Company registration in India has moved almost entirely online: one integrated form now bundles your company name reservation, incorporation, PAN, TAN, and GST application into a single submission, and a sweeping 2025 reform just pared India's famously tangled GST slab system down to two rates that actually matter. This is how the process works heading into 2026.
1. Sole proprietorship, LLP, or Private Limited Company
Three structures dominate the landscape here, each suited to a different stage.
- Sole Proprietorship. No incorporation, no minimum capital, no MCA filing of any kind, it simply exists once you start doing business. One catch worth knowing: the proprietor generally has to be an Indian resident, which rules this option out for NRIs.
- LLP (Limited Liability Partnership). Requires two designated partners, at least one of them Indian-resident, and is taxed at a flat 30% regardless of how much the business earns.
- Private Limited Company. The go-to choice for anyone planning to raise funding, issue ESOPs, or scale meaningfully, since most investors won't put equity into a proprietorship or an ordinary partnership. It needs at least two shareholders and one director who is Indian-resident (meaning present in India 182 or more days in the prior financial year), though the automatic route permits 100% foreign direct investment in most sectors, so non-resident shareholders are typically fine provided one resident director sits on the board.
2. Registering the business
A Private Limited Company gets registered through the MCA (Ministry of Corporate Affairs) portal via the SPICe+ form: Part A reserves the company name (you submit two choices, checked against both the MCA database and the trademark registry), while Part B covers capital structure, registered office, and director and shareholder details, filed alongside simultaneous applications for PAN, TAN, and GST. All-in cost typically lands somewhere between ₹7,000 and ₹25,000, with registration wrapping up in 5 to 15 working days depending on how clean the paperwork is going in. A sole proprietorship needs far less: just GST, Udyam, and Shop Act registrations, usually ₹1,000 to ₹5,000 and 3 to 7 working days. It's worth starting with modest authorized capital, ₹1 to 10 lakh is typical, and raising it later through Form SH-7 once the business actually needs it, rather than paying inflated stamp duty and annual ROC fees from day one.
3. Licenses and permits
There's no single national business license covering all of India. What's required depends on your industry and state, and certain regulated activities need their own permits and approvals on top of the standard MCA registration.
4. Corporate tax regimes
Corporate tax in India functions less like one fixed rate and more like a set of regimes to choose between. The default taxes domestic companies at 25% on turnover up to ₹400 crore and 30% above that. Most new companies instead elect into Section 115BAA, a flat 22% concessional rate (working out to roughly 25.17% once surcharge and cess are folded in) available to any domestic company willing to forgo certain deductions, and companies choosing this regime are exempt from Minimum Alternate Tax (MAT) altogether, which cuts down on compliance considerably. New manufacturing companies meeting strict conditions can instead access a 15% rate under Section 115BAB. Foreign companies pay a flat 35% plus surcharge and cess. Companies that stick with the standard regime will see MAT itself fall from 15% to 14% starting 1 April 2026 under the Finance Act 2026.
5. GST after the 2025 reform
India overhauled its GST structure on 22 September 2025: the old four-tier system of 5%, 12%, 18%, and 28% narrowed to essentially two working rates, 5% for essentials and 18% as the standard rate applying to most goods and professional services, with a separate 40% band carved out for luxury and "sin" goods such as tobacco and select luxury vehicles. GST registration becomes mandatory once turnover passes ₹40 lakh for goods or ₹20 lakh for services; below those thresholds, registering is optional.
6. Staying compliant
A Private Limited Company's ongoing annual compliance, accounting, ROC filings, income tax and GST returns, typically costs ₹15,000 to ₹40,000 a year with professional help. Business tax returns for most companies are due 30 September following the relevant financial year. It pays to reconcile GST and income tax records continuously through the year rather than scrambling at filing time, since mismatches between the two are among the most common triggers for a notice 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.