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

Dec 31, 2024
Private Limited Company vs. Limited Liability Partnerships

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.

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

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

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

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

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

Education Cess for Companies

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

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

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

For companies with a turnover exceeding ₹400 crore:

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

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

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

Income Tax Rate for Foreign Company

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

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

Minimum Alternate Tax for Company

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

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

H2 - How to Calculate Total Income for a Company?

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

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

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

Returns Applicable for Domestic Company for AY 2022-23

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

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

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

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

Domestic Company Tax Slab for AY 2024-25

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

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

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

Frequently Asked Questions

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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

Related Posts

What Is an LLP (Limited Liability Partnership) and How Does It Work?

What Is an LLP (Limited Liability Partnership) and How Does It Work?

In today’s dynamic business landscape, the Limited Liability Partnership (LLP) has emerged as a compelling choice for entrepreneurs, startups, and professional service providers. Offering the legal strengths of a company alongside the flexible governance of a partnership, LLPs are gaining remarkable popularity across India.

  • In the financial year 2023-24 alone, the number of LLP registrations soared by a striking 39%, reaching 58,990—a clear reflection of growing confidence in this structure.
  • The upward momentum continued into 2025, with May witnessing a 37% year-on-year jump in new LLP incorporations—outpacing the 29% growth seen in company registrations

These figures underscore a powerful trend: LLPs are fast becoming the go-to vehicle for professionals and small businesses seeking liability protection, compliance ease, and operational flexibility.

Table of Contents

What is LLP?

An LLP or Limited Liability Partnership is a business structure where business partners share limited liability, meaning their personal assets are protected in case the business incurs debts or liabilities.

LLPs are commonly used by professionals like lawyers, accountants, and consultants but are increasingly popular among small and medium-sized enterprises (SMEs).

An LLP is an ideal structure for businesses seeking operational flexibility, protection for partners' personal assets, and minimal compliance requirements. It is particularly attractive for professionals and small enterprises looking for a formal and efficient business framework.

This business structure also allows businesses to make use of the benefits of economies of scale, since LLPs can pool resources, expertise, and capital from multiple partners. By sharing operational responsibilities and costs, LLPs can reduce per-unit expenses, streamline processes, and negotiate better terms with suppliers.

This collaborative approach enables businesses to grow efficiently, expand their market presence, and achieve cost advantages typically associated with larger organizations.

How an LLP (Limited Liability Partnership) Works?

1. Hybrid Business Structure

A Limited Liability Partnership (LLP) is a flexible business structure that operates with a mix of partnership and corporate elements.

2. Limited Liability Advantage

The main advantage of an LLP is that it provides limited liability to its partners. This means that, unlike a general partnership, your personal assets (such as your home or car) are typically protected in case of legal action.

3. Lawsuit and Liability Rules

In an LLP, if the business faces a lawsuit, the partnership itself becomes the primary target, not the personal property of the individual partners. However, if a partner personally engages in wrongdoing (e.g., fraud), they could still be held liable for their actions.

4. Example: Meena and Shalini’s Case

  • Starting Out: Consider a scenario where two professionals, Meena and Shalini, decide to start a business offering consulting services in India. They have a shared interest in providing management consulting to small and medium enterprises (SMEs). Initially, they start with a mutual agreement and an informal arrangement.
  • Formalizing the Structure: However, as the business grows, they realize the need to formalize the structure to protect themselves from legal and financial risks. Meena and Shalini choose to form an LLP (Limited Liability Partnership) to safeguard their personal assets from any potential legal liabilities that may arise in the course of business. They register the LLP with the Ministry of Corporate Affairs (MCA) in India, creating an LLP agreement that outlines their responsibilities, profit-sharing ratios, and other operational details.
  • Facing a Legal Dispute: A few months later, the consulting firm faces a legal dispute due to an issue with one of their clients. The client sues the LLP for professional negligence, claiming that the advice given led to a loss in business.
  • Outcome of the Lawsuit: Since Meena and Shalini have formed an LLP, their personal assets—such as their homes, personal savings, or vehicles—are protected. The lawsuit can only target the assets of the LLP itself, not their personal belongings. However, if it is proven that either Meena or Shalini acted negligently or fraudulently in a personal capacity, that partner could still be held accountable for their individual actions.

LP (Limited Partnership) vs General Partnership

An LP (Limited Partnership) and a General Partnership are both business structures involving two or more partners, but they differ in terms of liability and management roles.

Limited Partnership (LP)

  • In an LP, there are two types of partners: general partners and limited partners.
  • General partners have full control over the management of the business and bear unlimited liability, meaning they are personally responsible for the business's debts and obligations.
  • Limited partners, on the other hand, contribute capital but do not participate in day-to-day management. Their liability is limited to the amount they invest in the business, protecting their personal assets beyond that contribution.

General Partnership

  • In a General Partnership, all partners share equal responsibility for managing the business and have unlimited liability.
  • This means they are personally liable for the debts and obligations of the business.
  • There is no distinction between the roles of partners—each partner participates in both the management and the liabilities of the business.

Key Difference

The key difference between the two is the level of liability protection and management involvement.

  • An LP offers limited liability to some partners (limited partners).
  • A General Partnership places full responsibility on all partners, making it a riskier option for individuals seeking protection from personal liability.

Related Read: What is the Difference Between LLP and Partnership?

LLP vs LLC

Ownership and structure

LLP refers to Limited Liability Partnership, where two or more partners collaborate to run the business. The partners can be individuals or corporate entities, and the number of partners can vary.

In an LLP, all partners share the management responsibilities and decision-making processes, unless the partnership agreement specifies otherwise. Partners have limited liability, meaning their personal assets are protected from business debts or legal claims.

LLC refers to a Limited Liability Company, which is a separate legal entity that can have one or more owners, known as members. The ownership can be divided among individual or corporate members, and the structure is more flexible than a corporation.

LLCs can be managed either by members (member-managed) or by designated managers (manager-managed). The members are not personally liable for the company’s debts or liabilities, providing them with protection similar to that of an LLP.

Liability protection

Partners in an LLP enjoy limited liability, meaning they are not personally liable for the debts or obligations of the business beyond their contribution to the partnership. However, if a partner engages in fraudulent or wrongful activities, they could still be personally liable for their actions.

LLC members also have limited liability, meaning they are generally not personally responsible for the company’s debts or liabilities. The LLC itself is a separate legal entity, so any financial obligations fall on the company, not the individual members. Similar to an LLP, members are protected unless they personally guarantee a debt or engage in illegal activities.

Decision making and management

In an LLP, all partners typically have a say in the management and operation of the business, unless otherwise specified in the LLP agreement. It is a more flexible structure in terms of decision-making since there is no requirement for a formal management team.

LLCs can be either member-managed or manager-managed. In a member-managed LLC, all members participate in managing the business, while in a manager-managed LLC, the members appoint managers to run the operations. This offers more structure compared to an LLP, especially for larger businesses.

Ownership transfer

Ownership in an LLP is typically not as easily transferable as in an LLC. Partners usually need to approve the admission of new partners or the transfer of ownership. This limits the liquidity and transferability of ownership interests.

Ownership in an LLC can be transferred more easily than in an LLP, depending on the terms of the operating agreement. LLCs can issue membership interests that can be bought or sold, making it easier to bring in new investors or transfer ownership.

LLP vs LP

An LP refers to a Limited Partnership, which is different from an LLP.

An LLP (Limited Liability Partnership) and an LP (Limited Partnership) are both business structures that involve multiple partners but differ in terms of liability and management.

In an LLP, all partners share equal responsibility for managing the business and enjoy limited liability, meaning their personal assets are protected from business debts. However, all partners are involved in decision-making unless specified otherwise in the agreement.

In contrast, an LPconsists of general partners and limited partners. General partners manage the business and have unlimited liability, while limited partners are only liable up to the amount of their investment and do not participate in the day-to-day operations.

The key difference lies in the roles and liabilities of the partners. In an LLP, all partners have equal liability protection and management control, whereas, in an LP, the general partners hold the management responsibility and are personally liable, while limited partners have liability protection but no management involvement.

The choice between the two structures depends on the desired level of involvement in business operations and the type of liability protection needed.

What are the advantages of LLP?

Wondering why you should choose LLP over other business registrations? Have a look:

  • Easy & quick to build: Building an LLP is a simple process. It does not have complicated steps and requirements and neither does it take months of waiting time. The minimum amount of fees for incorporating an LLP is INR 500 and the maximum that can be spent is INR 5,600
  • Continuity in succession: The life of the LLP is not affected by the death or retirement of any of the partners. If one of the partners withdraws because of any reasons, it does not mean that the LLP gets wound up. An LLP can only be shut down on the basis of the provisions of the Limited Liability Protection Act  of 2008
  • Limited liability: All the partners of the LLP have limited liability, which means that the partners are not liable to pay the debts of the company from their personal assets. No partner is responsible for any other partner’s misbehaviour or misconduct
  • Streamlines management: All the major decisions and management activities in an LLP are taken care of by the board of directors hence the shareholders receive very less power in making decisions
  • Hassle-free transfers: There are no restrictions on joining and leaving an LLP. One can easily admit as a partner and transfer the ownership to others
  • Taxation benefits: An LLP is exempt from various taxes such as dividend distribution tax and minimum alternative tax. Also, the rate of tax is less when compared to other business types
  • No compulsory audit requirements: There is no mandatory audit requirement for an LLP until the company exceeds the annual turnover of INR 40 lakhs

What are the disadvantages of LLP?

  • Not covered in all States: In India, there are certain variations in tax benefits from State to State. There are also cases when States restrict the formation of LLP. This is one of the major disadvantages of an LLP
  • Less credibility: An LLP has many benefits but the fact is that people do not consider LLPs to be a credible business. People still trust companies or partnerships over LLPs
  • Differences amongst partners: Since each partner is responsible for their own part, there are cases when partners do not consult each other before proceeding with a decision or agreement
  • Transfer of interest: Though interest and ownership can be transferred, it usually is a long procedure. Various formalities are required to comply with the provisions of the Limited Liability Partnership Act

Related Read: LLP Advantages and Disadvantages

Documentation requirements for registering an LLP (2025)

Before you start with the procedure of registering an LLP or make changes in an existing LLP, have a look at the list of documents you might need:

  • Form 7 is required to obtain a Designated Partner Identification Number (DIN) while registering your LLP. It may be sought from the MCA website. Along with the duly completed form, a registration fee of INR 100 must also be paid
  • Form 1/ RUN-LLP is required to register a name for the LLP and reserve it. It may be used to christen an LLP or to alter the present name. The fee for submitting this form is Rs 10,000
  • A request must also be filed by the partners for their DSC to be registered if it hasn’t already been done before
  • Form 2/FiLLiP is required for incorporating a registered LLP. This form must be sent to and acknowledged by the concerned State’s Registrar
  • An LLP agreement must be made, which outlines the duties of each partner involved. This requires the filling and submitting of Form 3
  • In the case of changing, altering, adding or removing partners, the partners must submit Form 4
  • Form 11 must be used to file the IT returns of the LLP
  • If the office address of the LLP is to be changed, then Form 15 must be filed

How to form a Limited Liability Proprietorship

As mentioned earlier, forming an LLP is easy and quick. Before you get started, obtain a DSC or Digital Signature Certificate as the following steps will require it. File for one if you don’t already have one. Further, here are the steps involved in forming an LLP. You can visit mca.gov.in and follow the steps listed below:

  1. Issue a Designated Partner Identification Number for yourself, which serves as an ID card
  2. File Form 7 and pay the required fees
  3. Register a name for your LLP using Form 1 and pay Rs 200
  4. Incorporate the LLP via Form 2. The LLP agreement must also be made at this stage
  5. File the LLP Agreement as per Section 2(o) of the LLP Act, 2008 using Form 3

With the above-mentioned steps, you are all set to start an LLP of your own.

Frequently Asked Questions

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

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

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

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

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Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

What should an LLP agreement include?

Typical clauses cover the registered office, business nature, rights and duties of partners, contributions and profit-sharing, voting rights, process for adding or removing partners, transfers, and dispute resolution mechanisms.

Who can become a partner, and what are the rules around it?

  • A minimum of two partners is required. If the number drops below two for over six months, the remaining partner can be held personally liable.
  • Partners can be individuals or corporations. Foreign partners must adhere to FDI norms and make contributions through approved banking channels at fair market value.
  • What are the compliance obligations for LLPs?

    Every LLP must file:

    • Form 8 (Statement of Account & Solvency), and
    • Form 11 (Annual Return)
      within 60 days from the end of the financial year (by May 30th for FY ending March 31).

    How is an LLP taxed?

    LLPs are taxed at a flat rate of 30% (plus surcharge and cess). They are exempt from dividend distribution tax, and partners are taxed individually when profits are distributed.

    Can existing businesses convert to an LLP?

    Yes, existing structures like private companies or partnership firms can convert to an LLP by following specific processes laid out in the LLP Act.

    Swagatika Mohapatra

    Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

    Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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    Importance of Registered Office of a Company: Meaning & Key Benefits

    Importance of Registered Office of a Company: Meaning & Key Benefits

    One of the first legal requirements for setting up a company is declaring its registered office. This isn’t just a formality- it’s the official communication hub for the company, where all statutory notices, correspondence from government authorities, and legal documents are sent. 

    The registered office reflectsa business's legal existences and plays a crucial role in compliance under the Companies Act, 2013.

    This blog discusses the meaning, requirements, importance, and procedures related to a company’s registered office, including how it applies to LLPs, Private Limited Companies, and OPCs.

    Table of Contents

    Meaning Of Registered Office Of A Company

    The registered office of a company is its principal place of business, serving as its official address for all legal and government-related correspondence. It must be a physical postal address located within the Registrar of Companies (ROC) jurisdiction where the company is registered.

    It is not necessarily the same as the place where day-to-day operations are carried out (corporate office or branch office). Instead, it ensures that government authorities and stakeholders know where to contact the company for statutory purposes.

    Registered Office Requirement during Company Registration

    At the time of incorporation, every company must declare its registered office. For this, certain documents are required:

    • Proof of address (electricity bill, water bill, or property tax receipt, not older than 2 months)
    • No Objection Certificate (NOC) from the landlord (if the property is rented)
    • Rent/lease agreement in case of rented premises, or property ownership documents in case of owned premises

    If the company does not have a permanent office at the time of registration, it can declare a temporary address. However, the final registered office must be filed with the ROC using Form INC-22 within 30 days of incorporation.

    Importance Of the Registered Office Of A Company

    Declaring and maintaining a registered office is a legal mandate under the Companies Act, 2013. Its importance can be summarised as follows:

    • Legal Compliance: A company must have a registered office within 30 days of incorporation.
    • Official Address for Communication: All government notices, summons, and correspondence are sent to this address.
    • Use on Official Documents: The registered office address must be printed on all letterheads, invoices, business correspondence, and official publications.
    • Jurisdictional Relevance: It determines the ROC jurisdiction under which the company falls and where records are maintained.

    Without a registered office, a company cannot be considered legally compliant.

    Change In The Registered Office Of A Company

    Companies may shift their registered office after incorporation. The process depends on the nature of the change:

    1. Change within the same city/town/local limits: Notify the ROC by filing Form INC-22 within 15 days.
    2. Change outside local limits but within the same ROC jurisdiction: Requires passing a special resolution and filing with the ROC.
    3. Change from one ROC jurisdiction to another (state-level change): Needs approval from the Regional Director, shareholder consent via special resolution, and filing of required forms (INC-22 & MGT-7).

    In every case, the company must update its address on all official documents.

    Registered Office of an LLP

    Like companies, Limited Liability Partnerships (LLPs) are also required to declare a registered office during incorporation. This is where all legal and government correspondence is sent. Any change must be filed with the ROC using Form 15.

    Register your LLP and enjoy flexibility with limited liability protection.

    Registered Office of a Private Limited Company

    A Private Limited Company must declare its registered office within 30 days of incorporation and notify the ROC of any change through Form INC-22. It acts as the official point of communication and is used on all business documents.

    Set up your Private Limited Company to gain credibility and attract investors.

    Registered Office of a One Person Company (OPC)

    For an OPC, the registered office requirement is the same as that of other companies. It must be declared during incorporation, and any changes should be reported to the ROC. Since OPCs have single ownership, the registered office is key in establishing legal identity.

    Incorporate your OPC to run your business independently with limited liability.

    Difference Between A Registered Office And A Corporate Office

    Many businesses confuse the registered office with the corporate office, but they serve different purposes:

    • Registered Office:

      • Legal requirement under the Companies Act
      • Official address for receiving government and legal communications
      • Determines the jurisdiction of the ROC
      • Must appear on all statutory documents

    • Corporate Office:

      • Operational headquarters of the company
      • Where executives and employees manage daily business activities
      • Focuses on decision-making, sales, and operations
      • Not a legal mandate under the Companies Act

    In simple terms, the registered office gives the company its legal identity, while the corporate office drives its business operations.

    Ready to Register Your Company?

    Get started with Razorpay Rize and make your business official in just a few clicks. Fast, simple, and 100% online.

    Frequently Asked Questions (FAQs)

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    Private Limited Company
    (Pvt. Ltd.)

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


    Limited Liability Partnership
    (LLP)

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

    One Person Company
    (OPC)

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

    Private Limited Company
    (Pvt. Ltd.)

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


    One Person Company
    (OPC)

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

    Private Limited Company
    (Pvt. Ltd.)

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


    Limited Liability Partnership
    (LLP)

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

    Frequently Asked Questions

    What is the purpose of a registered office for a company?

    The registered office serves as the company's official communication address. It is the place where:

    • All statutory notices and government correspondence have been sent.
    • Legal documents are served.
    • Company records are maintained.

    It legally establishes the company’s presence and is crucial for compliance under the Companies Act, 2013.

    Can a company have multiple registered offices?

    No. A company can have only one registered office at a time, which determines its legal jurisdiction.

    However, it can have multiple branch offices, corporate offices, or project offices across India or abroad. These do not replace the registered office.

    Does the registered office determine the jurisdiction of the Registrar of Companies (ROC)?

    Yes. The location of the registered office decides the company’s jurisdiction with respect to the Registrar of Companies (ROC). The ROC handles all filings, records, and legal matters under whose jurisdiction the registered office falls.

    Is the process for declaring a registered office the same for a Limited Liability Partnership (LLP)?

    The process is similar but not identical. LLPs also need to declare a registered office at incorporation by providing address proof, utility bill, and an NOC from the owner.Any change in the registered office of an LLP must be reported using Form-15 with the Registrar of Companies, unlike companies, which use Form INC-22.

    What happens if a company fails to notify the change in registered office address?

    Failure to update the ROC about a change in registered office is a non-compliance under the Companies Act. Consequences include:

    • Monetary penalties on the company and its officers.
    • Missing important notices or legal documents can lead to legal disputes or default status.

    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.

    Read more
    Common types of Business Licenses required in India

    Common types of Business Licenses required in India

    With a multitude of regulations varying from state to state, figuring out what licenses you need and how to obtain them can feel like attempting to solve a complex puzzle with missing pieces. However, worry not! We understand the challenges you face, and we're here to guide you through every step of the way.

    In this blog, we'll lead you through the intricacies of obtaining the necessary licenses to set up and operate your business seamlessly in India.

    Table of Contents

    Importance of Business Licenses

    Business licenses play a crucial role in India's business landscape for several reasons:

    Legal Compliance

    • Obtaining the necessary licenses ensures that businesses operate within the legal framework defined by government regulations.

    Consumer Trust and Safety

    • Certain licenses, such as FSSAI licenses for food-related businesses or health licenses for healthcare providers, signify compliance with safety and quality standards.

    Public Health and Environmental Protection

    • Licenses related to environmental clearances, waste management, and pollution control are essential for businesses to mitigate their environmental impact.

    Taxation and Revenue Generation

    • Business licenses, such as GST registration and professional tax registration, facilitate tax compliance and revenue generation for the Government.

    Regulation of Market Competition

    • Certain licenses, such as trade licenses and import-export licenses, regulate market entry and competition.

    Employee Welfare and Labor Rights

    • Labor licenses ensure that businesses adhere to labour laws and provide a safe and fair working environment for employees.

    Last but certainly not least, business licenses are a badge of honour for your business. They show investors, partners, and customers that you're serious, professional, and committed to doing things the right way. In a crowded marketplace, that kind of credibility can make all the difference.

    Common Types of Business Licenses in India

    Common types of business licenses required in India

    In India, obtaining the necessary business licenses depends on the type of business activity you intend to undertake and the location in which you plan to operate. Here are some common types of business licenses required in India:

    Business Registration:

    While not classified as a license, registering a business with the Ministry of Corporate Affairs (MCA) in India is a fundamental legal requirement if you are an entrepreneur establishing a business venture.

    Depending on the type of business structure chosen, such as sole proprietorship, partnership, limited liability partnership (LLP), or private/public limited company, the eligibility criteria, registration process, and compliance obligations can vary significantly.

    There are primarily following types of Business structures:

    •  Private Limited Company

    •  Limited Liability Partnerships

    •  One Person Company

    •  Public Limited Company

    •  Sole Proprietorship

    •  Partnership

    Ultimately, registering your business with the MCA not only establishes its legal legitimacy but also lays the foundation for growth, credibility, and long-term success in the Indian startup ecosystem.

    For detailed information regarding the eligibility criteria, registration process, and compliance obligations associated with different business structures, check out the link below.

    Company Registration in India - Online Incorporation Process Explained

    Udyam Registration - MSME License

    Similarly, Udyam Registration is not technically a license. However, it provides recognition and certain benefits to Micro, Small, and Medium Enterprises (MSMEs) in India.

    The eligibility criteria for Udyam Registration are based on the investment, turnover, years of establishment, etc.

    Once registered as an MSME, you can receive a unique Udyam Registration Number (URN) and a certificate that gives access to government schemes, subsidies, and incentives.

    GST Registration

    In India, Goods and Services Tax (GST) registration is mandatory for businesses meeting certain turnover thresholds, which is Rs. 40 Lakhs (for goods) and Rs. 20 Lakhs (for services) or engaging in specified activities.

    Here's an overview of the process of obtaining GST registration, which is not exactly a license but a crucial registration for businesses:

    • Access the official GST portal.
    • Fill out the registration form with accurate details regarding your business activities, turnover, and so on.
    • Furnish the necessary information, including business details, PAN, Aadhaar, bank account details, and relevant documents.
    • Upon successful verification, you will be issued a unique Goods and Services Tax Identification Number (GSTIN)- a 15-digit unique identifier for the businesses under the GST regime.

    Professional Tax Registration

    Professional Tax Registration is a requirement for employers and individuals engaged in certain professions, trades, or employment in India. It is a state-level tax levied by the respective State Governments for the welfare of professionals and workers in various sectors.

    In some states like Maharashtra, obtaining professional tax registration is mandatory.

    Shops and Establishment License

    The Shops and Establishment License is a mandatory requirement for businesses operating within a specific jurisdiction, typically at the state level, in India. It is governed by the respective state Shops and Establishment Act and its rules, which vary slightly across different states.

    The primary purpose of the Shops and Establishment License is to regulate the operations of shops, commercial establishments, and other businesses within a state with provisions related to-

    • Working hours
    • Welfare and safety of employees
    • Employment practices

    The Shops and Establishment License is usually valid for a specific period, after which it needs to be renewed to continue operating legally. A valid Shops and Establishment License is often required for various business activities, including obtaining other licenses, permits, or registrations.

    Trade License

    A trade license is a legal permit issued by the local municipal authority or council that authorizes your business to engage in specific commercial activities within a designated area or jurisdiction.
    Trade licenses specify the types of commercial activities that a business is permitted to undertake. These activities may include manufacturing, trading, storage, distribution, or provision of certain services, depending on the nature of the business and local regulations.

    In order to obtain a Trade license, you must submit an application to the local municipal authority or council responsible for issuing licenses. The application process typically requires businesses to provide certain documents, such as -

    • Proof of identity,
    • Address proof,
    • Proof of ownership or tenancy of the premises
    • Approvals and NOCs (No Objection Certificates) from relevant authorities

    Once the application is approved and all requirements are met, the local authorities will issue the trade license to your business, specifying the permitted activities, duration of validity, and any conditions or restrictions.

    Labour License

    Labour licenses, also known as labour permits or labour registrations, are legal authorizations issued by government authorities (Shram Suvidha Portal) to businesses, particularly those employing a significant number of workers, to ensure compliance with labour laws and regulations.

    It safeguards the rights and interests of workers by setting standards for fair treatment, safe working conditions, and adequate remuneration. These licenses often require businesses to adhere to minimum wage laws, working hour restrictions, overtime compensation, leave entitlements, and other labour standards aimed at promoting employee well-being.

    The process of obtaining a labour license may vary depending on the jurisdiction and the specific requirements imposed by labour laws and regulations.

    Food Safety and Standards Authority of India (FSSAI) License

    The Food Safety and Standards Authority of India (FSSAI) license, commonly referred to as the FSSAI license, is a mandatory requirement for businesses involved in the manufacturing, processing, packaging, storage, distribution, and sale of food products in India.

    Obtaining an FSSAI license is a legal requirement for food businesses operating in India. It is mandated by the Food Safety and Standards Act of 2006, and non-compliance can result in penalties, fines, or even closure of the business.

    Depending on the scale and nature of the business, there are different types of FSSAI licenses, such as Basic Registration, State License, and Central License, each catering to specific business activities and turnover thresholds.

    Import-Export License

    An import-export license, also known as an import-export permit, is a legal authorization issued by government authorities that allows businesses to engage in the importation and/or exportation of goods across international borders.

    An Importer Exporter Code is mandatory for the export and import of goods. It is a 10-digit identification number that is compulsory for the purpose of exporting from India as well as for the purpose of importing to India. It has lifetime validity.

    The process to obtain an Import Export Code (IEC) registration certificate online involves several steps, as outlined below:

    • Fill out the Application Form.
    • Gather the necessary documents as per the requirements specified.
      • For Private Limited/ LLPs- Company PAN Card, Incorporation Certificate, Aadhar Card, PAN Card of all Directors/Partners, and Cancelled Cheque of the Company.
      • For Partnerships- Partnership Firm PAN Card, Partnership Deed, Aadhar Card, PAN Card of all Partners, and Cancelled Cheque of the Partnership Firm.
    • Pay the required Fees.
    • Upon successful verification and processing, the Import Export Code (IEC) registration certificate will be issued. You will receive the certificate electronically using the registered email ID provided during the application process.

    While we covered some common licenses necessary for businesses in India, certain industry-specific licenses and permits exist that are crucial for compliance with sector-specific laws, regulations, and standards. These can vary widely depending on the nature of the industry, the type of activities involved, and the potential risks or impacts associated with the operations.

    Business Registration with Razorpay Rize

    To conclude, securing these licenses is crucial for the seamless operation of your business. However, it's essential to prioritize registering your business as a legal entity beforehand, as this step is often a prerequisite for applying for most of these licenses.

    Razorpay Rize simplifies this fundamental yet vital aspect of the process with its online company registration services. To learn more about how Razorpay Rize can assist you, click below.

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

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    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

    Nipun Jain

    Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

    Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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    Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
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    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
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    TBS Magazine
    Hey, Guys!
    We just got incorporated yesterday.
    Thanks to Rize team for all the Support.
    It was a wonderful experience.
    CHEERS 🥂
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