India's company registration has gone genuinely digital: a single integrated form now handles your company name, incorporation, PAN, TAN, and GST application together, and a major 2025 reform just cut India's notoriously complicated GST slab structure down to essentially two rates. Here's what it takes to start a business in India in 2026.
1. Which business structure fits you?
Before you register anything, it helps to know what you're actually choosing between.
- Sole Proprietorship. No incorporation process, no minimum capital, no MCA registration at all, it exists the moment you start conducting business. The catch: the proprietor generally must be an Indian resident, so this route isn't available to NRIs.
- LLP (Limited Liability Partnership). Needs two designated partners, at least one an Indian resident, and pays a flat 30% tax rate regardless of income level.
- Private Limited Company. The default for anyone planning to raise funding, issue ESOPs, or scale, since investors generally won't put equity into a proprietorship or ordinary partnership. Needs a minimum of two shareholders and at least one director who's an Indian resident (present in India 182+ days in the prior financial year), though 100% foreign direct investment is permitted under the automatic route for most sectors, so non-resident shareholders are generally fine as long as one resident director is on the board.
2. Register your business
Private Limited Company registration runs through the MCA (Ministry of Corporate Affairs) portal using the SPICe+ form: Part A reserves your company name (two options, checked against the MCA database and trademark registry), and Part B handles capital, registered office, director and shareholder details, along with simultaneous applications for PAN, TAN, and GST. Total cost typically runs ₹7,000 to ₹25,000 all-in, with registration completing in 5 to 15 working days depending on how clean your documents are. A sole proprietorship, by contrast, needs only GST, Udyam, and Shop Act registrations, generally ₹1,000 to ₹5,000 and 3 to 7 working days. Keep authorized capital modest at first, ₹1 to 10 lakh is common, since you can raise it later via Form SH-7 once you actually need to, rather than paying inflated stamp duty and annual ROC fees upfront.
3. Check licenses and permits
India doesn't issue a single national business license. What you need depends on your industry and state; certain regulated activities carry their own permits and approvals on top of standard MCA registration.
4. Understand Indian corporate tax
Corporate tax in India works more like a menu than a single rate. The default regime taxes domestic companies at 25% for turnover up to ₹400 crore and 30% above that. Most new companies instead opt into Section 115BAA, a flat 22% concessional rate (effective around 25.17% once surcharge and cess are added) available to any domestic company willing to give up certain deductions, and companies under this regime are exempt from Minimum Alternate Tax (MAT) entirely, which simplifies compliance considerably. A separate 15% rate under Section 115BAB applies to new manufacturing companies meeting strict conditions. Foreign companies are taxed at a flat 35% plus surcharge and cess. For companies that stay on the standard regime, MAT itself drops from 15% to 14% starting 1 April 2026 under the Finance Act 2026.
5. Understand GST
India's GST system was significantly simplified on 22 September 2025: the old four-tier structure of 5%, 12%, 18%, and 28% collapsed into essentially two working rates, 5% for essentials and 18% as the standard rate covering most goods and professional services, plus a 40% band reserved for luxury and "sin" goods like tobacco and select luxury vehicles. GST registration is required once turnover exceeds ₹40 lakh for goods or ₹20 lakh for services; below that, registration is optional.
6. Stay compliant
Ongoing annual compliance for a Private Limited Company, accounting, ROC filings, income tax and GST returns, generally runs ₹15,000 to ₹40,000 a year with professional support. Business tax returns are due by 30 September following the relevant financial year for most companies. Keep GST and income tax records reconciled throughout the year rather than at filing time; mismatches are one of the most common sources of notices from the tax department.
India business costs at a glance
| Item | Cost |
|---|---|
| Sole proprietorship registration | ₹1,000 to ₹5,000 |
| Private Limited Company registration, all-in | ₹7,000 to ₹25,000 |
| Corporate tax, standard regime (turnover under ₹400cr) | 25% |
| Corporate tax, Section 115BAA concessional | 22% (~25.17% effective) |
| Minimum Alternate Tax (from April 2026) | 14% |
| GST, standard rate | 18% |
| GST, essentials rate | 5% |
| GST registration threshold (services) | ₹20 lakh turnover |
Frequently asked questions
Can a non-resident own 100% of an Indian Private Limited Company?
Yes, 100% foreign direct investment is permitted under the automatic route for most sectors, as long as one Indian-resident director sits on the board.
How much does it cost to register a Private Limited Company in India?
₹7,000 to ₹25,000 all-in through the MCA's SPICe+ form, completing in 5 to 15 working days.
What is Section 115BAA in India?
A flat 22% concessional corporate tax rate (effective around 25.17% with surcharge and cess) that most new companies opt into, exempting them from Minimum Alternate Tax entirely.
What changed about India's GST in 2025?
The old four-tier structure collapsed into essentially two working rates on 22 September 2025: 5% for essentials and 18% standard, plus a 40% band for luxury and sin goods.
When do I need to register for GST in India?
Once turnover exceeds ₹40 lakh for goods or ₹20 lakh for services.
Fees and rates above come from the Ministry of Corporate Affairs (MCA) and the GST Council as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to an India-qualified chartered accountant or company secretary about your specific situation.