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India Business Set-up
Any company either incorporated or registered in India are governed by the Companies Act 1956.
To appoint local director is not required while incorporating a company in India.
Foreign nationals may also incorporate company in India and may hold foreign equity up to 100%. This of course depends upon the sector in which the company will operate and is subject to the approval from either the Reserve Bank of India (RBI) or the Foreign Investment Promotion Board (FIPB).
The Memorandum of Association (MOA) states the main, ancillary or subsidiary along with other objects of the proposed company. The Article of Association (AOA) covers the rules and procedures for the routine conduct of the proposed company, the authorized share capital of the proposed company and also the names of its first or permanent directors. Thereafter, both MOA and AOA are required to be stamped
A stamp duty, depending on the authorized share capital, is to be paid on both.
Shares should be expressed in fixed amount. Shares like "No par value" or "bearer" are not permitted and the shares to be subscribed should be expressed in Indian rupees.
Each company is supposed to appoint an auditor annually at its AGM. The auditor must be qualified by virtue of the Institute of Chartered Accountants of India Act 1949 and should be completely independent of the concerned company. The audited accounts of the concerned company serve as a tool for various stakeholders like creditors, investors, bankers and revenue authorities.
The names and all the required personal details of the directors and secretary, share capital, register of charges, registered office address, and other such particulars should be filed with the Companies Registry for any public inspection upon incorporation and if there is any change thereafter.
An Annual General Meeting (AGM) is mandatory to be held once in every financial year and not more than 6 months after the end of the financial year. For a new company it is not required until 18 months of its incorporation.
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Every company has to appoint a company secretary to comply with the Indian Companies Act, 1956 to ensure all compliances related to board meetings, company registers, AGM, Annual Return, statutory reporting.
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As per the Indian Income Tax Act certain expenses are paid only after deducting tax (Tax Deduction at Source-TDS). Each expense head has different % of deduction and different concept. Every company will have to register for TAN (Tax Identification No.) to facilitate the tax deduction and return filing. As per the law – if TDS is not deducted the expenses incurred cannot be claimed for income tax calculations.
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Every company registered in India must pay advance tax every quarter based on the income generated in the respective quarters within the due dates as specified by the department.
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Every company providing services need to apply for Service Tax Registration. It is classified under Indirect Tax. If a person is providing service then service tax should be charged and paid to the Govt.
The Service Tax must be computed and must be paid every month with in the specified Time Limit. The company must also file half yearly return with the specified time.
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Every employee needs to pay professional tax on the salary if you are employed in the state of Maharashtra apart from Indian Income tax as per your salary slabs.
This tax is deducted from the salary in advance by the employer.
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This is the corporate tax return that needs to be computed every year and filed with the Income Tax Authorities based on the audited accounts before the due date for Income for every financial year.
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Company Formation in India