A Comprehensive Guide on Micro Finance Company Registration

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

Micro Finance Companies (MFCs) are changing lives by making financial services accessible to people who are often overlooked by traditional banks. These companies focus on helping low-income individuals, small business owners, and self-employed people by offering small loans and basic financial support.

By doing so, they promote financial inclusion and play a key role in empowering communities and boosting local economies. However, like any financial institution, Micro Finance companies need to be registered and follow specific rules and regulations to operate legally and build credibility.

In this blog, we’ll walk you through everything you need to know about registering a Micro Finance Company in India- from understanding what they do, to the steps, documents, and costs involved in the registration process.

Table of Contents

What is a Micro Finance Company?

A Micro Finance Company is a financial institution that provides small loans and financial services to low-income individuals, self-employed persons, and small enterprises who lack access to conventional banking services.

These companies play a vital role in empowering economically weaker sections, supporting entrepreneurial initiatives, and fostering local economic development by promoting financial inclusion.

Features of Micro Finance Company

Micro Finance Companies are characterised by:

  • Providing small-ticket loans, typically without the need for collateral
  • Targeting low-income, rural, and unbanked populations
  • Offering simplified and accessible loan approval processes
  • Promoting financial literacy and inclusive banking

Objectives of Micro Finance Company

The main objectives of an MFC include:

  • Promoting financial inclusion for low-income individuals
  • Empowering women and self-employed entrepreneurs
  • Supporting small businesses and farming communities
  • Encouraging savings and responsible financial behaviour
  • Driving sustainable economic growth in underserved areas

Need for Micro Finance Company

There is a growing need for MFCs due to the lack of access to formal credit channels among the financially marginalised. Traditional banks often require credit history and collateral, which many low-income individuals cannot provide.

MFCs bridge this gap by offering unsecured loans and financial products tailored to the needs of small businesses, farmers, and micro-entrepreneurs.

Roles of a Micro Finance Company

Micro Finance Companies perform various functions that support economic empowerment:

  • Disbursing microloans to low-income individuals and small enterprises
  • Offering savings schemes and recurring deposit products
  • Providing insurance and risk mitigation solutions
  • Conducting financial literacy and awareness programs

Prerequisites for Microfinance Company Registration

A Micro Finance Company (MFC) can be registered either as an NBFC or as a Section 8 Company. The prerequisites vary depending on the type of entity you choose.

Prerequisites NBFC Section 8
Approval by the RBI It is mandatory It is not required
Net Owned Fund (NOF) Requires a minimum NOF of ₹5 crores There is no minimum requirement
Loan Limit It should be a maximum of 10% of the total assets There is a provision for an unsecured loan of around Rs. 50,000 to small businesses
Director Experience At least one director with 10 years of experience in financial services No prior experience required
No. of members Minimum members:
Private Limited Company- 2
Public Limited Company - 7
Minimum of 2 members
Status of Organisation Profitable Organisation Non-profit Organisation

Documents Required for Micro Finance Company Registration

Key documents include:

  • Identity and address proof of directors
  • Memorandum and Articles of Association
  • Business plan and financial projections
  • RBI approval (for NBFCs)
  • Certificate of Incorporation (for Section 8 companies)
  • Net Owned Fund certificate (for NBFCs)
  • Copy of Auditor’s report
  • Banker’s report copy
  • Recent credit report of the directors
  • Net worth certificate of the directors
  • Proof of work experience in the financial sector
  • Tax and statutory compliance documents

Micro Finance Company Registration as an NBFC

Given the two different approaches to forming a microfinance company, the registration process for an NBFC-MFI follows a specific set of steps:

  1. Company Incorporation:
    The first step is to register your business as either a Public Limited or a Private Limited Company. A private company requires a minimum of 2 members and a capital of ₹1 lakh, while a public company requires at least 7 members.
  2. Capital Requirement:Next, you must raise the minimum required Net Owned Funds (NOF)- ₹5 crore for most regions.
  3. Capital Deposit:
    Once the capital is raised, it must be deposited in a bank as a fixed deposit, and a ‘No Lien’ certificate must be obtained from the bank to confirm the funds are unencumbered.
  4. RBI License Application:
    The company must then apply for an NBFC license by submitting an online application through the RBI’s portal, along with all necessary certified documents. Additionally, a physical copy of the application and documents must be submitted to the RBI’s regional office.
  5. All documents should be readily available with the company at the time of filing.

Micro Finance Company Registration as a Section 8 Company

Alternatively, a Micro Finance company can be registered as a Section 8 Company, which is a not-for-profit entity. The steps involved in this process are:

  1. Obtain DSC:
  2. Begin by applying for the Digital Signature Certificate (DSC) for all proposed directors. The DSC is essential for digitally signing e-forms during the registration process.
  3. Name Approval:
  4. Next, apply for name approval using the SPICe+ form. The chosen name should reflect the company's non-profit nature- suggested words include Foundation, Sanstha, or Micro Credit.
  5. Draft and File MOA & AOA:
  6. Once the name is approved, prepare the Memorandum of Association (MOA) and Articles of Association (AOA). These must be filed along with the necessary supporting documents.
  7. Submit Incorporation Documents:
  8. Finally, all relevant incorporation documents, including Form INC-12, must be filed to obtain the license to operate as a Section 8 company.

Micro Finance Company Registration Fees

Registration fees vary based on the chosen structure:

  • NBFCs: Government registration charges, RBI license fee, legal and consultancy fees, and compliance setup costs.
  • Section 8 Companies: Lower fees due to no capital requirement; includes MCA license charges, incorporation costs, and legal consultations.

Registration Process of the Company with the RBI

Step 1: Register the Brand Name as a Trademark

Before proceeding with the RBI registration, it’s important to secure your brand identity. Registering your brand name or logo as a trademark under the Trademarks Act, 1999, ensures legal protection and exclusive rights to use the name across India.

Step 2: Incorporate the Company and Obtain a Certificate of Incorporation

Begin by registering your business as a Private Limited or Public Limited Company under the Companies Act, 2013 via the Ministry of Corporate Affairs (MCA) portal.
You will receive a Certificate of Incorporation (CoI) upon approval, which acts as the legal foundation for your microfinance company.

Step 3: Deposit Capital and Obtain No Lien Certificate

Raise the required Net Owned Funds (NOF)—₹5 crore (₹2 crore for northeastern states)—and deposit it as a Fixed Deposit in a scheduled commercial bank. Obtain a No Lien Certificate from the bank, confirming the funds are unencumbered and reserved as per RBI norms.

Step 4: Prepare and Submit the Detailed Project Report (DPR)

Create a robust Detailed Project Report covering your business plan, financial projections, risk management policies, organisational structure, and promoter background.

Step 5: Complete RBI Formalities and Gather Certified Documents

Collect all required documents, including:

  • Certificate of Incorporation
  • MOA & AOA
  • PAN & TAN
  • No Lien Certificate
  • Board resolutions
  • Audited financials (if available)

Step 6: Submit Online Application via RBI's Portal

Access the portal and complete the online NBFC-MFI application. Upload all necessary documents and ensure there are no errors or omissions in the form.

Step 7: Submit a Physical Application to the RBI Regional Office

After the online submission, send a hard copy of your application, including all enclosures and supporting documents, to the Regional Office of the RBI under whose jurisdiction your company falls.

Conclusion

Registering a Micro Finance Company enables you to reach underserved communities while operating within a legal and trusted framework.

Each model has its own advantages. NBFCs are ideal for those looking to operate commercially, access capital markets, and build a for-profit lending institution with high compliance standards. On the other hand, Section 8 Companies are best suited for nonprofit or social enterprise models focused on financial literacy, community development, or charitable micro-lending.

Frequently Asked Questions

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

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

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

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

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

Register your business

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

How Do I Start a Microfinance Company?

Each model has its own advantages. NBFCs are ideal for those looking to operate commercially, access capital markets, and build a for-profit lending institution with high compliance standards. On the other hand, Section 8 Companies are best suited for nonprofit or social enterprise models focused on financial literacy, community development, or charitable micro-lending.

  • As an NBFC-MFI (Non-Banking Financial Company - Micro Finance Institution)This is a for-profit model regulated by the RBI, which is ideal if you plan to scale lending operations commercially.
  • As a Section 8 Company (Non-Profit Model)This structure is more suitable for social enterprises or charitable organisations offering microcredit without profit motives.

Key steps:

  1. Incorporate a company (Private/Public Ltd. or Section 8).
  2. Raise the required capital (₹5 crore for NBFC-MFI or as applicable).
  3. Deposit capital and get a No Lien certificate from a bank.
  4. Submit a Detailed Project Report (DPR).
  5. Apply to the RBI for a license (NBFC route) or to the MCA for Section 8.
  6. Await approval and begin operations.

How Do I Get a Microfinance License?

If you're forming an NBFC-MFI, the license must be obtained from the Reserve Bank of India (RBI).

Steps to get the license:

  1. Incorporate a company under the Companies Act
  2. Raise and deposit ₹5 crore as Net Owned Funds
  3. Obtain a No Lien certificate for the FD from the bank
  4. Prepare a Detailed Project Report (DPR) and supporting documents
  5. Apply online via the RBI's portal
  6. Submit physical documents to the RBI Regional Office

For Section 8 Companies, you need to apply to the Ministry of Corporate Affairs (MCA) for a license using Form INC-12.

How Much Capital is Required to Start a Micro Finance Company?

  • If you are starting as an NBFC-MFI, the minimum capital (Net Owned Funds) required is ₹5 crore for most parts of India.
  • For a Section 8 Company, there is no minimum capital requirement. However, the capital should be sufficient to support your operations and fulfil the objectives laid out in your application.

How Do I Register a Micro Company?

If by “micro company” you mean a Microfinance Company, you can register in two ways:

  1. As a Private or Public Limited Company (for NBFC route)
  2. As a Section 8 Company (for nonprofit)

Once your company is incorporated, follow the appropriate process (RBI or MCA) to apply for microfinance permissions.

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.

Read More

Related Posts

Startup India Scheme: Eligibility Criteria, Benefits & Application Details

Startup India Scheme: Eligibility Criteria, Benefits & Application Details

The Startup India Scheme is a flagship initiative by the Government of India aimed at fostering entrepreneurship, innovation, and economic growth. Launched in 2016, this scheme provides startups with financial assistance, tax exemptions, and regulatory benefits to help them scale efficiently. This blog explores the eligibility criteria, benefits, and application process to guide aspiring entrepreneurs on leveraging this initiative for their business growth.

Table of Contents

Definition of "Startup"

As per the Startup India Scheme, a "Startup" is defined by the following criteria:

  • The entity should be incorporated as a Private Limited Company, a Limited Liability Partnership (LLP), or a Registered Partnership Firm.
  • The age of the company should not exceed 10 years from the date of incorporation.
  • The annual turnover should not exceed INR 100 crore in any of the financial years since incorporation.
  • The business should be working towards innovation, improvement of products/processes/services, or scalable business models with high potential for employment generation and wealth creation.
  • Startups should be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) to avail of scheme benefits.

What Is the Startup India Scheme?

The Startup India Scheme was launched in 2016 with the objective of encouraging entrepreneurship, generating employment, and fostering innovation. This initiative is managed by the Department for Promotion of Industry and Internal Trade (DPIIT) and aims to position India as a global startup hub by offering regulatory support, funding access, and tax exemptions.

Why Was Startup India Launched?

India has always been home to entrepreneurs, but before 2016, starting and scaling a business came with significant roadblocks- complex regulations, limited funding options, and restricted market access. Recognising this, the Government of India launched the Startup India initiative on January 16, 2016, to create a more supportive ecosystem for startups.

Here’s why the initiative was needed and how it helps:

  • Reducing Bureaucratic Hurdles
  • Easing Financial Constraints
  • Encouraging Job Creation & Innovation
  • Enabling Market Access & Growth
  • Creating a Culture of Entrepreneurship

Since its launch, over 100,000 startups have been recognised under the scheme, creating jobs, driving innovation, and strengthening India’s position as a global startup hub.

Top Features Of the Startup India Scheme

The Startup India Scheme offers multiple benefits to startups, including:

  • Tax Exemptions: Startups are eligible for a three-year income tax exemption.
  • Funding Support: Access to government funds and venture capital assistance.
  • Simplified Compliance: Reduced regulatory burden with self-certification for labour and environmental laws.
  • Fast-Tracked Patent Registration: Reduced fees and faster processing for patent applications.
  • Networking Opportunities: Participation in government-organised startup festivals and events.
  • Access to Government Tenders: Startups receive preference in public procurement without prior experience requirements.

Eligibility Criteria for the Startup India Scheme

To be eligible, startups must meet specific criteria set by the Department for Promotion of Industry and Internal Trade (DPIIT).

Here’s a detailed breakdown of the eligibility requirements:

  • Be incorporated as a Private Limited Company, LLP, or a Registered Partnership Firm.
  • Be less than 10 years old from the date of incorporation.
  • Have an annual turnover not exceeding INR 100 crore.
  • Focus on innovation, scalability, and employment generation.
  • Obtain DPIIT recognition for startup status.

Types of Organisations Eligible For the Startup India Scheme

The following entities qualify for the scheme:

  • Private Limited Companies: Must be registered under the Companies Act, 2013.
  • Limited Liability Partnerships (LLPs): Must be registered under the LLP Act, 2008.
  • Registered Partnership Firms: Must be incorporated under the Indian Partnership Act, 1932.

How to Register Your Startup with the Startup India Scheme

Step 1: Incorporate Your Business

Before applying for Startup India recognition, you must officially register your business as a legal entity. Your startup can be incorporated as one of the following:

  • Private Limited Company – Register under the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA).
  • Limited Liability Partnership (LLP) – Register under the Limited Liability Partnership Act, 2008 with the MCA.
  • Partnership Firm – Register under the Indian Partnership Act, 1932 with the respective state authority.

Step 2: Register Under the Startup India Scheme

Once your business is incorporated, you can apply for recognition under the Startup India initiative by following these steps:

  • Visit the Startup India portal www.startupindia.gov.in
  • Click on "Register" and create an account.
  • Log in and navigate to “Recognition” → “Apply for DPIIT Recognition”.
  • Fill in the application form with details about your business.

Step 3: Apply for DPIIT Recognition

To get official recognition as a startup, you must apply for DPIIT (Department for Promotion of Industry and Internal Trade) recognition. DPIIT-recognised startups gain access to tax benefits, easier compliance, and funding opportunities.

Steps to Apply for DPIIT Recognition:

  • Provide business details (name, incorporation date, industry sector, location).
  • Describe your startup’s innovation, scalability, and market potential.
  • Upload supporting documents (explained in Step 5).
  • Submit the application for review.

Step 4: Recognition Application Submission

Once all details are filled in, submit the Startup India recognition application.

The DPIIT reviews applications to ensure the business meets eligibility criteria (e.g., age of the startup, turnover, and innovation focus). If all documents are in order, recognition is granted within 2-3 weeks.

Step 5: Documents Required for Registration

You must upload specific documents during the registration process. Ensure you have:

Mandatory Documents:

  • Certificate of Incorporation / Registration – Proof that your business is legally registered.
  • Detailed Business Description – A document explaining how your startup is innovative and scalable.
  • PAN (Permanent Account Number) – A copy of your business’s PAN card for tax purposes.

Additional Documents (If Applicable):

  • Patent or Trademark Details – If your startup has intellectual property rights, submit supporting documents.
  • Letter of Recommendation (Optional) – From an incubator, industry expert, or recognised institution supporting your innovation.

Step 6: Get Your Recognition Number

Once your application is approved, you will receive a Startup Recognition Number from DPIIT. This confirms that your business is officially recognised under Startup India and is eligible for various benefits.

Step 7: Some Other Important Things To Follow

  • Ensure compliance with tax laws and regulatory requirements.
  • Utilise government schemes and incentives to scale operations.

Benefits From DPIIT

Startups recognised under DPIIT receive several benefits, including:

  • Tax exemptions under Section 80 IAC of the Income Tax Act.
  • Easier access to government grants and funds.
  • Self-certification for labour & environmental laws, reducing compliance costs.
  • Simplified compliance and faster patent approvals.
  • Gain visibility through Startup India showcases and events.

Advantages of the Startup India Scheme

  • Financial Support: Grants, loans, and venture capital funding assistance.
  • Regulatory Benefits: Self-certification for labor and environmental laws.
  • Tax Relief: Exemption from income tax for 3 years.
  • Market Access: Access to government tenders and public procurement schemes.
  • Networking Opportunities: Participation in startup events and mentorship programs.

Conclusion

India is rapidly becoming a global hub for startups, and the Startup India Scheme is at the heart of this transformation. By nurturing innovation, job creation, and economic development, the initiative is shaping the future of entrepreneurship in India.

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

When was the Startup India Scheme launched?

The Startup India Scheme was launched on January 16, 2016, by the Government of India to promote entrepreneurship, innovation, and economic growth.

Who is eligible for the Startup India Scheme?

To be eligible for the Startup India Scheme, a business must:

  • Be registered as a Private Limited Company, Limited Liability Partnership (LLP), or a Registered Partnership Firm.
  • Be less than 10 years old from the date of incorporation.
  • Have an annual turnover not exceeding INR 100 crore in any financial year.
  • Be working towards innovation, improvement, or development of a scalable business model.
  • Obtain recognition from the Department for Promotion of Industry and Internal Trade (DPIIT).

Is Startup India Tax-Free?

Startups registered under the Startup India Scheme and recognised by DPIIT are eligible for a three-year income tax exemption under Section 80-IAC of the Income Tax Act. Additionally, they benefit from exemptions on capital gains tax and angel tax under certain conditions.

What are the Startup India benefits?

The key benefits of the Startup India Scheme include:

  • Tax exemptions: Three-year income tax holiday and angel tax exemption.
  • Financial support: Access to a ₹10,000 crore Fund of Funds for investment.
  • Simplified compliance: Self-certification for labour and environmental laws.
  • Faster patent registration: 80% rebate on patent filing fees with expedited processing.
  • Networking and mentorship: Opportunities through startup hubs, incubators, and accelerator programs.

How does the Startup India Scheme support new businesses?

The Startup India Scheme supports new businesses by:

  • Providing financial assistance through government-backed funds and venture capital access.
  • Offering tax benefits to reduce financial burdens in the early years.
  • Simplifying regulatory processes, making compliance easier.
  • Fast-tracking intellectual property rights (IPR) registrations for startups.
  • Creating networking opportunities through startup events, incubators, and accelerator programs.
  • Facilitating ease of doing business with relaxed norms and exemptions from various government regulations.

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.

Read more
One Person Company Registration Fees in India in 2025

One Person Company Registration Fees in India in 2025

For solo entrepreneurs looking to start their own venture, a One Person Company (OPC) is an ideal business structure that offers the benefits of limited liability and complete control over the business. Understanding OPC benefits and the costs associated with registration is essential before diving into the process.

From government fees to professional charges, registering an OPC in India involves several expenses. Planning your budget can help you navigate the process smoothly and avoid unexpected costs.

In this blog, we’ll explore the various costs associated with OPC registration online in India and provide a detailed breakdown.

Table of Contents

What Does the OPC Registration Fee Include?

The OPC registration fee breakdown generally comprises the following components:

  • Government Filing Fees: Charges for submitting incorporation forms and other mandatory filings.
  • Professional Service Charges: Fees for hiring professionals like Chartered Accountants or Company Secretaries assist with registration.
  • Miscellaneous Costs: Additional expenses such as document preparation, notarisation, and obtaining licenses, if required.

OPC Registration Fees Breakdown

The OPC registration cost can be divided into several components:

Government Fees

  • Cost for filing the SPICe+ form and other mandatory forms on the MCA portal.
  • Cost of obtaining DSC for the Director.
  • Fees for obtaining the DIN
  • Depends on the authorised capital of the company; higher authorised capital attracts higher fees.

Professional Service Charges

Fees for professional assistance in preparing documents, filing forms, and ensuring compliance. It varies based on the service provider and location.

Stamp Duty Fees

Stamp duty is state-specific and varies based on the authorised capital and the location of its registered office. On average, stamp duty can range from ₹500 to ₹5,000.

Name Reservation Fees

Reserving a unique name for your OPC costs ₹1000 per application. This step ensures your chosen name complies with MCA guidelines.

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Miscellaneous Expenses

Charges for notarisation and other incidental expenses.

How Much Does OPC Registration Cost?

The overall cost of OPC registration in India typically ranges between INR 5,000 and INR 20,000, depending on various factors like professional service fees, authorised capital, and location. Government fees generally constitute a significant portion of the total cost.

Factors Affecting OPC Registration Fees

There are several factors affecting the OPC fees. Some of the OPC registration cost factors include- 

  1. Authorised Capital: Higher authorised capital increases government fees and stamp duty charges.
  2. Location: Costs may vary depending on the state due to differences in stamp duty and professional service charges.
  3. Choice of Service Provider: The fees charged by professionals or agencies can differ significantly based on their expertise and service offerings.
  4. Additional Services: Costs for optional services, such as trademark registration or GST registration, add to the total expense.

{{opc-cta}}

<H2> One Person Company Registration Process

The OPC registration process involves the following key steps:

  1. Name Approval:
    • Choose a unique name for your OPC and apply for approval through the Ministry of Corporate Affairs (MCA) portal.
  2. Obtaining DSC:
    • Obtain a Digital Signature Certificate (DSC) for the proposed director.
  3. Drafting Memorandum and Articles of Association:
    • Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) outlining the company's objectives and rules.
  4. Submitting Documents on the MCA Portal:
    • Upload the required documents, such as identity proof, address proof, and the nominee's consent, on the MCA portal along with Form SPICe+.
  5. Incorporation Certificate:
    • Once approved, the MCA issues a Certificate of Incorporation, marking the completion of the registration process.

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

Who is eligible to act as a member of an OPC?

To be a member of a One Person Company (OPC), you must meet the following eligibility criteria:

  • Individual Membership: Only a natural person (not a company or organisation) can act as a member of an OPC.
  • Residency Requirement: The person must be a resident of India, meaning they have stayed there for at least 120 days during the financial year.

Citizenship: Only Indian citizens are eligible to form an OPC.

Is GST registration mandatory for an OPC?

GST registration is not mandatory for every OPC. The requirement depends on the nature of the business and its turnover:

  • Mandatory Registration: If the annual turnover exceeds ₹20 lakh (₹10 lakh for certain northeastern states) or if the business involves inter-state supply of goods or services.
  • Voluntary Registration: Even if the turnover is below the threshold, an OPC may opt for voluntary registration to claim input tax credit and expand its business operations.

What is the cost of registering an OPC?

The OPC registration charges in India can vary based on professional fees, state-specific charges, and other factors.

What is the minimum capital for an OPC company?

There is no mandatory minimum capital requirement for registering an OPC in India. However, the capital structure must be defined at the time of incorporation, and it can be as low as ₹1. The recommended authorised capital typically starts at ₹1 lakh, but this is not a compulsory requirement and depends on the founder’s business plan.

What is the turnover limit for an OPC?

An OPC can operate as long as its annual turnover does not exceed ₹2 crore and its paid-up capital does not exceed ₹50 lakh. If the turnover crosses ₹2 crore, the OPC must convert into a private limited company or a public limited company within six months of exceeding the limit.

What are the tax implications of a One Person Company?

The applicable Tax rate to the OPC would be 30% plus cess and surcharge.

Can an OPC raise funds from the public?

No, an OPC cannot raise funds from the public. Since it is a privately held entity, it is restricted from:

  • Issuing shares to the public.
  • Listing on a stock exchange.

However, OPCs can raise funds through other methods, such as loans from banks or financial institutions or by adding a new shareholder when converting to a private limited company.

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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Small Company Definition in India - Razorpay Rize

Small Company Definition in India - Razorpay Rize

The Ministry of Corporate Affairs (MCA) has revised the definition of a "Small Company" in India through the Companies (Specification of Definitions Details) Amendment Rules, 2022, effective from 15 September 2022. This amendment aims to reduce compliance burdens for small companies and support their growth in India's economic landscape. The updated criteria focus on the paid-up capital and turnover limits, making it easier for businesses to qualify as small companies under the Companies Act 2013.

Small companies play a vital role in India's economy, generating profits and creating employment opportunities. The revised small company definition is expected to benefit a larger number of businesses, fostering entrepreneurship and innovation across various sectors. By understanding the new criteria and the benefits offered to small companies, entrepreneurs can make informed decisions while setting up or managing their ventures.

Table of Contents

What are Small Companies?

Small companies, as defined by the Companies Act 2013, are private limited businesses with lower annual revenue compared to regular-sized companies. They follow the same registration process as private limited companies but have distinct financial criteria. To be classified as a small company as per the Companies Act, a business must meet the revised thresholds for paid-up capital and turnover.

The significance of small companies in India's economy cannot be overstated. They contribute to profit generation and job creation, making them essential drivers of economic growth. By providing goods and services to local communities and niche markets, small companies help foster inclusive development across the country.

The New Definition of Small Company

A small company is now defined as a non-public entity as per the Companies (Specification of Definition details) Amendment Rules, 2022, effective from 15 September 2022, if it meets the following conditions:

  • Small company paid-up capital should not exceed ₹4 Crores, or such higher amount specified, which should not exceed ₹10 Crores.
  • Small company turnover limit should not exceed ₹40 Crores, or such higher amount specified, which should not exceed ₹100 Crores.

It is important to note that certain companies are excluded from being classified as small companies, even if they meet the above criteria. These include:

  • Public companies
  • Holding companies
  • Subsidiary companies
  • Companies registered under Section 8 (non-profit companies)
  • Companies governed by any special act

The 2022 amendment significantly broadened the scope for small companies, enhancing their eligibility for benefits and simplifying compliance requirements, thus fostering growth in the small business sector in India.

Earlier Definition of Small Companies 2021

Prior to the 2022 amendment, the definition of small companies underwent changes in 2021. The thresholds for paid-up capital and turnover were revised as follows:

Criteria Threshold
Paid-up capital Maximum: ₹2 crores
Turnover Maximum: ₹20 crores

Comparing Small Company New Definition with Old Definitions

The Companies (Specification of Definition details) Amendment Rules, 2022, have further expanded the scope of small companies by increasing the limits for paid-up share capital and turnover. Here's a comparison of the key changes between the old and new definitions:

H3 - Criteria H3 - Old Definition (before 2021) H3 - Old Definition (2021) H3 - New Definition (2022)
Paid-up share capital Maximum: ₹50 lakhs Maximum: ₹2 crores Maximum: ₹4 crores
Turnover Maximum: ₹2 crores Maximum: ₹20 crores Maximum: ₹40 crores

The increased thresholds allow more firms to be classified as small companies and avail of the benefits provided under the Companies Act 2013. This expansion is expected to reduce compliance burdens and facilitate ease of doing business for a larger number of small businesses in India.

Benefits of Revised Small Company Definition

Exemption from Preparing Cash Flow Statements

Small companies are not required to include cash flow statements in their financial reports, simplifying their accounting processes.

Simplified Annual Filings

They can prepare and file an abridged annual return, reducing administrative workload.

Fewer Board Meeting Requirements: 

Small companies are mandated to hold only two board meetings per year instead of four, which lessens operational demands.

Impact on Audit Processes

  1. Auditors are not required to report on the adequacy of internal financial controls.
  2. There is no compulsory rotation of auditors, which can reduce costs and administrative burdens.

Compliance Ease 

A director can sign annual returns in the absence of a company secretary, further streamlining operations.

Reduced Penalties for Non-Compliance: 

This encourages small companies to focus on growth rather than worrying excessively about penalties.

These exemptions and relaxations aim to ease the compliance burden on small companies, allowing them to focus on their core business activities and growth strategies.

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Characteristics of a Small Company in India

Small companies in India have distinct characteristics that set them apart from larger enterprises. Some of the key traits include:

Ownership Structure 

Typically, small companies are privately owned entities, often structured as private limited companies, partnerships, or sole proprietorships. This ownership model allows for greater control and flexibility in decision-making but limits access to larger capital investments.

Simplified Compliance 

One of the key advantages of being classified as a small company is the reduced compliance burden. They benefit from exemptions, such as not needing to prepare cash flow statements, simplified annual filings, and fewer requirements for board meetings—only two are mandated per year. These measures significantly alleviate administrative pressures, allowing owners to focus on core business activities.

Auditing Requirements 

Small companies face less stringent auditing requirements. For instance, they are not obligated to rotate auditors or report on the adequacy of internal financial controls, which reduces costs and simplifies financial oversight.

Limited Resources and Workforce

Small companies generally operate with limited resources and a smaller workforce. They often employ fewer staff members, sometimes relying on a single individual or a small team to manage operations. This can lead to agility in decision-making but may also pose challenges in scaling operations or managing increased demand.

Restricted Market Reach

The market reach of small companies is typically confined to local or regional areas. They often serve niche markets or specific community needs, such as convenience stores in rural areas. This limitation can hinder growth opportunities compared to larger firms with broader market access.

How to Register a Small Company as per the Companies Act 2013?

To register a business online as a small company under the Companies Act 2013, follow these steps:

  1. Obtain Digital Signature Certificates (DSCs) for all proposed directors and subscribers
  2. Reserve the company name by submitting Part-A of the SPICe+ form
  3. File Part-B of the SPICe+ form along with required documents (Memorandum of Association (MOA), Articles of Association (AOA), Professional Declaration, Affidavits, Identity and Address Proofs, and Correspondence Address)
  4. Pay prescribed fees and stamp duty for the SPICe+ form, MOA, and AOA
  5. Obtain the Certificate of Incorporation from the Registrar of Companies (ROC) upon successful review of submitted documents

Matters to be included in the Board's Report for small companies:

  • The web address for the Annual Return (if available)
  • Number of Board meetings held during the year
  • Directors' Responsibility Statement as per Section 134(5)
  • Details of any frauds reported by the auditor under Section 143(12), except those reportable to the Central Government
  • Explanations or comments on any qualifications, reservations, or adverse remarks in the auditor's report
  • Summary of the company's current affairs and business overview
  • Financial summary or highlights
  • Material changes in the nature of the business after the financial year-end and their impact on the company's financial position
  • Changes in directorship during the year
  • Significant legal or regulatory orders affecting the company's going concern status or future operations

Synopsis of MCA Notification on Companies (Specification of Definition details) Amendment Rules 2022

The MCA has issued the Companies (Specification of Definition details) Amendment Rules, 2022, effective from 15 September 2022. The key amendments include:

  1. Rule 2 has been amended by substituting a new clause 2(1)(t), which specifies the revised definition of small companies.
  2. The thresholds for paid-up capital and turnover have been increased in the definition of a small company under the Companies Act 2013.

These amendments aim to provide relief to a larger number of businesses by classifying them as small companies and offering them various benefits and exemptions under the Companies Act 2013.

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Frequently Asked Questions

What is a small company as per the Companies Act, 2013?

A small company, as per the Companies Act, 2013, is a private limited company that meets the revised criteria for paid-up capital (not exceeding ₹4 crores) and turnover (not exceeding ₹40 crores) as specified in the Companies (Specification of Definition details) Amendment Rules, 2022.

What is a small company's limit?

The small company limit, as per the latest amendment, is a paid-up capital not exceeding ₹4 crores and a turnover not exceeding ₹40 crores.

What are the small companies in India?

Small companies in India are private limited businesses that meet the revised criteria for paid-up capital and turnover as specified in the Companies Act 2013. They play a crucial role in the country's economic growth by generating profits, creating jobs, and fostering entrepreneurship.

What is the definition of a small company, as per SEBI?

The Securities and Exchange Board of India (SEBI) defines a small company based on market capitalisation. Specifically, a small-cap company has a market capitalisation below ₹5,000 crores. This classification is distinct from the definition of a small company under the Companies Act 2013, which focuses on paid-up capital and turnover thresholds.

What is the size of a small-cap company?

As per SEBI's definition, a small-cap company has a market capitalisation below ₹5,000 crores. This classification is based on the company's market value and is different from the definition of a small company under the Companies Act 2013.

Sarthak Goyal

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

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

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