authorised capital is not the actual amount received by the company; it’s simply the potential limit for share issuance.

Understanding authorised capital is essential because it affects how companies structure their finances and plan for future growth.

Pvt Ltd Company Registration CTA

Significance of Minimum Paid-Up Capital for Private Limited Company

The minimum paid-up capital plays a critical role in ensuring that the company has sufficient funds to carry out its initial operations and that it has a solid financial standing. While India no longer imposes a minimum requirement, the paid-up capital has important practical implications for a business.

  • Debt Reliance vs. Equity Investment: A company’s paid-up capital affects how much debt it can take on and the level of equity investment it can seek from external investors.
  • Growth Potential: A higher paid-up capital might signal stronger financial health, enabling better growth prospects, as it indicates the company has substantial backing.
  • Market Health Indicator: Paid-up capital can serve as a reflection of market confidence and can influence the company’s ability to attract investments.
  • Equity vs. Debt: While equity involves selling shares to raise capital, which gives shareholders ownership stakes and voting rights, debt involves borrowing funds which must be repaid with interest but does not dilute ownership.

Different Types of Capitals for Private Limited Companies

A private limited company can have different types of capital, including:

  • Issued Capital: The total value of the shares issued to shareholders.
  • Subscribed Capital: The portion of issued capital that shareholders agree to purchase.
  • Called Up Capital: The portion of subscribed capital that the company demands from shareholders at a given time.
  • Paid-up Capital: The amount shareholders have actually paid for their shares.
  • Uncalled Capital: The part of subscribed capital that the company has not yet demanded.
  • Reserve Capital: A portion of the company’s capital that is reserved for specific uses and cannot be called upon unless approved.
  • Authorised Capital: The maximum capital a company is authorised to raise through the issuance of shares. It sets the upper limit for the company’s equity base.

Each of these capital categories plays a significant role in structuring a company's equity and determining its financial health.

Authorised Capital Differs from Paid-Up Capital

There is often confusion between authorised capital and paid-up capital. Here’s a detailed comparison of authorised capital vs. paid-up capital:

Aspect Authorised Capital Paid-up Capital
Definition The maximum amount of share capital a company is legally allowed to issue. The actual amount of share capital that shareholders have paid to the company.
Requirement for Business Not necessarily issued in full; acts as a cap. For operational expenses and compliance; must be reflected in company accounts.
Modification Can be increased by altering the MOA and passing a special resolution. Can only increase if the company issues additional shares and shareholders pay for them.
Example If authorised capital is ₹10,00,000, the company cannot issue shares beyond this amount. If out of ₹10,00,000 authorised, ₹5,00,000 is issued and paid by shareholders, the paid-up capital is ₹5,00,000.

While authorised capital sets the upper limit, paid-up capital reflects the actual funds available for business use.

Various Sources of Paid-Up Capital for a Private Limited Company

Paid-up capital can be sourced from various methods:

  • Par Value of the Shares: The nominal value assigned to each share, typically very low.
  • Premium/Discount Value of the Stock: Shares may be issued at a premium (above the par value) or at a discount (below the par value).
  • Premium Shares: Shares issued at a price higher than their par value, with the difference considered as premium capital.
  • Discounted Shares: Shares issued below their par value, which may be used as an incentive for investment.

Each of these methods impacts the financial structure of the company and can influence investor interest and company growth.

Head to Razorpay Rize’s Private Limited Company Registration to Incorporate your Company!

What is the Requirement of Minimum Paid Up Capital for a Private Limited Company?

Currently, the Companies Act of 2013 does not specify a minimum paid-up capital requirement for private limited companies. This change has provided greater flexibility for entrepreneurs to start businesses without the need to meet strict capital requirements. 

However, it remains crucial to set the minimum paid-up capital for private limited companies that reflects the company’s business model and operational needs.

Conclusion

In conclusion, while there is no mandatory minimum paid-up capital requirement for a private limited company in India, it remains a critical element of the company’s financial structure.

For entrepreneurs and startups, having a well-thought-out capital structure sends a strong signal to stakeholders, such as investors, banks, and potential business partners, about your financial stability and commitment. It demonstrates that your business has the resources to meet its obligations, handle unexpected challenges, and seize new opportunities. 

This is particularly important in building market credibility, attracting investors, and maintaining trust with suppliers and customers.

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)

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BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

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  • 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
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Private Limited Company
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BEST SUITED FOR
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  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
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BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is the minimum turnover for a Pvt Ltd company?

There is no minimum turnover requirement for a private limited company in India. A company can operate with zero turnover as long as it complies with regulatory requirements, such as filing annual returns, paying applicable taxes, and maintaining statutory records.

What is the cost of running a Private Limited Company?

The cost of running a private limited company in India varies depending on factors such as compliance, taxation, and operational expenses. On average, the annual costs include:

  • Compliance Costs
  • Professional Fees
  • Other Costs

Can a single person own a Pvt Ltd?

No, a private limited company requires a minimum of two members (shareholders) and two directors. However, one individual can fulfil both roles, while the second shareholder can own a single share, such as a family member or close associate. For businesses looking for sole ownership, One Person Company (OPC) might be a better alternative.

Which is better, an LLP or a company?

The choice between an LLP (Limited Liability Partnership) and a private limited company depends on your business needs:

Private Limited Company LLP
Ownership Shareholders own the company. Partners own the LLP.
Compliance Higher compliance requirements and costs. Lesser compliance and cost-efficient.
Liability Limited to the extent of shares held. Limited to the partner’s agreed contribution.
Fundraising Potential Better suited for raising funds through equity. Not ideal for external investments.

Choose a private limited company for startups seeking funding or scalability and LLP for smaller businesses or professional services.

Can I buy a property in a Pvt Ltd company?

Yes, a private limited company can purchase property in its name. This includes commercial, residential, or industrial properties, which can be used for business operations or as investments. However, the purchase should align with the company’s objectives as stated in its Memorandum of Association (MOA).

What is the minimum paid-up capital of a private Ltd company?

As per the Company Act, there is no mandatory minimum paid-up capital requirement for a private limited company in India. Companies can start with any nominal amount of paid-up capital, depending on their operational needs.

What is paid-up capital for a private company?

Paid-up capital refers to the amount of money that shareholders have invested in the company by purchasing its shares. It is the actual capital received by the company from its shareholders. For example, if a company issues shares worth ₹10 each and 1,000 shares are subscribed and fully paid, the paid-up capital is ₹10,000. 

What is Authorised capital in a private limited company?

Authorised capital is the maximum amount of share capital that a company is authorised to issue to its shareholders, as stated in its Memorandum of Association (MOA). For example, if the authorised capital is ₹1 lakh, the company cannot issue shares beyond this limit without amending the MOA. 

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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We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

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Hey, Guys!
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