Published Mon, 27 Feb 2023
For promoting ease of doing business in India, the Government has been taking several measures for establishing business entities in a hassle free manner by fully integrating applications for multiple services into a general incorporation form. After a business entity has been established in India, there are multiple business registrations and other regulatory approvals that are required to be obtained by such an entity from various regulatory authorities depending upon the nature, size and activity carried on by the entity.
In this Article, we have summarized major business registration(s) and other regulatory approvals to be obtained by a business entity:
Goods and Service tax (GST) is a ‘uniform’ ‘value added’ ‘indirect tax’ levied on supply of goods and services across the country. GST is a “destination-based tax” which is levied only on value addition at each stage because credits of input taxes paid at the time of procurement of goods or services are available and could be set off with output tax liability.
Under the Goods and Service Tax (GST) regime, businesses whose turnover exceeds Rs. 40 Lakhs (Rs 20 lakhs for service provider) are required to mandatorily obtain GST registration as a normal taxable person. Such registration shall be taken within 30 days of becoming liable to registration.
If a business entity which is required to obtain GST registration carries on business without registering under GST, it will be treated as an offence under GST laws and such an entity may incur heavy penalty. Obtaining GST registration is an online process and usually takes 3-5 working days.
Every person who wants to invest or start business in India is required to obtain a Permanent Account Number. PAN is a unique 10 digit alpha-numeric number issued to an applicant by the Income Tax Authority.
It usually takes 2-5 days to obtain an e-PANl. However, the physical PAN card may take time. Application for obtaining PAN can be made online on NSDL website. In case of Private limited, Public limited, Section-8 Company and One Person Company the same is applied along with incorporation of the business entity.
Tax Deduction and Collection Account Number (TAN) is required to be obtained by all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS).
Just like PAN, it is also a 10 digit alpha-numeric number issued by the Income Tax Authority. Application for obtaining TAN is to be made online on NSDL website. In case of Private limited, Public limited, Section-8 Company and One Person Company the same is applied along with incorporation of the business entity.
Though Trademark registration is not mandatory for any business entity in India, it is advisable to register your trademark to protect your unique brand, logo, slogan, etc.
Before proceeding with Trademark registration, it is important to check if the similar trademark does not exist and to identify the class in which the trademark shall be registered based on the business activity.
Trademark registration is an online process and the same can be done at the comfort of your home.
Once the trademark is registered, the registered proprietor of the trademark enjoys an exclusive right in relation to that trademark within the territorial jurisdiction of India.
Read our blog Trademark registration for details on the same.
Start-up registration allows an eligible entity (i.e. a private limited company or a limited liability partnership) which has been in existence for a period not exceeding 10 years from the date of incorporation to access a host of tax exemption (under Section 80IAC and Section 56 of the Income Tax Act, 1961), easier compliance and various other benefits.
Only those business entities which are working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with high potential of employment generation or wealth creation can opt for start-up registration.
It is not mandatory to obtain start-up registration but it is advisable to obtain the same if eligible, to access a host of tax exemptions and incentives available to the company.
Read our blog startup India for details on the same.
The benefit of seeking Micro, Small and Medium Enterprises (MSME) registration is that it allows small businesses to avail various benefits/ subsidies from the Government of India.
Whether a business entity is eligible for registration as a micro, small or medium enterprise depends on threshold limit for investment in plant and machinery or equipment and on its Annual Turnover as follows:
Manufacturing & Service Sector
Investment in Plant & Machinery
Investment not exceeding Rs. 1,00,00,000/-(Rupees One Crore)
Turnover not exceeding Rs. 5,00,00,000/- (Rupees Five Crores)
Investment not exceeding Rs. 10,00,00,000/- (Rupees Ten Crores)
Turnover not exceeding Rs. 50,00,00,000/- (Rupees Fifty Crores).
Investment not exceeding Rs. 20,00,00,000/- (Rupees Twenty Crores)
Turnover not exceeding Rs. 1,00,00,00,000/- (Rupees Hundred Crores).
Above both conditions need to be fulfilled to be eligible for respective types of enterprise.
MSME registration is a simple online process and can be done in a single day.
Some of the benefits of MSME registration include:
Timely payment in respect of goods sold or services rendered;
Interest on delayed payment at three times of the rate notified by RBI
Maximum credit period allowed is forty five days
Liberalized norms for listing of securities on SME platform
Priority sector lending
Read our blog MSME registration for details on the same
It is mandatory for a business entity engaged in export or import of goods to obtain Import Export Code (IEC). It is a unique 10 digit code issued by the Directorate General of Foreign Trade with lifetime validity. It is not possible to deal with export or import of goods or services without this code. Obtaining IEC is an online process and it takes 15-20 days to obtain IEC.
Read our blog Import Export Code for details on the same
Registration under Shop and Establishment Act is applicable nationwide and is applicable broadly for all business organizations and is required to be applied within 30 days from commencement of work.
Each state has different rules, regulations and procedures for registration under the Shop and Establishment Act. Currently, the registration need to be applied with incorporation application in the State of Delhi
The Employees Provident Funds and Miscellaneous Provisions Act, 1952, is applicable to every establishment in which twenty or more persons are employed and a factory engaged in any industry specified in Schedule I of the Act. Under this Act, both the employer and employee has to contribute 12% of the basic wages, dearness allowance and retaining allowance (if any) payable to each of the employees (whether employed by him directly or by or through a contractor).
EPF Registration is mandatory for every business organization having 20 or more employees. In case of Private limited, Public limited, Section 8 Company and One Person Company the same is applied along with incorporation of the business entity.
The objective of this Act is to provide financial security and stability in cases where an employee is no longer fit to work or at the time of his retirement.
ESI registration is mandatory for all business establishments employing 10 or more employees. In case of Private limited, Public limited, Section 8 Company and One Person Company the same is applied along with incorporation of the business entity.
Under The Employees State Insurance Act, the employer and employee has to contribute 0.75%* and 3.25%* each of the wages paid/payable to ESIC. Its objective is to provide benefits to employees in case of sickness, maternity and employment and to make provision for certain other matters such as injury or related matters.
*Revised Rates as applicable w.e.f 01.07.2019.
SEBI is the securities market regulator in India. Any company intending to issue securities to the public or to list its existing securities on a recognized stock exchange is required to obtain appropriate approval from SEBI considering the nature of issue.
Approval from RBI is required when a foreign company intends to establish Branch Office/ Liaison Office/ Project Office in India or when an existing company wants to carry on business as a Non-Banking Financial Company or any other regulated type of business.
Any person engaged in the business of manufacturing or processing or packaging or distributing or transportation of food items is required to obtain a license from FSSAI. FSSAI Registration is available in three broad categories depending upon the annual turnover of the business:
Basic Registration - Issued for businesses that are small in turnover – up to ₹12 lakhs approximately per annum.
State License – Issued for businesses that have a turnover greater than ₹12 lakhs require a state licence.
Central License – Issued for businesses that have a turnover greater than ₹20 lakhs require a central licence
The Insurance Regulatory and Development Authority of India (IRDAI) regulates and promotes Insurance and Re-Insurance Industries in India. The authority issues a license to Companies to deal in such kind of business.
TRAI is a statutory body that regulates the telecommunications sector of India. Companies engaged in business related to telecommunication services are required to obtain a license from the Department of Telecommunication which operates under TRAI.
A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route. Such investment will require approval of relevant Ministry(ies) as applicable.