How to Start a Franchise Business in India?

Mar 28, 2025
Private Limited Company vs. Limited Liability Partnerships

Starting a franchise business in India is a lucrative opportunity for aspiring entrepreneurs. Franchising allows individuals to operate a business under an established brand with a proven business model. It offers benefits like brand recognition, operational support, and reduced risk compared to starting an independent venture.

This blog will walk you through everything you need to know about franchising in India.

Table of Contents

What Is The Meaning of Franchising a Business?

Franchising is a business model where a franchisor grants the rights to an individual (franchisee) to operate under its brand, using its products, services, and business processes. The franchisee pays a fee and agrees to operate under the franchisor’s guidelines in exchange for brand licensing, training, operational support, and marketing assistance.

The franchising model benefits both parties:

  • Franchisor Benefits: Rapid expansion, increased brand reach, and revenue from franchise fees.
  • Franchisee Benefits: Access to a recognised brand, reduced startup risk, and operational guidance.

Key aspects of franchising include:

  • Brand Licensing: The franchisee gets permission to use the franchisor's brand name and trademarks.
  • Operational Support: Training, marketing, and business strategy support are provided.
  • Profit-sharing Agreements: Franchisees pay royalties or a percentage of revenue to the franchisor.

Types of Franchises

Franchises can be categorised based on their structure and operational model:

Product Distribution Franchise:

  • Franchisee sells the franchisor’s products under its brand.
  • Examples: Automobile dealerships (Maruti Suzuki), and soft drink bottlers (Coca-Cola).

Business Format Franchise:

  • Franchisee adopts the entire business model, including operations, branding, and marketing.
  • Examples: McDonald’s, Domino’s, KFC.

Manufacturing Franchise:

  • Franchisee manufactures and sells the franchisor’s products under its brand name.
  • Example: Food and beverage brands allowing third-party bottlers.

Job Franchise:

  • A low-cost model where individuals operate small-scale service businesses.
  • Examples: Cleaning services, travel agencies, real estate consultancy.

How Long Does It Take To Franchise a Business?

Franchising a business typically takes between six months to two years, depending on factors like:

  • Industry type and regulatory requirements.
  • Business readiness and operational scalability.
  • Development of legal and training documents.
  • Marketing efforts to attract franchisees.

How Much Should It Cost To Franchise a Business?

The cost to franchise a business can vary significantly based on factors like industry, business model, and support provided. On average, franchising a business may cost between ₹5 lakh to ₹50 lakh or more in India. Key expenses include:

  • Franchise Fee: ₹2 lakh to ₹10 lakh (varies by brand reputation).
  • Legal and Registration Fees: ₹50,000 to ₹2 lakh.
  • Training and Support Costs: ₹1 lakh to ₹5 lakh.
  • Marketing and Branding Expenses: ₹1 lakh to ₹3 lakh.
  • Infrastructure Setup: Varies depending on the business type.

Additional factors like franchise location, infrastructure requirements, and marketing strategy impact the overall investment.

Advantages of Franchising a Business

  1. Rapid Expansion: Scale business operations quickly with minimal capital investment.
  2. Lower Financial Risk: Franchisees fund their business setup, reducing financial burden.
  3. Brand Recognition: Established branding makes it easier to attract customers.
  4. Operational Support: Franchisees receive training, marketing, and business guidance.
  5. Access to Motivated Franchisees: Entrepreneurs invest time and money, ensuring dedication to success.

Disadvantages of Franchising a Business

  1. Loss of Control: Franchisees operate independently, which can lead to inconsistencies.
  2. Reputation Risk: Poorly managed franchises can damage brand image.
  3. Legal & Financial Complexity: Requires detailed agreements and ongoing compliance.
  4. Ongoing Training & Support: Continuous investment in franchisee development is necessary.

Franchise Vs Licensing: What’s The Difference?

Franchising Licensing
Control High Control Low control
Legal obligations Extensive with detailed agreements Less strict, focussed on intellectual property rights
Investment Higher due to training, support, and operational costs Lower primarily for brand usage
Brand usage Franchisee must follow strict brand guidelines Licensee can identify how the brand can be used
Revenue model Royalties, franchise payments, ongoing payments One-time or periodic licensing fees

How to Start a Franchise Business - 8 Key Steps

Step 1: Determine If Franchising is Right For Your Business

Before diving into franchising, evaluate whether your business is scalable, profitable, and replicable. Ask yourself:

  • Is there consistent demand for my product or service?
  • Can my business model be easily duplicated in different locations
  • Do I have strong branding and operational processes in place?

Not all businesses are fit for franchising. A successful franchise model requires a proven track record, solid profit margins, and strong brand appeal to attract potential franchisees.

Step 2: Protect Your Business’s Intellectual Property

Your brand is one of your most valuable assets. Before offering franchises, secure trademarks, copyrights, and proprietary processes to prevent misuse and ensure brand consistency.

Step 3: Prepare Your Franchise Disclosure Document (FDD)

The Franchise Disclosure Document (FDD) is a legal document that provides prospective franchisees with full transparency about their business. This document must comply with franchise laws and typically includes:

  • Franchise fees and ongoing costs
  • Training and support provided
  • Franchisor and franchisee responsibilities
  • Earnings potential (if disclosed)
  • Legal obligations and dispute resolution process

A well-structured FDD builds trust with potential franchisees and helps you stay compliant with franchise laws.

Step 4: Draft a Franchise Agreement

The franchise agreement is a legally binding contract outlining the rights and responsibilities of both the franchisor (you) and the franchisee. Key elements to include:

  • Operational guidelines – How franchisees must run the business
  • Fee structure – Initial franchise fees, royalties, and marketing fund contributions
  • Territory rights – The defined area where the franchisee can operate
  • Training and support – What assistance franchisees will receive
  • Exit clauses – Terms under which a franchise can be sold or terminated

This document ensures both parties are aligned and protects your brand from misuse.

Step 5: Register Your Company

Depending on your state and region, you may need to register your franchise with government authorities before selling franchise units. Registration is not mandatory, but it is required to obtain GST registration depending on the turnover.

Head over to Razorpay Rize to Register your Company.

Step 6: Compile an Operation Manual

A franchise operations manual is a step-by-step guide that helps franchisees run the business successfully while maintaining brand consistency. It should cover:

  • Day-to-day business processes
  • Hiring and training staff
  • Customer service guidelines
  • Marketing and advertising strategies
  • Financial management and reporting

Step 7: File or Register Your FDD

Once your FDD is finalised, keep it securely stored for easy access and updates as needed. While the FDD is a mandatory document, filing requirements vary by state.

Step 8: Set Strategy To Achieve Your Sales Goal

Develop marketing and recruitment strategies to attract the right franchise partners. The strategy should be tailored to your business, community, and growth objectives. Here are some effective ideas to consider:

  • Provide a referral incentive for those who bring in qualified franchisee applicants.
  • Develop a strategic marketing plan from the start to capture attention.
  • Recruit sales professionals who understand your business and its story.

5 Strategies to Help You Succeed at Franchising

  1. Maintain Brand Consistency: Implement strict guidelines for uniformity across locations.
  2. Select the Right Franchisees: Screen candidates for skills, experience, and commitment.
  3. Provide Ongoing Training & Support: Regularly update franchisees with best practices.
  4. Implement Effective Marketing Strategies: Invest in advertising and localised promotions.
  5. Ensure Strong Financial Management: Monitor franchise performance and optimize cost structures.

Case Studies of Successful Franchise Businesses

Franchising is a proven business model that allows entrepreneurs to leverage established brands and systems for success. Below are examples of successful franchise businesses, showcasing their revenue, profit margins, and operational highlights.

1. McDonald's

  • Industry: Quick-Service Restaurant (QSR)
  • Investment: ₹6–14 crores
  • Profit Margin: 50–60%
  • Break-even Period: 4–5 years
    McDonald’s is one of the most profitable franchises globally due to its standardized operations and strong brand recognition. In India, its franchise model offers high footfall and consistent demand, making it a lucrative investment.

2. Baskin Robbins

  • Industry: Ice Cream and Dessert
  • Investment: ₹10–20 lakhs
  • Profit Margin: 50–60%
  • Break-even Period: 6–12 months
    With over 800 outlets in India, Baskin Robbins has built a strong presence in the dessert market. Its diverse flavors and year-round demand ensure steady sales and excellent returns for franchisees.

3. Haldiram

  • Industry: Food and Snacks
  • Investment: ₹30 lakhs–₹6 crores (depending on store format)
  • Profit Margin: 50–60%
  • Break-even Period: 2–3 years
    Haldiram is a trusted name in Indian snacks and sweets. Its franchise model offers multiple formats, including quick-service restaurants and dine-in outlets, ensuring high profitability backed by a loyal customer base.

4. Marco’s Pizza

Marco’s Pizza achieved remarkable growth with a revenue increase of 23.5% in one year by opening 113 stores. The brand focuses on strategic revenue-boosting approaches, making it one of the fastest-growing pizza franchises globally.

5. Lenskart

  • Industry: Eyewear Retail
  • Investment: ₹25 lakhs
  • Profit Margin: Approx. 33%
    Lenskart is India’s largest eyewear brand, offering trendy products such as prescription glasses and sunglasses. With innovative features like "Try Before You Buy," its franchise model generates average monthly sales of ₹9 lakhs, making it ideal for urban markets

Final Thoughts

Franchising can be a great way to start a business without building everything from scratch. You get a known brand, a proven business model, and ongoing support but it’s not a shortcut to success. It still takes effort, investment, and commitment to make it work.

The key is choosing the right franchise. Think about what fits your skills, budget, and long-term goals. A great brand in the wrong location or with poor financial planning can still struggle. Do your homework, understand the costs, and be ready to follow the franchisor’s guidelines.

Frequently Asked Questions

rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

How do I open up my own franchise?

To start your own franchise-

  • You’ll need to create a business model that can be replicated. This involves building a strong brand, developing detailed operational processes, and ensuring your business is profitable.
  • Next, you’ll need to register as a franchisor, create legal agreements (Franchise Disclosure Document & Franchise Agreement), and establish a support system for franchisees.
  • Once everything is in place, you can start recruiting franchise partners.

Do I need to register my franchise?

Yes, in most countries, you need to register your franchise before offering it to potential franchisees. The requirements vary by region—some require a Franchise Disclosure Document (FDD) and legal agreements, while others may have additional licensing requirements.

Which franchise is best for beginners?

For beginners, it’s best to choose a franchise with low initial investment, strong brand recognition, and comprehensive support. Some beginner-friendly franchises include:

  • Food & Beverage: Subway, Dunkin’
  • Retail: Miniso, FirstCry
  • Education & Coaching: Kumon, The Learning Experience
  • Service-Based: Urban Company

Look for franchises with a simple operating model and strong training programs to make the transition smoother.

Which franchise is most profitable?

Profitability depends on location, investment, and management. Before investing, analyse franchise fees, profit margins, and ongoing costs to determine the best fit.

Are franchise fees monthly?

Most franchises charge ongoing royalty fees, which can be monthly, quarterly, or annually. These fees are typically a percentage of your revenue (ranging from 4% to 12%) or a fixed amount. Some franchises also charge additional marketing or operational fees.

Is licensing an alternative to franchising?

Yes, licensing can be an alternative to franchising, but it’s a different business model. In licensing, you grant permission to use your brand, trademark, or product without controlling business operations. In franchising, you provide a complete business model, training, and support while maintaining control over operations. Licensing offers more flexibility but less oversight, while franchising ensures brand consistency but comes with more regulations.

Related Posts

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

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

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

Table of Contents

Budget 2024 Latest Update on Corporate Tax Rate

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

Subdivisions of Direct Taxes

Direct taxes in India are categorized as follows:

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

What is Pvt. Ltd. Tax Rate?

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

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

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

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

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

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

Corporate Income Tax Rate for AY 2022-23

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

For Companies with Turnover Above ₹400 Crore

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

For Companies with Turnover Below ₹400 Crore

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

Key Budget 2022 Updates

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

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

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

{{pvt-cta}}

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

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

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

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

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

Education Cess for Companies

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

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

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

For companies with a turnover exceeding ₹400 crore:

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

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

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

Income Tax Rate for Foreign Company

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

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

Minimum Alternate Tax for Company

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

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

H2 - How to Calculate Total Income for a Company?

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

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

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

Returns Applicable for Domestic Company for AY 2022-23

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

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

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

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

Domestic Company Tax Slab for AY 2024-25

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

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

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

Frequently Asked Questions

rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

How much tax does a private limited company pay?

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

How can I avoid tax in a PVT Ltd company?

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

What is 25% tax on a company?

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

What are the tax benefits of Pvt Ltd?

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

• Expenditure incurred wholly for business purposes is tax-deductible

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

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

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

• Deductions for CSR expenditure incurred on eligible activities

How Much Does It Cost to Register a Company in India in 2025?

How Much Does It Cost to Register a Company in India in 2025?

Starting a business in India involves several legal and regulatory steps, one of the most important being company registration under the Companies Act, 2013. While the process itself has been digitised through the Ministry of Corporate Affairs (MCA) portal, the cost of registering a company in India can vary significantly.

It depends on the type of business you choose, your authorised capital, and even which state you’re in. Add in government fees, professional charges, and compliance costs, and the numbers can look very different for a tech startup versus a small consultancy.

This blog breaks down the different types of company registrations, their associated costs, and additional fees you should be aware of while planning your business launch.

Table of Contents

Types of Company Registrations in India

The choice of business structure impacts both compliance requirements and registration fees. Common options include:

Breakdown of Company Registration Fees

The cost of company registration includes government charges, professional fees, and incidental expenses. Below is an approximate breakdown (may vary by state and authorised capital):

  • Private Limited Company: ₹7,000 - ₹25,000

  • Public Limited Company: ₹15,000 - ₹30,000

  • Limited Liability Partnership (LLP): ₹6,000 - ₹12,000

  • One Person Company (OPC): ₹7,000 - ₹20,000

  • Section 8 Company: ₹10,000 - ₹15,000

Disclaimer: These are approximate ranges. The final cost depends on factors like authorized capital, the state of registration, and the service provider you choose.

A Detailed Breakdown of Company Registration Cost

To understand the price ranges above, it's essential to know what you're paying for. The total cost is a sum of three key components:

A. Government & Statutory Fees

These are mandatory fees paid to the Ministry of Corporate Affairs (MCA) and state governments.

  • SPICe+ Form Filing: This is the primary fee for incorporation. It varies based on the company's authorized share capital. For most small companies with capital up to ₹15 Lakhs, there is no filing fee, but other charges still apply.
  • Stamp Duty: This is the most significant variable. It is a state-levied tax on the Memorandum of Association (MoA) and Articles of Association (AoA). Stamp duty in states like Maharashtra or Delhi is different from Tamil Nadu or Karnataka, causing major price variations.
  • PAN and TAN Application: A fee of approximately ₹110 is charged for issuing the company's Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
  • Name Approval (RUN): While you can file the name within the SPICe+ form, a separate name reservation application costs ₹1,000.

B. Professional Fees

This is the fee paid to a Chartered Accountant (CA), Company Secretary (CS), or a law firm for their expertise.

  • What it covers: Drafting legal documents (MoA & AoA), filing the forms correctly, providing consultation, and ensuring the process is smooth and error-free.
  • Why it varies: Fees depend on the complexity of the registration, the professional's experience, and the city of operation. This fee is the primary reason for the wide cost range seen in the market.

C. Ancillary Costs

These are other necessary expenses incurred during the process.

  • Digital Signature Certificate (DSC): Required for all directors/partners to sign the electronic forms. A DSC for two directors typically costs between ₹1,000 - ₹2,000.
  • Registered Office Address: While not a fee, you must have proof of a registered office. If you don't own a property, costs for a rental agreement, NOC, or a virtual office service will apply.
  • Miscellaneous Expenses: Small costs for notarization, printing, and courier services.

Costs of Other Essential Registrations for Company Incorporation

Once your company is registered, you will need other licenses to operate legally. Here are the most common ones and their associated costs.

Registration Government Fee Typical Professional Fee (Approx.)
GST Registration ₹0 (Free) ₹1,500 - ₹3,000
MSME (Udyam) Registration ₹0 (Free) ₹1,000 - ₹2,500
Import Export Code (IEC) ₹500 ₹2,000 - ₹3,000
Trademark Registration ₹4,500 (for Small Enterprises/Individuals) ₹3,000 - ₹7,000
Professional Tax (State-specific) Varies by state (e.g., ₹2,500 annually in Tamil Nadu) ₹1,000 - ₹2,000

Factors Affecting Company Registration Fees

Several factors influence the overall cost of registration:

  1. Type of company: Pvt. Ltd., LLP, OPC, etc.
  2. Authorised share capital: Higher capital means higher government fees.
  3. State of incorporation: Stamp duty varies across states.
  4. Professional help: Costs increase if you hire legal or financial consultants.
  5. Compliance requirements: Annual filings, GST, and audits add to expenses.

Key Costs Involved in Company Registration

When budgeting for company registration in India, consider the following expenses:

  • Office Address Proof- Home, rented, or virtual office setup costs.
  • Digital Signature Certificate (DSC)
  • Director Identification Number (DIN)
  • Name Approval Fee
  • Stamp Duty – State-dependent
  • Registration Filing Fees- Depends on authorised capital.
  • Professional Fees
  • PAN & TAN Application
  • Miscellaneous Costs- Printing, notarisation, shipping, etc.

Tips to Reduce Company Registration Costs

  • Choose the right business structure: Avoid overcomplicating; pick a structure that fits your scale and goals.
  • Hire affordable professionals: Compare fees before finalising consultants.
  • Stay compliant: Timely filings prevent late fees and penalties.

Important update- Additional fees apply for the delay in filing forms

The MCA has tightened rules around compliance. Delayed filing of statutory forms now attracts additional fees, which can be significantly higher than the standard charges.

For example:

  • Delay of up to 30 days: 2x of normal fees
  • Delay of 30- 60 days: 4x of normal fees
  • Delay beyond 180 days: 12x of normal fees

This makes it important for companies to track deadlines, file forms on time, and seek professional assistance when needed to avoid heavy penalties.

Frequently Asked Questions (FAQs)

rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

How frequently are the registration fees and compliance costs updated?

The Ministry of Corporate Affairs (MCA) and respective state governments revise registration fees and compliance costs from time to time. Updates usually happen when:

  • There are amendments to the Companies Act, 2013 or the LLP Act.
  • Stamp duty rates change at the state level.
  • MCA introduces new rules for compliance, penalties, or late fees (for example, the recent hike in additional filing fees for delays).

What factors influence the cost of company registration in India?

The total cost of company registration depends on several factors:

  • Type of company
  • Authorised share capital 
  • State of incorporation & stamp duty
  • Number of directors & shareholders
  • Professional services
  • Compliance requirements

Is GST applicable to company registration fees?

  • Government fees (RoC charges, stamp duty, PAN/TAN, DIN, DSC, etc.) – No GST applies.
  • Professional or consultancy fees (CA, CS, or legal professional services) – 18% GST is applicable on the service charges.

So, while statutory fees don’t attract GST, you will pay GST on professional help.

What are the rules for the company registration of a charge?

A “charge” refers to any security interest created on a company’s assets (like a mortgage or hypothecation) to secure a loan. Under the Companies Act, 2013:

  • Every company creating a charge must register it with the RoC within 30 days of its creation using Form CHG-1 (for other than debentures) or Form CHG-9 (for debentures).
  • If not filed within 30 days, registration can still be done up to 300 days with additional fees.

If the charge is not registered, it becomes void against creditors and liquidators, though still valid between the company and lender.

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.

Read more
Appointment of Director to Your Company: Eligibility, Procedure & More

Appointment of Director to Your Company: Eligibility, Procedure & More

Appointment of a director is a crucial step in establishing a Private Limited Company. A director oversees the company's operations and ensures compliance with legal requirements. 

Additionally, directors play a vital role in protecting shareholder investments and steering the company towards success. In this article, we will delve into the process of appointing a director in a Private Limited Company, the eligibility criteria to be a director and the provisions of the Companies Act 2013 for the appointment of directors.

Table of Contents

Understanding the Role of a Director

Directors are individuals appointed by shareholders to supervise a company's activities, as guided by the Memorandum of Association (MOA) and Articles of Association (AOA). Since a company is a legal entity and cannot act independently, it functions through its directors. The Board of Directors, composed of these individuals, is responsible for the company's management and decision-making.

In a Private Limited Company, directors hold significant importance. They are tasked with making everyday decisions and overseeing the company's administration. Shareholders rely on directors to manage their investments effectively and ensure the company's growth and success.

Types of Directors of a Company

Directors are categorised into various types based on their roles and responsibilities. Let us take a closer look at each type:

Executive Directors

  • Actively involved in the company's daily management.
  • Often hold specific executive roles, such as CEO, CFO or COO.
  • Responsible for implementing the company's strategies and policies.

Non-Executive Directors

  • Do not participate in the company's day-to-day management.
  • Provide independent oversight to the company's board and management.
  • Offer valuable insights and advice based on their expertise and experience.

Independent Directors

  • A subset of non-executive directors with no financial or other vested interests in the company apart from their role as directors.
  • Primary responsibility is to safeguard the interests of the company's shareholders.
  • Ensure transparency and accountability in the company's operations.

Nominee Directors

  • Appointed by third-party authorities or the Government to tackle mismanagement and misconduct.
  • Represent the interests of the appointing authority.
  • Monitor the company's activities and report any irregularities.

Appointment of Director to Private Limited Company

Specific requirements must be met when appointing directors in a Private Limited Company, these are:

  • The maximum directors in a private company is 15. 
  • The minimum directors in a private company is 2.
  • The limit of 15 directors can be exceeded by appointing additional directors through a special resolution with the support of 75% or more shareholders.
  • The appointment of directors must be in accordance with the provisions of the Companies Act 2013.

Provisions of the Companies Act, 2013

The Companies Act 2013 includes several key provisions related to the appointment and roles of directors:

  • Section 149: Details mandatory requirements, such as having a certain number of directors, including a female director and a resident director.
  • Section 152: Specifies the process for appointing directors at the company's general meeting and mandates the use of the Director Identification Number (DIN).
  • Section 161: Provides guidelines for appointing additional, alternate and nominee directors by the Board.
  • Section 164: Lists the disqualifications for becoming a director, ensuring that only eligible individuals are appointed to the board.

By adhering to these provisions, companies can establish a well-structured and compliant board of directors.

Reasons for Adding or Changing Directors in a Company

There are several reasons why a company may choose to appoint new directors/board of directors or change its existing board composition:

  1. Introducing New Talent: As a company grows, it may become necessary to bring new talent to the board to address new challenges and requirements that come with expansion.
  2. Preventing Ownership Dilution: By appointing additional directors, shareholders can delegate more operational responsibilities without relinquishing strategic control.
  3. Addressing Inefficiency of Current Directors: A company may appoint new directors to maintain efficiency if existing directors are underperforming due to personal issues.
  4. Complying with Statutory Requirements: Companies must maintain a specific number of directors according to the Companies Act 2013. They must promptly appoint new directors to comply with legal requirements if the number falls below the minimum.

Eligibility to Be A Director in a Company

To be eligible for appointment as a director, an individual must meet the following criteria:

  • Be at least 18 years old, as minors are not permitted to hold the director position.
  • Not be disqualified under the provisions of the Company Act 2013, which include:
    • Being an undischarged insolvent
    • Having been convicted of an offence involving moral turpitude
    • Having been convicted of an offence under the Companies Act 2013
    • Having been disqualified by an order of a court or tribunal
  • Have mutual consent from the Board of Directors, shareholders and the individual being considered for the directorship.

It is crucial to ensure that the prospective director meets these eligibility criteria before proceeding with the appointment process.

Documents for Director Appointment

When appointing a director, the following documents are required:

  1. PAN card
  2. Identity proof (Voter ID, driver's license, Aadhaar card, etc.)
  3. Residence proof (utility bills, rental agreement, etc.)
  4. Recent passport-sized photograph
  5. Digital Signature Certificate (DSC)

Procedure for Appointing/Add a Director to a Company

The process of appointing a director involves several key steps:

  1. Reviewing the Articles of Association (AOA)

The first step is to review the company's Articles of Association (AOA) to ensure that it includes a clause permitting the appointment or addition of directors. If the current AOA lacks such a provision, it should be amended to include one before proceeding with the director's appointment.

  1. Conducting a General Meeting for Director Appointment

The company must formally appoint a director by passing a resolution in a general meeting, either during an Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM). 

To arrange an EGM, the company must conduct a board meeting to pass a resolution for holding the EGM. The resolution to appoint the director must be filed in Form MGT-14 with the Registrar of Companies within 30 days.

  1. Applying for Director Identification Number (DIN) & Digital Signature Certificate (DSC)

The individual selected for directorship must apply for a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) if they do not already possess these. After obtaining the DIN, the prospective director must provide the company with their DIN along with a declaration affirming that they are not disqualified from being a director.

  1. Obtaining Consent from the Prospective Director – Form DIR-2

The individual proposed for directorship must express their consent to serve in this role by submitting Form DIR-2, a formal consent to act as a director. An individual can only be appointed as a company director by explicitly giving their consent. This step is crucial to ensure that the prospective director is willing to take on the responsibilities associated with the position.

  1. Issuing a Letter of Appointment to the Director

After obtaining consent from the prospective director, the company should issue a formal Letter of Appointment. This director appointment should detail the terms and conditions of the appointment, including the director's roles, responsibilities and any remuneration or salary. The Letter of Appointment serves as a legal document that outlines the expectations and obligations of both the company and the director.

  1. Filing Forms DIR-2 and DIR-12 with the ROC

Once the resolution for the appointment of a director is passed and the individual has submitted Form DIR-2, the company can officially appoint them as a director. 

The company must file both Form DIR-2 and Form DIR-12 (detailing the particulars of the director's appointment) with the Registrar of Companies (ROC) within 30 days of the director's appointment. Failing to file these forms within the prescribed time frame can result in penalties and legal complications.

  1. Filing Amendment Applications with GST and Tax Authorities

After appointing a new director, the company must file the necessary applications to update the director's details with various regulatory authorities, including the GST Network (GSTN) and other relevant certificates, to reflect the change in directorship. This step ensures that the company remains compliant with all legal and regulatory requirements related to its directors.

Frequently Asked Questions:

rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

How to appoint a director in a company?

To appoint a director in a company, follow these steps:

  1. Review the Articles of Association (AOA) to ensure it allows for the appointment of new directors.
  2. Conduct a general meeting (AGM or EGM) to pass a resolution for the director's appointment.
  3. Ensure the prospective director applies for a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
  4. Obtain consent from the prospective director through Form DIR-2.
  5. Issue a Letter of Appointment to the director.
  6. File Forms DIR-2 and DIR-12 with the Registrar of Companies (ROC) within 30 days of the appointment.
  7. Update the director's details with relevant regulatory authorities, such as the GST Network (GSTN).

What are the criteria for the appointment of a director?

The criteria for the appointment of a director include:

  • Being at least 18 years old.
  • Not being disqualified under the provisions of the Company Act, 2013.
  • Having mutual consent from the Board of Directors, shareholders and the individual being considered for the directorship.

Possessing a valid Director Identification Number (DIN) and Digital Signature Certificate (DSC).

How do you write a Director's appointment letter?

A Director's appointment letter should include the following details:

  • The date of appointment
  • The term of appointment (if applicable)
  • The roles and responsibilities of the director
  • Remuneration or salary details (if any)
  • Expectations regarding attendance at board meetings and other company events.
  • Confidentiality and non-disclosure clauses
  • Termination conditions

What is the manner of appointment of Directors?

Directors are appointed through a formal resolution passed at a general meeting of the company (AGM or EGM). The appointment must be approved by the shareholders and comply with the provisions of the Companies Act, 2013. The appointed director must provide their consent through Form DIR-2 and possess a valid Director Identification Number (DIN) and Digital Signature Certificate (DSC).

How much does it cost to appoint a director?

The cost of appointing a director may vary depending on factors such as:

  • Professional fees for legal and compliance services.
  • Filing fees for Forms DIR-2 and DIR-12 with the Registrar of Companies (ROC).
  • Charges for obtaining a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
  • Any remuneration or salary offered to the director.

It is advisable to consult with a legal professional or corporate service provider to determine the specific costs involved in appointing a director for your company.

How long does a director appointment take?

The timeline for a director appointment may vary depending on factors such as:

  • The availability of the required documents and information.
  • The time taken to conduct the general meeting and pass the appointment resolution.
  • The processing time for obtaining a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
  • The efficiency of filing Forms DIR-2 and DIR-12 with the Registrar of Companies (ROC).

Typically, the entire process of appointing a director can take anywhere from a few days to a couple of weeks, subject to the company's diligence and compliance with legal requirements.

What documents are required for a director appointment?

The documents required for a director appointment include:

  • PAN Card
  • Identification Proof (Voter ID, Driving Licence, Aadhaar Card, etc.)
  • Proof of Residence (utility bills, rental agreements, etc.)
  • Passport Size Photograph
  • Digital Signature Certificate (DSC)
  • Consent to act as a director (Form DIR-2)
  • Declaration of non-disqualification

Rize.Start

Hassle free company registration through Razorpay Rize

in just 1,499 + Govt. Fee
With ₹0 hidden charges

Make your business ready to scale. Become an incorporated company through Razorpay Rize.

Made with ❤️ for founders

View our wall of love

Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
Prakhar Shrivastava
foxsell.app
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.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/
Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
Prakhar Shrivastava
foxsell.app
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.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/