How to set up a new company
Obtain Director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)
The applicant is required to fill out and submit Form DIN-1 to obtain the provisional DIN. This form is available online on the Ministry of Corporate Affairs 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately issued. The applicant is also required to pay an application fee of INR 100, which can be done online. The printed application form must then be signed and sent for approval to the Ministry of Corporate Affairs by courier, along with proof of payment (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of residence within 60 days of the date of generation of the provisional DIN. On receipt of the DIN application form and attached supporting documents, the concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The status of the DIN approval process can be checked online on the MCA portal. The provisional DIN itself is approved as the permanent DIN.
2 Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)
To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost structure. Company directors submit the prescribed application form along with proof of identity and address. After the DSC is obtained, it must be registered on the MCA portal before it can be affixed on any e-form. Once the Director has obtained the provisional DIN online, DSC may be obtained while the provisional DIN is being registered.
3 Reserve the company name online with the Registrar of Companies (ROC) (National)
Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on the MCA 21 website. A maximum of 6 suggested names can be submitted; they are then checked by ROC staff for any similarities with all other names in India. After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the Registrar of Companies electronically informs the applicant. In practice, it takes 2 days to obtain a clearance of the name if the proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee can be made online.
4 Stamp the company documents at the State Treasury (State)
The request for stamping the incorporation documents should be accompanied by unsigned copies of the memorandum (MOA), articles of association (AOA), and the payment receipt. The Superintendent at the State Treasury returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father-"s name, address, occupation, and the number of shares subscribed. This information must be in the applicant-"s handwriting and duly witnessed. The time involved in engrossing the documents may vary from 1 to 4 days, depending upon the mode of payment of the stamp duty charges: if the stamp duty is paid in cash (most common form of payment for small amounts such as these duty charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand draft, then engrossing may take 3-4 days.
5 Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National)
The following forms are required to be electronically filed on the website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies of the Memorandum and Articles of Association (MOA and AOA) and duly executed Power of Attorney (POA) must be attached to Form 1. The fees for registering a company can be paid online by credit card or in cash at certain authorized banks. Paying online reduces the time by 2–3 days compared with paying by bank draft. One copy of the Memorandum of Association, Articles of Association, Form 1, Form 32, Form 18, and the original name-approval letter, consent of directors, and stamped power of attorney must be physically submitted to the Registrar of Companies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of Incorporation, which is available online on the Ministry of Corporate Affairs website (as an e-certificate) after 2–3 days. The physical copy of the certificate is sent to the company office by registered or rush mail. The process takes from 3 to 7 working days.
6 Make a seal (Private)
Although making a company seal is not a legal requirement for the company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the number of seals required and the time period for delivery. The cost can range from INR 300 to INR 500.
7 Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)
Under the Income Tax Act (1961), each person must quote the Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN-related services, the Income Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor Services Ltd., which was authorized to set up and manage IT PAN Service Centers. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the abovementioned service centers using Form 49A, with a certified copy of the Certificate of Registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facilitation Centers will supply the PAN application form (Form 49A), assist the applicant in filling out the form, collect the filled-out form, and issue an acknowledgment slip. After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case may be, will print the PAN card and deliver it to the applicant. The application for PAN can also be made online or using the rush process called TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allotted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although the online application would speed up the process to obtain the PAN, applicants are not using the online system mostly because the documents must still be physically dropped off for verification with the authorized agent.
* 8 Obtain a Tax Account Number (TAN) for income taxes deducted at the source from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL), as outsourced by the Income Tax Department (National)
The Tax Account Number (TAN) is a 10-digit alphanumeric number required of anyone responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification of the application, the same is sent to the Income Tax Department for validation. The department will issue the TAN and communicate it to NSDL online. On the basis of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, any authorized franchise or agent appointed by the National Securities Depository Services Limited (NSDL) can accept and process the TAN application. The national government levies the income tax. The application for a TAN can also be made online. An application (Form 49B) can be submitted through TAN online at the NSDL-TIN website. Once the application is submitted online, a unique 14-digit acknowledgment number is generated. This acknowledgment number should be printed and sent to NSDL at the address mentioned on the NSDL-TIN website along with the processing fee. Payment can be made by check or credit card. Tracking the status of the e-registration at is available at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time to obtain the TAN by 2–3 days. However, the majority of applicants are not using the online system mainly because the online application has to be followed with an offline submission: the hard copy of the application is required to be physically filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allotted on a priority basis, at an extra cost, in approximately 5 days.
* 9 Register with the Office of Inspector, Shops, and Establishment Act (State/ Municipal)
Under the Kerala Shops and Establishment Act,-(1960), the application for registration using Form B1 must be submitted to the Labor Commissioner within 30 days of the opening of the establishment. An inspection may be made to verify the facts stated in the application. The registration fee depends upon the number of employees in the establishment.
* 10 Register for Value-Added Tax (VAT) at the Commercial Tax Office (State)
Under the Kerala VAT Act 2003, the application should be filed with the Commercial Tax Department using Form 1 and, upon verification, the authority shall issue the Certificate of Registration within 30 days of the application receipt. The application must be accompanied by: 1. Attested copy of proof of identity such as passport or Permanent Account Number card; 2. Declaration stating the name of the person deemed to be the manager of such business; 3. Memorandum and Articles of Association; 4. Certified copy of the Certificate of Incorporation; 5. Latest copy of the income tax return; 6. Copy of the Board of Directors' resolution to apply for registration. The schedule of fees is as follows:- a. Where the total turnover of the company is less than INR 500,000:- INR 500; b. Where the total turnover is greater than INR 500,000 but less than INR 1,000,000:- INR 750; c. Where the total turnover is greater than INR 1,000,000 but less than INR 5,000,000:- INR 1,000 + INR 25 for each INR 100,000 or part (there) of above INR 1,000,000; d. Where the total turnover is INR 5,000,000 and above:- INR 2,000 + INR 50 for each INR 100,000 or part thereof above INR 5,000,000 (the total registration fee shall not exceed INR 20,000).
* 11 Register for Profession Tax at the Profession Tax Office (State/Municipal)
This Act is applicable to all concerned shops and establishments in Kerala. Every employer is required to deduct a specified amount, based on the rates prescribed by the Act, from the salary of the employees. While registration is at the level of the state government, collection of tax is at the Municipal Corporation level.
* 12 Register with Employees' Provident Fund Organization (National)
The Employees Provident Fund Organization (EPFO) is a statutory organization under the Ministry of Labor and Employment. The Provident Fund registration focuses on delinquent reporting, underreporting, or nonreporting of workforce size. If a company has more than 20 employees, then it is mandatory to register with the EPFO and a code number will be allotted to the company. Once the employer is registered with the EPFO, it will register his employees with the office and open Provident Fund accounts in the name of each employee. More information is available at www.epfindia.gov.in. As per an internal circular, the code number is to be allotted within 3 days of the date of submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number later: in 12 to 15 days.
* 13 Register for medical insurance at the regional office of the Employees State Insurance Corporation (National)
Registration is the process by which every employer and every paid employee is identified for health-insurance purposes. The Employees’ State Insurance (ESI) Act (1948) provides for a fund administered by the ESI corporation in which contributions is made both by the employer and the employee at the rates prescribed by the National Government. The Employer should register within 15 days after the Act becomes applicable. For this purpose, the employer should submit Form 01 to the ESI regional office. Upon receipt of the registration form, the office shall allot an employer’s code number and shall inform the employer of that number through an “intimation letter” sent by post. An employee’s individual insurance involves a separate process, one which is initiated after employer’s registration. The employer should fill out declaration forms for all coverable employees and submit the same, along with Form 3, to the appropriate regional office within 10 days of the employee’s appointment date. The employees’ temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get a permanent ESI card. More information is available at http://www.esic.nic.in.