Converting Your Private Limited Company into an LLP: INDIA

Converting Your Private Limited Company into an LLP: INDIA

Table of Contents

  • Introduction
  • What is an LLP? Benefits of an LLP over a Private Limited Company
  • Eligibility Criteria for Conversion
  • Companies That Cannot Be Converted into an LLP
  • Documents Required for Conversion
  • Step-by-Step Procedure for Conversion
  • Tax Implications of Conversion
  • Why Choose for Your LLP Conversion?
  • FAQs on Conversion from Private Limited to LLP


Are you considering converting your private limited company into a Limited Liability Partnership (LLP)? With relaxed compliance norms but limitation of liability advantages, LLPs are emerging as a preferred entity of choice for small and medium enterprises in India.

As per recent stats, over 2 lakh companies have already opted for LLP conversion to take advantage of operational flexibility coupled with improved profit margins.

This comprehensive guide takes you through all the nitty-gritties of private limited to LLP conversion – explaining benefits, eligibility norms, required documents, step-by-step procedural aspects as well as tax implications in detail.

So if you too are planning this switch, read on to find out everything about making a smooth transition.

What is an LLP? Benefits of an LLP over a Private Limited Company

An LLP or Limited Liability Partnership integrates the flexibility of a general partnership as well as the advantages of limited liability for its partners, similar to a Private Limited Company.

Here are some noteworthy benefits that make LLPs score over conventional private limited entities:

  • Lesser Compliance Norms: Unlike private limited firms, LLPs are not mandated to conduct meetings, prepare cash flow statements or even get their accounts audited.
  • Operational Flexibility: LLP Agreement lays down mutually-agreed governance terms among partners. Changes in partners do not impact continuity of business.
  • Lower Cost of Formation: Cost of incorporating and maintaining an LLP is significantly lesser compared to a private limited company.
  • Taxation Benefits: No DDT (Dividend Distribution Tax) or MAT (Minimum Alternate Tax) is applicable on profits of an LLP.

LLP vs. Private Limited Company – A Quick Comparison

ParameterLLPPrivate Limited Company
Compliance RequirementsLowHigh
Operational FlexibilityHighLow
Limited LiabilityYesYes
Taxation RatesLower due to absence of DDT, MATHigher
Cost of Formation & MaintenanceLowerHigher

Clearly, ease of administration coupled with tax savings make LLP conversion an appealing bet for private limited companies once they achieve significant scale.

Eligibility Criteria for Conversion

As per the Limited Liability Partnership (LLP) Act of 2008, a private company can opt for LLP conversion if it meets the following eligibility norms:

  1. There is no security interest on the company assets at the time of application
  2. No pending e-forms or statutory dues exist
  3. No charges are registered against the company
  4. All shareholders have given consent for the proposed conversion
  5. All creditors have given their approval for the conversion
  6. At least one year’s financial statements and annual return must be filed with RoC
  7. Paid-up share capital must be there in the company

Additionally, the applicant company should have filed its income tax returns up to date and must not be registered under Section 25 of the Companies Act i.e. it should not be a Section 8 company.

Companies That Cannot Be Converted into an LLP

While LLP conversion norms are relaxed, there are certain categories of private companies that do not qualify for this change:

  • Companies operating in banking/insurance/NBFC/stock broking sectors
  • Companies that have secured loans or borrowings
  • Private companies receiving foreign direct investment with performance-linked conditions
  • Entities that have opted for external commercial borrowings
  • Companies receiving FDI under automatic or government approval route

Thus, trading, manufacturing, and service sector companies with decent scale and limited reliance on institutional debt make for ideal LLP conversion candidates.

Documents Required for Conversion

To initiate the LLP conversion process for your private limited firm, keep the following documents handy:

  • Shareholder Consent: Approval from all shareholders in specified format
  • Incorporation Documents: Memorandum of Association (MoA) and Articles of Association (AoA)
  • Tax Clearances: No objection certificates from Income Tax department
  • Creditor Consent: Approval from secured as well as unsecured creditors
  • Financial Statements: Latest audited balance sheet and annual return
  • Partner Statements: Declaration from shareholders agreeing to become LLP partners

Table of Documents Required for Conversion

For CompanyFor Credit/Financial AspectsFor LLP Formation
MOA, AOACreditor ConsentDesignated Partner Consents
Board ResolutionIT ClearancePartner Proofs
Shareholder ApprovalFinancial StatementsDraft LLP Agreement

Preparing this paperwork can take 1-2 weeks depending on your company size and creditor base. Plan in advance for a smooth transition.

Step-by-Step Procedure for Conversion

The private limited to LLP conversion procedure involves 7 key steps:

Step 1) Obtain DIN for New Partners

First and foremost, the intended designated partners of the LLP must procure their Director Identification Numbers (DINs), along with Digital Signature Certificates (DSCs) which are mandatory for DIN application.

Step 2) Convene Board Meeting for Approval

Once new partners have obtained DINs, the existing company needs to conduct a board meeting for approving LLP conversion plans. The resolution must be filed with MCA in Form MGT-14.

Step 3) Apply for LLP Name Approval

You can now initiate the process of name reservation and approval by applying in Form RUN. Ensure your preferred LLP name is unique, distinct, and does not resemble any existing trade mark.

Step 4) File Incorporation Form (FORM FiLLiP)

The next step involves actual LLP incorporation by filing the FiLLiP e-form along with copy of registered office address proof, partner consents, identity-resident proofs, and details of partner interests in other firms.

Step 5) Apply for Conversion via Form 18

Form 18 is the specific application form for private limited conversions. Along with Form 18, you must submit financial statements, income tax clearance records, shareholder consents, creditor no-objection certificates, and other documents.

Step 6) Draft LLP Agreement

With incorporation formalities completed, the designated partners must draft an Agreement laying down the governance structure including roles-responsibilities matrix and profit-sharing terms among partners.

Step 7) Intimate RoC via Form 3 and Form 14

Finally, within specified timelines, the LLP must intimate MCA about the creation of LLP Agreement (via Form 3) and conversion completion (via Form 14) along with attachments.

Example LLP Conversion Timeline

Board Resolution and Document Collection1-2 weeks
Name Approval and FiLLIP Filing1 week
Form 18 Filing + Financial Statements2 weeks
LLP Agreement Drafting1 week
Overall Conversion Time4-6 weeks

This completes the conversion process – and your private limited company now continues operations as a limited liability partnership or LLP!

Tax Implications of Conversion

  • Tax is rarely levied on private limited to LLP conversions as it is not regarded as an asset “transfer” by the Income Tax Act
  • However, to avail tax exemption, certain pre-requisites must be fulfilled:
  1. Company assets-liabilities must fully vest in converted LLP entity
  2. Shareholders must become LLP partners with same profit-stake ratios
  3. Partner benefits must accrue purely from capital contribution and sharing ratios rather than side deals
  4. Aggregate turnover must be under Rs. 60 lakhs and asset value under Rs. 5 crores in preceding 3 years

If these conditions are met, capital gains tax and other levies can be safely avoided. Do consult an expert tax advisor to be doubly sure.

Why Choose for Your LLP Conversion?

When navigating the complex private limited to LLP conversion process, expert assistance is key for a smooth transition. makes life easy through end-to-end support including drafting documents, liaising with MCA, ensuring tax optimization and hand holding till your LLP registration formalities conclude.

With a 99% success rate across 10,000+ clients served over the past decade, is your safest bet for:

  • Low Cost Services: High-quality deliverables at just Rs. 4999 all-inclusive pricing
  • Quick Turnarounds: Express conversions delivered within just 4-5 working days!
  • Reliable Expertise: Seasoned lawyers and CAs with 10+ years domain experience
  • Round-the-Clock Support: Phone, WhatsApp, Email assistance for prompt query resolution

Be it company registration, accounting, trademark services or annual compliances – Filingwala assists at every milestone with full commitment to ethics and transparency.

To get started right away or clear any conversion-related doubts, call +91 70204 38881 now!

FAQs on Conversion from Private Limited to LLP

Q1. Can a One Person Company (OPC) get converted into an LLP?

Yes, OPCs can definitely opt for LLP conversion by passing a member’s resolution and submitting applicable forms with RoC approval.

Q2. Does LLP conversion alter the original company incorporation date?

No, the incorporation date remains unchanged even after conversion. The company is treated as the same continuing entity, only the form has changed from private limited to LLP.

Q3. What happens to existing Director Identification Number (DIN) after LLP conversion?

Once conversion is completed, the private company Directors automatically become LLP Designated Partners. Their existing DIN remains valid post-conversion as well without any modification.

Q4. Can audited financial statements be submitted after filing conversion forms?

While not preferred, submission of financial statements up to 60 days after filing Form 18 has been allowed by MCA under extenuating circumstances on case-to-case basis. However, all other documents must be submitted upfront without exception.

Q5. How much time does LLP conversion usually take?

If supporting documents are in order, the conversion process gets completed within just 12-15 working days from FiLLiP filing date. Our express conversion services reduce timelines even further to just 4-5 working days!

Convert Pvt Ltd Company to Public Limited Company in India

pvt ltd company to public limited company registration
pvt ltd company to public limited company registration

Have you been thinking about converting your Pvt ltd company to public limited company (PLC) but don’t know where to begin? Well, you have come to the right place!

Converting to a public limited structure opens up tremendous growth opportunities through access to public capital, increased credibility, and prestige. However, it also requires meeting several regulatory compliance norms.

This comprehensive guide from India’s top experts at takes you through the entire private to public company conversion process step-by-step. Read on to fully understand eligibility, documents required, procedure and costs involved.

Table of Contents

  • Private Ltd vs Public Ltd Company
  • Benefits of Becoming a Public Company
  • Checklist of Requirements for Conversion
  • Post Conversion Requirements
  • Step-by-Step Procedure for Conversion
  • ROC Forms and Filings Needed
  • Documents Required for Conversion Process
  • Why Choose
  • FAQs on Private to Public Conversion

Key Differences Between Private Limited and Public Limited Company

Let’s first briefly understand 6 main differences between a private limited & public limited company:

ParameterPrivate Limited CompanyPublic Limited Company
Minimum Paid-up Capital₹1 Lakh₹5 Lakhs
Trading of SharesNot freely transferableFreely tradeable on stock exchanges
Minimum Number of Members27
Number of Directors23
ListingCan’t be listedCan be listed for public fundraising
ComplianceLower accountability & disclosure normsHigher transparency through accountability

So in summary, a public limited structure makes your company more transparent, accountable and opens doors for accessing larger capital from public investors. But this comes with added responsibilities and compliance overhead.

Key Benefits of Converting to a Public Limited Company

Here are some of the main advantages of converting from a private limited to a public limited company:

1. Ability to Raise Capital through Public Listing

The biggest benefit is that you can now issue IPOs and raise large amounts of capital from public retail and institutional investors. This fresh capital can be used to fuel rapid growth plans.

2. Increased Credibility & Trust

Being a listed entity on the stock exchanges increases visibility and establishes credibility with customers, vendors and the public.

3. Higher Valuations

Listed companies often get higher valuations during acquisitions or investments from private equity/venture capital funds.

4. Improved Corporate Governance

More independent directors on board, oversight by SEBI and accountability to shareholders leads to better corporate governance.

5. Prestige of Being a Listed Company

Having your company name and stock quote listed in the financial pages of newspapers and websites brings huge prestige.

6. Exit Opportunities for Investors

It offers early investors better exit opportunities to cash out through the IPO or by selling their shares later.

Thus, converting to public limited company offers long-term growth opportunities. Now let’s look at exactly what’s needed to undertake this conversion process.

Checklist of Requirements for Private to Public Company Conversion

Here are the key legal requirements and procedural conditions for converting from a private limited into a public limited company:

  • Must have minimum 7 members/shareholders
  • Minimum paid-up capital of ₹5 lakhs
  • Minimum 3 Directors on Board
  • No overdue statutory filings or charges
  • Special Resolution approval from shareholders
  • Alter Memorandum & Articles of Association
  • Obtain NOC from creditors/lenders if any
  • Consent from Directors, Auditors etc.
  • Approval from Regional Director if turnover exceeds thresholds
  • Filing with Registrar of Companies (ROC) for name/status change

Additionally, the company directors also need to have valid DIN numbers. So if your private limited company meets all the above criteria, you can proceed to the actual conversion process.

Post Conversion Requirements

After completing the private to public conversion, companies also need to fulfill a few additional formalities:

  • Apply for a fresh PAN card
  • Update company name on stationery, invoices etc.
  • Notify banks and update company details
  • Inform sales tax, income tax and other government authorities
  • Start complying with listing and public company guidelines

This ensures the transition is smooth for all stakeholders.

Step-by-Step Procedure for Private to Public Company Conversion

The entire conversion process involves 8 key steps which are explained below:

Step 1) Check Eligibility for Conversion

First check if your private company meets all the eligibility criteria outlined earlier in terms of shareholders, paid capital, directors etc.

Step 2) Pass Board and EGM Resolutions

Conduct board meeting to approve conversion. Fix date for shareholder EGM to pass Special Resolution.

Step 3) Make Changes in MOA & AOA

Make necessary alterations to Memorandum & Articles of Association as per public company requirements

Step 4) Obtain NOCs from Lenders

Take No Objection Certificate from banks/financial creditors if your company has any outstanding loans.

Step 5) Seek Creditor, Director etc. Consents

Obtain consent from directors, auditors and major creditors for the proposed conversion.

Step 6) File Forms with ROC

Key forms to be filed with Registrar of Companies for conversion:

  • Form MGT-14: Filing of EGM Special Resolution
  • Form INC-27: Application for Conversion of Company

Step 7) Issuance of Fresh Certificate of Incorporation

Once satisfied, ROC will issue a fresh Certificate of Incorporation with the new company name and status.

Step 8) Post Conversion Compliances

Complete other formalities outlined in the post-conversion requirements section.

That completes end-to-end private to public limited company conversion process. Quite straightforward, isn’t it?

Now let’s look at some key documents needed for conversion.

Documents Required for Private to Public Conversion

Here are the main documents & information required for converting a private company to public limited:

  • Copies of MOA & AOA – Existing Memorandum & Articles of Association
  • List of Directors & Shareholders – With PAN card copies
  • EGM Notice & Resolution – Containing agenda of conversion
  • Audited Financial Statements – Past 3 years audited balance sheets & profit/loss statements
  • Digital Signature Certificates – Class 2 or 3 DSC for authorised directors
  • Latest Electricity/Water Bill – Related to registered office address as address proof
  • NOC from Creditors – No Objection Certificate giving consent for conversion
  • List of Assets & Liabilities – Latest statement of assets & liabilities

So make sure you have all the above documents handy before initiating the private to public conversion process.

Now let’s look at why you should choose expert assistance from for ensuring smooth conversion of your company.

Why Choose for Your Private to Public Conversion? is India’s #1 platform for business and legal services catering to over 1 lakh SMEs and startups. Our dedicated experts provide end-to-end assistance for private to public company conversion including:

1. Complimentary Consultation – Our experts will advise you on the overall conversion process, timelines, documents required etc. so that you are completely prepared.

2. Change MOA & AOA Drafting – We help you make the required changes in MOA & AOA as per public company norms and provide print-ready digitally signed copies.

3. E-Filings & ROC Compliance – Our platform reduces paperwork by helping you with all ROC registrations, eform filings, followups to ensure faster approval.

4. Post Conversion Formalities – Our team assists you with all regulatory updates and stakeholder notifications for seamless changeover into public company.

5. Dedicated Assistance – You get a relationship manager for end-to-end assistance & updates on conversion status without chasing officers.

6. Affordable Pricing – Our fixed pricing means you get the expertise of CA/CS professionals without extra charges for time overruns. Zero hidden costs either.

7. Quick Turnarounds – Our automated platform ensures we deliver most conversion services in just a month!

So forget all that manual paperwork and SC/ST office chasing. Partner with today to convert your private limited into a public limited company quickly and hassle-free!

Frequently Asked Questions (FAQs)

Below are answers to some common questions about private to public company conversion:

Q. Which section allows private to public company conversion?

A. Section 18 of Companies Act, 2013 governs the voluntary conversion of a private company into a public company.

Q. What’s the minimum authorized capital for public company?

A. Minimum authorized share capital for a public limited company is Rs. 5 lakhs. Minimum paid-up capital also needs to be Rs. 5 lakhs.

Q. What makes a company eligible for getting converted?

A. The private company should meet the eligibility criteria in terms of number of members, directors, authorized capital etc. as per Checklist outlined earlier.

Q. How long does the conversion process take?

A. Complete process takes around 30-45 days including regulatory approvals. Expert assistance can cut down time to 3-4 weeks.

Q. Is name change mandatory during private to public conversion?

A. Yes, the company has to change name to add ‘Limited’ as suffix instead of ‘Private Limited’ after conversion to public company.

We hope this detailed guide helps you understand everything involved in private to public company conversion – eligibility norms, documents required, step-by-step procedure, costs and timelines. has simplified incorporations, ROC filings and regulatory compliances for over 1 Lakh businesses so far thanks to our tech-led platform, CA/CS assisted services and affordable pricing.

So if looking for reliable assistance on your company conversion, then contact us today!

4 Simple Ways to Close Your Private Limited Company in 2023

4 Simple Ways to Close Your Private Limited Company in 2023

A step-by-step guide on legally shutting down your private limited company in India

Running a private limited business comes with its own unique challenges. Sometimes, things simply do not work out or you may want to move on to other ventures. In such cases, legally closing down your company is important to avoid future liabilities.

This definitive guide covers all you need to know about closing a private limited company in 2023 in compliance with the latest Indian regulations:

Table of Contents

  • Introduction
  • 4 Ways to Close Your Private Limited Company
    • Sell the Company
    • Compulsory Winding Up
    • Voluntary Winding Up
    • Defunct Company Winding Up
  • Documents Required
  • Timeline and Costs
  • FAQs
  • Expert Assistance from Filingwala


Deciding to close your private limited company can be difficult but is often necessary. According to industry experts, over 20% of new companies fail in their first year while over 50% close down within their first five years of operations.

Reasons for shutting down vary – lack of profits/capital, promoter disputes, regulatory issues, etc. The process can seem intimidating but following the proper step-by-step procedure makes it hassle-free.

We will explore the 4 main routes laid out under the Companies Act 2013 to legally close your private limited business. This includes:

  1. Selling the Company
  2. Compulsory Winding Up
  3. Voluntary Winding Up
  4. Defunct Company Winding Up

Pro tip: Work with a professional consultant to ensure smooth closure while avoiding future liabilities.

4 Ways to Close Your Private Limited Company

1. Sell the Company

Selling your private limited company by transferring majority shareholding is the simplest approach. It does not require actual court monitored winding up but does legally transfer liabilities.


  • Find potential buyers for majority or complete company shares
  • Negotiate share transfer agreement with buyer
  • Pass special resolution in board meeting approving sale
  • File MGT-14 form with RoC within 30 days
  • Submit share transfer deed, directors’ consent, updated AoA/MoA
  • Transfer digital signatures, company credentials etc.

Selling allows promoters to exit the business while new owners take over its assets/liabilities in fast one-stop process. This route is best when your company has good financials, clientele, growth potential but you as promoters want to move on.

2. Compulsory Winding Up

Compulsory winding up is initiated by a tribunal order under Section 271 of Companies Act 2013. It is done if the company has acted unlawful, fraudulent, or violated compliance norms.

The detailed court monitored procedure involves:

  • Petition Filing: By company, creditors, contributories, registrar or government in NCLT
  • Affidavits Submission: Statement of affairs, auditor certification
  • NCLT Hearing: Accepting objections, appointing liquidator
  • Liquidator Custody: Taking custody of assets, books of accounts
  • Dissolution Order: Passed within 60 days of application

Compulsory winding up ensures assets are properly valued before dispersing while clearing outstanding debts in order of priority. It requires detailed compliance and can take 6-12 months based on case complexity.

3. Voluntary Winding Up

As the name suggests, voluntary winding up is initiated by the company itself through a special shareholder resolution. It is done when the business has run its term or promoters voluntary want to close operations.

The key steps are:

  • Board Resolution: 75% director majority consent
  • Shareholder Resolution: 75% shareholder majority consent
  • Liquidator Appointment: Confirmation by creditors
  • Declaration of Solvency: Directors declare company’s ability to clear debts
  • Winding Up Report: Details assets, liabilities, creditors etc.
  • Dissolution Order: Passing within 60 days of application

Voluntary winding ensures transparency by quantifying assets/liabilities with the dissolution order validating clearance of all outstanding debtor claims. The process takes 4-8 months on average.

4. Defunct Company Winding Up

Defunct companies are those that have not conducted any business for over an year or never commenced operations after incorporation.

Such companies can simply submit a STK-2 form with below information to ROC to fast track dissolution:

  • No pending litigation or outstanding statutory dues
  • No existing assets or liabilities
  • Not carrying on any business since incorporation
  • Never commenced operations after incorporation

This simplified fast track exit route allows quick closure with minimal compliance burden. The STK-2 form based winding up takes just 1-2 months.

Key Comparison of Winding Up Procedures

BasisCompulsoryVoluntaryDefunct Company
Initiated ByNCLT, Creditors etc.Company DirectorsCompany Directors
OrderTribunal OrderTribunal OrderDirect Submission
Timeline6-12 months3-8 months1-2 months
Suitable ForMismanaged FirmsCompleted Term FirmsNever Active Firms

Documents Required

While exact documents vary based on specific closure route, some common ones needed are:

  • Updated Memorandum & Articles of Association
  • List of Assets & Liabilities
  • Audited Financial Statements
  • Copy of Shareholder Resolutions
  • Director Declarations & Affidavits
  • Liquidation /Insolvency Forms
  • Bank Statements
  • TDS Certificates
  • GST Returns
  • Income Tax Returns

Maintaining proper books of accounts and updated records right from inception simplifies the closure process later on.

Timeline and Costs

The time taken for private limited company closure varies from 1-12 months depending on route taken. Approximate timeline and lawyers+government fees for each are:

Sell Company1-2 monthsRs. 15,000+
Compulsory6-12 monthsRs. 50,000+
Voluntary4-8 monthsRs. 30,000+
Defunct1-2 monthsRs. 10,000+

The cost is inclusive of professional fees and various government/regulatory charges for filing dissolution application, issuing public notices, affidavit preparation etc. Defunct company STK-2 form offers the fastest and most affordable exit route.


Q1. Can you reverse private limited company closure?

No, once dissolution is complete and certified by RoC you cannot legally resurrect the company. Assets get transferred or liquidated.

Q2. What happens to company assets/liabilities after closure?

All assets get accurately valued and distributed priority wise to clear debts, taxes, employee dues followed by payments to owners/shareholders.

Q3. Is director approval required for shutting down?

Yes, 75% of directors need to consent to voluntary closure. For compulsory winding majority decision is not required.

Q4. Can closure application get rejected by ROC/NCLT?

Yes, if mandatory affidavits, directors consent, creditor notices, valuations etc. are inaccurate or inadequate the dissolution order may get rejected resulting in delays.

Expert Assistance from Filingwala

Closing a private limited company involves many intricate compliance, valuation and legal aspects. Doing it yourself can lead to complex delays and failures.

This is where working with a professional consultant like Filingwala simplifies the entire process. Their team of CA, CS and lawyers help with:

  • Choosing the optimal closure route
  • Preparing all affidavits/forms
  • Issuing creditor notices
  • Drafting board/shareholder resolutions
  • Executing asset valuations/transfers
  • Responding to objections if raised
  • Facilitating smooth order procurement

Right guidance ensures you avoid any violations or future liabilities when shutting down companies even with complex management and ownership structures.

So relax while the experts at Filingwala quickly and affordably manage your private limited company closure! Reach out for a free consultation now!

New Ancestral Property Tax Rules Bother NRIs

New Ancestral Property Tax Rules Bother NRIs

A recent government notice regarding ancestral property tax has created confusion and uncertainty among Non-Resident Indians (NRIs) inheriting family assets in India. The tax department has clarified that all inherited properties will be subject to capital gains tax when sold, even if the new owner is an NRI or overseas citizen of India (OCI).

As per the guidelines, the cost basis of an inherited property will be calculated based on its valuation in 2001 or the actual purchase cost paid by the previous owner, whichever is higher. Several deductions and indexation benefits applying to residents do not extend to NRIs increasing their total tax liability.

These rules have surprised many NRIs who have inherited ancestral homes or land as part of family settlements in India.

Who do the new ancestral property tax guidelines impact?

The updated guidelines on capital gains tax on inherited properties primarily impact:

  • Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) who have received ancestral homes, farms, plots or other real estate as inheritance from relatives in India.
  • While existing properties gifted to NRIs living abroad also come under purview, the major effect is on inheritors who are tax residents overseas.
  • Second or third generation children of NRIs who have been bestowed family owned assets passed down via succession laws on their parents’ demise.
  • OCI cardholders now face similar tax implications as NRIs when inheriting and selling Indian properties after a recent policy amendment.

Experts estimate nearly 5 million NRIs could be dealing with ancestral assets transfers in coming years. This group is worried about substantial tax burdens even though most inherited property sales fund retirement corpuses or major life needs.

Historical cost basis versus 2001 valuation causes confusion

A key aspect of the ancestral property tax rules is the cost basis dependence on 2001 valuations rather than the original purchase cost which created difficulties for many NRI taxpayers:

  • Drive towards real estate indexation: Indexed cost method adjusting for inflation is used rather than historical actual cost at which previous owners obtained the property.
  • Lack of comprehensive valuation records: Obtaining accurate property values from over 20 years ago especially in rural areas with inadequate infrastructure proves troublesome for those inheriting older properties.
  • Higher taxes due to unavailable deductions: Accurate records also essential for claiming deductions, exemptions, etc. which are now inaccessible causing larger capital gains tax incidence for NRI inheritors.
  • Subjectivity in valuation reports: Getting registered valuers to provide fair market value estimates often involves subjective opinions on outdated infrastructure development, pricing trends etc leading to inconsistent assessed costs.
  • Circular complexity causes taxpayer confusion: Complex wording and frequent circular references make cost basis rules ambiguous to interpret. Lack of accompanying examples, FAQs leave much clarity to be desired.

The combination of such issues during a sensitive period of grief has aggravated difficulties for NRIs handling inherited assets. Harsher tax implications prevent them from smoothly transferring assets even for important needs like medical care or children’s higher education.

Sensible solutions muted so far

Realizing higher revenues from the large diaspora of high net worth individuals seems to be impeding accommodative solutions, claim concerned groups. They recommend:

  • Allowing historical cost basis: Using actual cost at which assets were originally purchased rather than mandating 2001 valuations eases process without substantial revenue impact.
  • Transparency around valuations: Standardizing valuation guidelines, making circle rates publicly available, regulating valuer licenses etc. to remove ambiguity.
  • More exemptions and deductions: Introducing special carve outs similar to available benefits for residents will align the playing field.

However, the government stance remains rigid so far. Authorities suggest technological improvements, such as online portal access, as redressal. However, stakeholders assert that substantive issues persist, including unrealistic valuations, unavailable deductions, and circular complexity. These issues require dedicated reform focus from policy makers.

What are the next steps for concerned NRIs?

As controversies rise around unrealistic tax burdens on inherited property sales, confusion prevails on way forward for NRIs:

  • Seeking extensions before sale: Inheritors are deferring property sales while lobbying for relief measures. But this delays fund availability for important life needs.
  • Contesting unfair valuations: Obtaining multiple valuation reports, comparing with circle rates etc. to dispute unfavorable cost basis. Success rates vary case-to-case causing more delays.
  • Structuring smart partitions: Consulting tax experts to divide assets keeping tax implications in mind before confirming inheritances. Helps mitigate future liabilities.
  • Planning property investments: Setting up local investment vehicles for routing inheritances to avail resident tax benefits before property sale. Involves additional compliance requirements.

Managing sentimental values while making such calculations adds further emotional burden for NRIs handling delicate family property transfers from abroad. However, the need for tax certainty will continue to drive their agenda with policy makers.

In conclusion, the ancestral property tax changes reveal gaps between policy intent and practical challenges for NRI inheritors. Addressing their limitations constructively by factoring unique needs will be key to resolving this long standing legacy issue amicably.

Limited Liability Partnership (LLP) Registration in India: Step-by-Step Guide

Limited Liability Partnership (LLP) Registration in India: A Step-by-Step Guide for 2024

Table of Contents

  • Introduction
  • What is an LLP?
  • Advantages and Disadvantages of an LLP
  • LLP vs Partnership: Key Differences
  • Documents Required for LLP Registration
  • LLP Registration Process Step-by-Step
    • Digital Signature Certificate
    • Designated Partners
    • Apply for DIN
    • Apply for LLP Name
    • Prepare LLP Agreement
    • File LLP Registration Documents
    • Obtain Certificate of Incorporation
    • Make a Seal/Stamp
    • Open a Current Bank Account
    • Register for TAN and GSTIN
    • Additional Compliances
  • LLP Registration Cost Breakdown
  • Role and Responsibilities of Designated Partners
  • Conclusion
  • FAQs on LLP Registration

Gone are the days of traditional partnership and sole proprietorship businesses in India. Today, the Limited Liability Partnership (LLP) model offers an attractive alternative for entrepreneurs and small business owners.

An LLP combines the flexibility of a partnership with the advantages of limited liability of a company. This simple yet powerful hybrid structure has made LLPs immensely popular in recent years.

But how exactly do you go about registering an LLP in India? What documents do you need? And what are the compliance requirements post registration?

This comprehensive guide answers all such questions in depth. So whether you’re just starting out or planning to convert your existing business into an LLP, you’ll find this article helpful.

Let’s get started!

What is a Limited Liability Partnership (LLP)?

An LLP essentially provides the benefits of limited liability of a company while allowing its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement.

Here are some key characteristics of an LLP in India:

  • Separate legal entity from its partners/members
  • Governed by LLP Agreement between partners
  • Requires minimum two partners and two designated partners
  • Limited liability protection to partners
  • No requirement to maintain statutory minimum capital
  • Flexibility in ownership transfer
  • Easy to dissolve

So in a nutshell, an LLP provides the twin benefits of separate legal status and flexibility of a partnership – the best of both worlds.

This makes the LLP structure ideal for small business owners, startup founders, consultants, professionals and enterprises who wish to conduct business without onerous company-like compliances.

Having understood what an LLP means, let’s look at some of its major advantages and disadvantages before moving on to the registration procedure.

Key Benefits or Advantages of an LLP

Limited Liability for Partners: The biggest advantage of an LLP is limited liability for its partners. Personal assets of partners are protected from any business-related debts and external claims. Maximum liability is up to their agreed capital contribution.

No Requirement for Statutory Audit: LLPs are exempt from mandatory statutory audit if annual turnover does not exceed ₹40 lakhs or contribution does not exceed ₹25 lakhs. This results in cost savings.

Simple Compliance Requirements: Very few annual filing and disclosure requirements for LLPs compared to private limited companies. No need to conduct board meetings. Provides operational flexibilities to partners.

Low Cost Incorporation: Cost of incorporating an LLP is significantly lower with fewer procedural requirements compared to a private limited company. No stamp duty or government fees on registration.

Flexibility in Ownership Transfer: Unlike a private/public limited company, there is no restriction on transfer of ownership in an LLP. New partners can be admitted without any hassles.

Easy to Dissolve/Wind-up: An LLP is relatively easier to dissolve compared to a company. Only filing of a statement with the ROC is sufficient to initiate dissolution while ensuring limited liability.

Global Recognition: LLP structure is recognized worldwide. Makes it easier to attract foreign partners, capital and conduct international trade. Supports business expansion plans.

Scalability: An LLP structure is suitable for both small and big businesses. Provides room for unlimited partner addition while retaining features of partnership and corporate structure.

Taxation Benefits: Certain taxation benefits are available for LLPs including no dividend distribution tax, lower corporate tax rates if turnover is below Rs 1.5 Cr. and avoidance of double taxation.

Key Disadvantages or Limitations of LLP

No Separate Fund Raising Options: Unlike a company, an LLP cannot raise funds from the public by issuing shares and debentures. Dependent only on partners’ investments and loans.

Ambiguity in Some Operational Aspects: While an LLP agreement governs partner rights and duties, some aspects like registration of charges and bankruptcy proceedings are still ambiguous compared to companies.

Higher Tax Compliance Burden: If annual turnover exceeds Rs. 1.5 crore, LLPs lose several tax exemptions meant for small businesses. Tax rates increase with higher revenues.

Lower Brand Value Perception: LLP tag may not carry the same credibility and brand positioning compared to a private limited tag from customer perspective.

Lack of Clarity on Residual Mechanism: In case of dissolution, the LLP Act does not adequately clarify subsequent asset/liability distribution mechanism amongst partners.

Restriction on Business Activities: LLP structure cannot undertake certain business activities such as non-banking financial services, insurance broking etc. without RBI and IRDAI’s approval respectively.

So while LLPs have multiple advantages, partners should also consider a few limitations before opting for it. Having an LLP may not suit all kinds of businesses and stakeholder needs.

LLP vs Partnership Firm: Major Differences

Now that you know the basics of an LLP, you may be wondering how it differs from a traditional partnership firm.

Here is a quick comparison:

BasisPartnership FirmLLP
RegistrationNo separate registration requiredSeparate registration with ROC mandatory
Legal StatusPartners jointly constitute the firm, no separate legal standingIndependent legal entity, separate from its partners
Liability ProtectionUnlimited personal liability except for limited partners in limited partnershipsLimited liability shield available to all designated and other partners based on LLP agreement
Ownership ChangesConsent of all partners required for changesEntry/exit of partners allowed with mutual consent based on LLP Agreement
DissolutionDissolution possible only by consent of all partnersDissolution relatively simpler based on LLP Agreement clauses
CompliancesVery limited compliancesMore compliances compared to partnership but significantly lower than a company
Funding OptionsLimited funding optionsWider external funding sources
Credibility & BrandingLower credibilityHigher credibility and branding due to mandatory registration

So in summary, an LLP offers more operational flexibility with higher business credibility and limited liability benefits compared to a conventional partnership firm.

With the basics out of the way, let’s deep dive into the step-by-step process for LLP registration.

Documents Required for LLP Registration

To incorporate an LLP in India, you need to submit certain documents to the Registrar of Companies (ROC).

Here are the key documents required for LLP registration in India:

  • DIN and DSC – For designated partners
  • Self-attested PAN cards of partners
  • Aadhaar cards of partners
  • Residential address proofs of partners
  • Registered office address proof (rental agreement plus NOC/utilities bill)
  • Business activity proof
  • Name approval confirmation
  • LLP agreement (Form 3)
  • LLP Form 2 – Incorporation document signed by partners with annexures
  • Signed affidavits and consent letters from designated partners
  • Subscriber’s sheet with capital contribution details
  • Form for appointment of designated partners

Additionally, a private limited company or LLP can also act as designated partner if they have turnover/net worth as prescribed by MCA.

While this may seem a lot of documentation, don’t worry – our experts at Filingwala will handhold you through this process.

With the required LLP registration documents in order, here is a blow-by-blow account of the step-by-step LLP registration process in India:

Step-by-Step LLP Registration Process in India

Step 1) Apply for Digital Signature Certificate (DSC)

The first step is for the proposed designated partners to obtain Class 2 Digital Signature Certificates (DSC). This will be required for digitally signing all LLP registration documents. Two types of DSCs can be obtained:

  1. With ePass 2003 standard
  2. With enhanced ePass 2003 standard

We recommend going for option 2 i.e. enhanced DSC as it is more advanced encryption method for better security.

DSC application requires identity and address proof submission along with physical verification. The cost of a DSC comes to around ₹2,500 per designated partner from authorized agencies like TCS, MTNL, NIC etc.

The DSC will be issued usually within 2-3 business days.

Step 2) Identify Designated Partners

As per LLP Act 2008, every LLP should appoint at least two designated partners who are responsible for compliance and administrative requirements just like directors in a company.

There is no limit on maximum number of designated partners. Apart from individuals, a body corporate can also be appointed as DP in LLP provided:

  • It has a net worth of ₹5 lakhs or more OR turnover of ₹5 crores or more during the last financial year
  • It submits required documents like board resolution, authorization letter, NOC etc. along with DP identification no.

Designated partners should be 18+ years old, mentally sound, and not disqualified under the Companies Act 2013. Their consent is mandatory even for resignation.

Step 3) Apply for Director Identification Number (DIN)

After appointment, the next step is for every designated partner (DP) to obtain a unique, life-long Director Identification Number (DIN). This serves as an identity proof for directors and designated partners across all organizations where they hold such positions.

To apply for DIN online an individual needs to provide their:

  • Full name
  • Gender
  • Nationality
  • Date of birth
  • Father’s name
  • Permanent address
  • Passport no. (in case of foreign nationals)

Along with self-attested copies of PAN card and Aadhaar card.

DIN application can be made online at the MCA portal instantly through DSC authentication. Physical documents verification happens post application.

There is no DIN application fee for Indian nationals. For foreign nationals and NRIs it is USD 100.

Step 4) Apply for LLP Name Approval

In parallel to DIN application, you can apply for LLP name approval from ROC. The process takes 3-5 working days.

Some guidelines on selecting a suitable LLP name in India:

  • Should end with the letters ‘LLP’ / ‘Limited Liability Partnership’ written in full
  • No resemblance with existing trademarks
  • Cannot use names like Bank, Stock Exchange, Corporation etc. without approvals from relevant regulators
  • Maximum two words allowed apart from LLP tag
  • Cannot use names of historic personalities without consent

Up to four name options can be applied for which remain valid for 3 months upon approval. The cost per approved LLP name is ₹1000.

Step 5) Prepare LLP Agreement

The LLP Agreement sets out the mutual rights and duties amongst partners inter se and is mandatory for registration. It is an important document equivalent to AoA and MoA of a company.

Some of the key clauses within an LLP agreement would cover:

  • Nature and scope of LLP’s activities
  • Contribution amounts of partners
  • Profit/loss sharing ratios
  • Roles and responsibilities of designated partners
  • Rights, duties and liabilities of partners
  • Rules for meetings
  • Accounting and auditing
  • Indemnity clauses
  • Dispute resolution process
  • Changes in partners
  • Dissolution terms

Plus additional clauses based on specific mutual understanding between partners.

While MCA has provided an indicative format for LLP Agreement, partners have the flexibility to draft their own document that aligns with their unique business needs as long as it covers the above aspect.

It is recommended that the LLP Agreement be drafted by a competent professional with legal knowledge to ensure compliance and effectiveness.

Step 6) File Incorporation Documents

Once name approval and LLP agreement is in place, the next step is to file for LLP registration with MCA by submitting filled Form 2 – Incorporation Document along with required attachments like:

a. Subscriber sheet with partner details and capital contribution
b. Consent letters from designated partners c. Declaration from professionals if applicable
d. NOC and address proof of registered office e. Details of LLP(s)/company(ies) as partners

Comprehensive information on the proposed LLP structure, designated & other partners, registered address, proposed activities etc. need to be provided in Form 2.

It has to be duly signed and stamped by the designated partners and submitted along with required attachments and registration fees to ROC. This can be done online through MCA portal.

Step 7 ) Obtain Certificate of Incorporation

Upon scrutinizing the incorporation documents (Form 2) and attachments, if ROC is satisfied with compliance to LLP rules it will register the LLP.

A 21 digit alphanumeric Certificate of Incorporation (COI) confirming the date of LLP formation gets generated. This can be downloaded from MCA portal once issued.

The COI certifies that the LLP now has an independent legal existence, a Permanent Account Number (PAN) will get allotted automatically post incorporation.

Step 8) Make an LLP Seal/Stamp

While not a compliance mandate, every LLP should create an official seal/stamp carrying its registered name, registered address, registration no. and date of incorporation.

This stamp needs to be affixed by designated partners on legal agreements, invoices, purchase orders etc.which adds to the credibility of business communications.

Rubber stamps can be easily made by any vendor. Embossing seals also serve the same purpose.

Step 9) Open a Current Bank Account

After LLP incorporation, a separate current bank account should be opened in the entity’s name with authorized signatories from amongst the designated partners.

This business account will be used for all financial transactions of the LLP going forward. PAN card details need to be submitted to the bank for opening the account.

Step 10) LLP PAN and TAN

While PAN automatically gets generated upon LLP incorporation, you need to separately apply for Tax Deduction Account Number (TAN) with Income Tax department.

The designated partners can apply online for TAN instantly with their DSC by providing certain essential details of the LLP.

TAN registration is mandatory for any business that deducts tax at source like professional fees, contractor payments etc. It is required to deposit TDS and file TDS returns every quarter.

Step 11) GST Registration

If your LLP provides any kind of goods or services in India and fall under the GST threshold you have to mandatorily obtain GST Identification Number (GSTIN).

It is a unique 15 digit state-wise registration code that helps trace all transactions of a business.

GST registration for a new LLP can be easily completed online via the GST portal with online application form GST REG-01.

This requires basic details of LLP, partners, activity, bank accounts, authorized signatories etc along with scanned documents. Registration certificate gets issued typically within 3 working days on email.

Step 12) Trademark Registration (Optional)

While not mandatory, an LLP can additionally secure Brand protection for its logos and names used in business by registering them under the Trademarks Act 1999 through Form TM-1.

The entire trademark filing process online just takes about 5-7 working days with certificate issuance in 2-3 months.

It prevents others from infringing or passing off their services in your brand’s name. Adds further authenticity.

Additional LLP Compliance Requirements

While the registration formalities get completed with the above 12 steps, here are some regular post-incorporation compliance requirements for LLPs:

  • Filing Annual Returns: Every LLP has to file an Annual Return in Form 11 to ROC within 60 days of financial year ending on 31st March. This gives details of all designated partners, changes if any and declaration of compliance signed by a designated partner. Continual non-filing can attract penal action.
  • Filing Annual Accounts: Within 30th October every year, LLPs have to file their audited or unaudited annual accounts and financial statements for each financial year before 30th October in Form 8 through online filing. Non-compliance attracts fine up to ₹5,000.
  • Intimate Changes in Partners: Any admission, retirement or cessation of existing partners needs to be intimated to ROC within 30 days in Form 3. Changes in designated partners require additional filings like DIR-12 etc.
  • Keeping Statutory Registers: Registers like Partners Contribution agreement register, Common Seal register, etc need to be maintained and kept updated at registered address of LLP.
  • Appointment as Statutory Auditor/Compliance Auditor: If turnover exceeds Rs 40 Lakhs or contribution value crosses Rs 25 Lakhs, it is mandatory for LLPs to appoint a Statutory Auditor and undergo compliance audit annually.

Breakup of LLP Registration Costs in India

Here is an indicative breakup of the costs involved in LLP registration and compliance in the first year for reference:

Expense DescriptionIndicative Cost
Government registration feesRs. 0
Digital signatures for 2 designated partnersRs 5,000
DIN for 2 designated partnersRs 0
LLP name approval feesRs 1,000
Stamp duty for LLP agreementVaries based on state
LLP agreement drafting chargesRs 3,000 – Rs 5,000
Filing fees for Form 2 and Form 3Rs 100 per document
Professional service feesRs 3,000 – Rs 5,000
Total Approximate CostRs 12,100 – Rs 16,100

So as you can see, the total approximate cost for registering an LLP ranges from ₹12,100 to ₹16,100. This includes government fees, professional charges, and documentation expenses.

The cost is significantly lower when compared to registering a private limited company, which could easily incur expenses of ₹15,000-₹20,000 or more. This competitive pricing makes LLP an attractive structure.

Some key things that help keep LLP registration costs low – zero government fees, no stamp duty or taxes, flexibility on capital contribution etc.

Role and Responsibilities of Designated Partners

As discussed earlier, designated partners (DPs) form an important position in the LLP structure. They are akin to directors in a private limited company.

Let’s understand the key roles and responsibilities designated partners have:

Compliance Management

  • Make sure to meet all regulatory compliances promptly, including the filing of annual returns, accounts, audit reports, etc.
  • Intimate ROC of any changes in partners within prescribed time limits
  • Maintain all statutory registers and documents
  • Represent LLP for any compliance related matter before tribunals

Administrative Duties

  • Make investments and take business decisions on behalf of LLP
  • Raise finances through loans as required for business operations
  • Open and operate bank accounts of LLP
  • Appoint internal auditors or secretarial staff if needed
  • Protect LLP’s intellectual property if any

Liabilities for Non-Compliance

  • Penal consequences under Limited Liability Partnership Act, 2008
  • Financial penalties upto ₹5 lakhs extendable to ₹5 crores

So in essence, designated partners act as the directing force behind an LLP much like board of directors and are accountable for regulatory requirements.


We have covered all major aspects in this detailed guide on LLP registration process, documentation, compliance formalities plus analysis of the advantages and limitations of an LLP structure.

LLPs provide operational flexibility for running a business, along with higher credibility and limited liability protection for partners. However, it’s important to note that they also entail a set of post-incorporation compliance responsibilities that partners must fulfill.

New partners should thus assess their bandwidth before opting for an LLP route.

That said, an LLP still remains one of the preferred legal structures in India for consultants, professionals and MSME business owners given its strengths.

We hope you found this article useful. Please feel free to reach out to our experts at Filingwala for any assistance on your LLP registration journey.

Happy Businesses Begin Here!

FAQs on LLP Registration

Q1. Can I convert my existing partnership firm or private company into an LLP?

Converting a partnership firm (whether registered or unregistered), private company, unlisted public company, or LLP into an LLP is entirely permissible. This can be achieved by filing the necessary forms with the Registrar of Companies (ROC).

Q2. Is prior approval from any regulator required for LLP registration?

Incorporating an LLP for business activities that are not sector-specific, such as banking, insurance, housing finance, etc., does not require prior approvals.

Q3. Can foreign nationals or NRIs be designated partners in an LLP?

Foreign nationals and NRIs can become designated partners in an LLP formed in India if they meet eligibility criteria, including minimum stay requirements in India, completion of verification formalities, and possession of a valid DIN.

Q4. Is having an LLP agreement mandatory?

Yes, an LLP Agreement that sets out the mutual rights and duties amongst partners is mandatory at the time of LLP registration. The format has flexibility but minimum content requirements must be met.

Q5. Can minor become partner in LLP? No, a minor cannot become a partner in an LLP . Only individuals who are of 18 years and above or competent to contract as per Indian Contract Act, 1872 can become LLP partners.

Manage Your Company in India

Manage Your Company in India

Running a company in India involves adhering to a complex set of laws and regulations mandated by various government bodies. Keeping track of the ever-changing rules around tax compliances, account audits, annual filings and more can be daunting even for experienced professionals. Just a minor slip can result in huge financial penalties or even imprisonment for company directors.

This article will provide a comprehensive guide on the major statutory compliances applicable to Indian companies and practical tips to remain compliant. You’ll also learn how outsourcing this function to specialized services firms like Filingwala can make compliance easy while you focus on business growth.

Table of Contents:

  • Why Managing Compliance is Critical
  • Key Company Compliance Requirements in India
  • Common Pain Points in Compliance Management
  • Expert Tips to Avoid Non-Compliance
  • Role of Technology in Compliance Management
  • Why Outsource Compliance Management?
  • Filingwala’s Unique Compliance Management Services
  • Getting Started with Filingwala

Why Managing Compliance is So Critical

Before going deeper into specific compliance regulations, it is vital to understand why keeping your company compliant should be non-negotiable:

Financial Costs: Penalties under various laws for non-compliance are massive often ranging from Rs. 50,000 to even Rs. 10 lakh per instance. These penalties multiply rapidly given the breadth of filing requirements.

Business Disruptions: Beyond fines, serious offences can also result in freezing of company operations or cancellation of business licenses till defaults are rectified. Getting back to normal business after such actions by MCA, Income Tax or GSTN involves heavy lawyers’ fees and months may pass by.

Reputational Damage: Details of all company non-compliances are available publicly on government portals given mandatory disclosures. This results in massive credibility loss among customers, vendors, investors etc directly impacting future revenues.

Legal Consequences: As per latest amendments, serious offences under Companies Act and Tax laws can now result in heavy fines as well as imprisonment up to 7 years for promoters and directors. Even technical defaults can result in long-drawn legal trials.

Given so much at stake, prudent directors and owners invest in robust systems and capable teams to keep their companies fully compliant at all times.

Key Company Compliances in India

While the entire gamut of rules applicable to Indian companies runs into thousands of pages, the most critical compliance requirements mandated by MCA and Tax Departments include:

Compliance ActivityRelevant LawsFiling AgencyPenalty for Default
Annual Statutory AuditCompanies ActMCAUp to Rs. 5 Lakhs
Annual Return FilingCompanies ActMCARs. 100 per day
Financial Statement FilingsCompanies ActMCARs. 1000 per day
AGMs & Board MeetingsCompanies ActMCAUp to Rs. 25,000
Director/Address Change IntimationCompanies ActMCAUp to Rs. 50,000
Income Tax Return FilingIncome Tax ActCITMaximum Rs 5000 and interest paid at 1% for every month or part thereof for after due date.
Income Tax AuditIncome Tax ActCIT0.5% of Sales or Rs. 1.5 Lakhs
GST Return FilingGST ActGSTNUp to Rs. 10,000 monthly
GST RegistrationGST ActGSTNUp to Rs. 10,000

This table covers just the tip of the compliance iceberg – over 100 more filings like TDS, PF Returns, Export Reporting etc. may apply!

Staying on top of these multifarious filing requirements consistently is extremely challenging for most companies. But some basic discipline and expert help can prevent non-compliance.

Common Pain Points in Company Compliance Management

Talking to numerous Compliance heads across industries, three chief pain points always emerge on managing ever-growing compliance burden:

Lack of Visibility: Multiple critical compliances fall due almost daily but key directors are unaware with visibility limited to compliance staff. Small oversights result in defaults getting missed till penalties start hitting.

Lack of Accountability: Dispersed ownership of filings across functions like finance, legal, IT results in gaps with no single point overseeing end-to-end compliance. Issues keep falling through cracks between teams.

Manual Tracking: Reliance on basic Excel sheets to log and track hundreds of filings across laws is prone to frequent exceptions. Lead times for follow-ups are inadequate.

Expert Tips to Avoid Non-Compliance

Through decades of assisting enterprises maintain robust compliance systems, industry experts highlight 5 vital best practices:

  1. Maintain a continuously updated compliance calendar with all activities, due dates and responsible owners tagged. Review it weekly.
  2. Invest in automated alerts and tracking mechanisms rather thanpure manual methods to eliminate human errors.
  3. Assign single point accountability to a senior executive for end-to-end compliance performance.
  4. Educate functional teams constantly on evolving compliance norms through workshops.
  5. Take external expert assistance from specialized professionals rather than entirely relying on internal teams.

While these practices require some tools and effort, they pay rich dividends preventing the disastrous outcomes of non-compliance!

Harnessing Technology for Managing Compliance

Thankfully, modern governance, risk and compliance (GRC) tools offered by various RegTech providers can eliminate most manual challenges and provide Directors unmatched visibility and control.

Solutions like Filingwala ComplyOpt enable one-stop tracking of all compliance activities providing features like:

  • Centralized calendar showing upcoming filing timelines
  • Automated email and SMS alerts to internal teams on due filings
  • Dashboards to view compliance health-scores and pending activities
  • Tax and legal database access with latest Circulars, Forms etc.
  • Templates and checklists for key filing procedures
  • Filing and documentation management tools
  • MIS reports to gauge compliance metrics

Such solutions plug gaps through automation, accountability and access – hallmarks of a world-class compliance system.

Why Outsource Company Compliance Management?

But given internal bandwidth limitations in most companies, outsourcing compliance support to external specialists has now become vastly popular. Over 80% of mid-sized companies now use third-party compliance services in some form as per industry estimates.

Compared to inhouse handling, outsourcing compliance management provides unmatched advantages:

Reduced Risk: Expert teams specializing in company law ensure absolute adherence to statutory requirements and proactively highlight any changes.

Cost Savings: Inhouse hiring of qualified compliance staff plus tools involves massive fixed expense whereas outsourced fees are variable based purely on work volume.

Improved Efficiency: Seasoned teams manage filings faster with fewer errors leveraging institutional knowledge and specialized tech tools like audit software, e-filing APIs etc.

Better Visibility: Management dashboards provide real-time status of pending and completed compliance tasks rather than fragmented internal reporting.

Proactive Advisory: External specialists inform clients well in advance regarding new compliance rules, documentation needs etc rather than just tracker-based reporting.

Expanded Capabilities: Multi-disciplinary partner teams also provide value-added services like registrations, certifications, licenses etc. making them a one-stop-shop.

For these compelling reasons, trusted names like Filingwala now manage compliance functions for thousands of enterprises across manufacturing, retail, IT and infrastructure sectors.

Filingwala’s Unique Compliance Management Services

Filingwala distinguishes itself from average outsourced providers through proprietary compliance technology and advisory solutions tailored to client-specific needs. Core offerings include:

1. ComplyOpt Compliance Tracking Software: Their smart portal and mobile app provides intuitive dashboards, alerts, trackers and reports for all compliance activities due across various regulations. This serves as a single point of truth with no visibility gaps.

2. End-to-End Filing Services: Their expert teams don’t just track but directly complete and eFile all statutory returns with income tax, GSTN, MCA portals through appropriate digital/paper channels.

3. Tax Advisory & Litigation Support: Their multi-disciplinary tax consultants offer personalized advisory on optimizing tax costs through exemptions, rebates plus represent clients during assessments and appeals.

4. Legal Advisory & Documentation: Customized legal advice based on business specifics ensures clients remain fully aware of evolving laws, new rulings and resultant changes needed in agreements or HR policies if any.

5. Audit & Certification Assistance: Where specific certifications like tax audits, CSR audits, environment clearance certificates etc. are sought, their specialists ensure seamless coordination and execution.

6. Registrations & Renewals: Across various sectors, securing licenses, dealerships, society formation etc and keeping them renewed periodically becomes easier relying on Filingwala’s dedicated teams.

On the whole, Filingwala makes compliance and associated regulatory aspects integral to doing business seem vastly more doable!

Getting Started With Filingwala

I hope this guide has convinced you on the importance of meticulous company law compliance as well as showed how capable partners like Filingwala make the journey easier through technology and human resources.

Ensure your exciting business ideas avoid becoming entangled in a complex web of regulatory filings, fines, and litigation by entrusting this critical function to trusted specialists!

Start the process by visiting and filling out their concise registration form, or take immediate action by calling 9072166000.Feel free to clarify any specific questions regarding their compliance services through email, chatbot or by scheduling an obligatory consultation meeting.

Here’s raising a toast to managing a fully law-abiding, responsible business!

FAQs on Company Compliance Management

Q1. Does every Indian company need external compliance support?

It depends on internal expertise available. Larger companies have inhouse company secretaries but small/mid-sized players lacking focused bandwidth can benefit greatly from external specialists like Filingwala.

Q2. What compliance activities can be outsourced?

Almost all statutory filings like annual filing, tax returns, ROC disclosures, audit reports etc. can be tracked or partially/fully managed by external teams. Advisory across taxes, accounting, legal matters can also be provided based on requirements. Only final certification is needed from company management.

Q3. Are there any risks in outsourcing compliance?

Yes, you must assess capabilities and client portfolio of providers carefully before engaging them. But leading names like Filingwala with proven track records, transparency and client-first approach greatly mitigate these risks. Checking for ISO-certified process orientation is also recommended.

Q4. How much cost and effort saving actually happens via services like Filingwala?

Filingwala clients reported over 50% savings in total compliance management costs compared to fully inhouse handling as per company-published case studies. Average turnaround times for filing key returns reduced by 3-4 days through process improvements. Top management’s time involvement also dropped by 60% owing to dashboard visibility.

Q5. How quickly can outsourced compliance support be started?

Once basic details are submitted, Filingwala onboards clients onto its Compliance software and assigns account manager within 3-5 working days. First set of compliance filings can begin immediately based on where client is in financial year. So the process is quite fast and smooth.

What is a Private Limited Company in India?

What is a Private Limited Company in India?

Table of Contents

  • Introduction
  • What is a Private Limited Company?
  • Key Characteristics
    • Comparison Table
  • Advantages and Disadvantages
    • Examples
  • Compliance Requirements
    • Statutory Registers Table
  • Steps to Start a Private Limited Company
    • Cost Breakdown
  • FAQs
  • Conclusion


Starting a private limited company in India can be a smart business decision for many entrepreneurs. However, the process and compliance requirements involved can also seem daunting to those unfamiliar with it.

This comprehensive guide breaks down everything you need to know if you’re considering setting up a private limited company in India. You’ll learn what a private limited company is, its key traits, the major pros and cons with real examples, legal compliance needs, step-by-step process to register one, estimated costs and answers to some frequently asked questions.

So if you want to make an informed decision about forming a private limited company for your business in India, you’re in the right place!

What is a Private Limited Company?

The Companies Act 2013 mandates the registration of private limited companies, distinct legal business entities owned by their shareholders. The term “private limited” signifies that the company remains privately held, with no aspirations to list on a stock exchange.

India’s private limited companies limit shareholder liability to the extent of their shareholding, safeguarding the personal assets of directors and shareholders in case of business failure.

Private limited companies must have at least two directors and shareholders, with restrictions on the maximum number of directors and an overall ownership limit of 200 shareholders.

Key Characteristics

Some key traits of a private limited company include:

Comparison Table

ParameterPrivate Limited CompanyPartnership Firm
Legal Entity StatusSeparate Legal EntityNo separate legal entity
Owners LiabilityLimited to shareholdingUnlimited personal liability
RegistrationCompulsory under Companies ActNot legally required but optional
Compliance NeedsHighLow
Transfer of OwnershipEasy via share saleChallenging without consent

So in a private limited company, owners enjoy protection from personal liability along with increased credibility, perpetual succession and easier transfer, despite higher compliance responsibilities.

Advantages and Disadvantages

Advantages of a Private Limited Company

  • Limited liability for owners safeguards personal assets
  • Increased credibility with banks, customers
  • More financing options
  • Attract investor funding more easily
  • Perpetual succession despite ownership changes
  • Smooth transfer of stake through share sale

Disadvantages of a Private Limited Company

  • Complex legal and accounting compliance
  • Increased statutory reporting needs
  • Higher setup and operational costs
  • Lack of privacy due to public reporting

Real-World Examples

A private limited company structure can be beneficial to high-risk manufacturing business owners as it shields their personal wealth or assets from substantial product liability claims.

Similarly, an online retailer private limited company may find it easier to raise external investor capital for scaling up quickly compared to being a proprietorship.

Compliance Requirements

To maintain active status, a private limited company in India needs to follow several regulatory requirements under the Companies Act 2013. Some examples include:

Statutory Registers Table

Register of MembersRecords shareholding changeUpdated regularly
Register of ChargesTracks assets charged as securityUpdated within 30 days
Register of Loans/Investments/GuaranteesRecords financial transactionsUpdated within 7 days
Register of ContractsTracks contracts detailOngoing

Additionally, filing annual returns, financial statements, company secretary compliance reports, holding board meetings as per guidelines etc. also fall under compliance obligations.

Neglecting compliance needs can incur heavy penalties or even force dissolution. Therefore, it’s advisable to employ professional help like FilingWala to meet all regulatory needs.

Steps to Start a Private Limited Company

Here is an overview of the typical 8 Steps process to form a private limited company in India:

1. Apply for Director Identification Number (DIN)

Every director needs a unique DIN before company incorporation. It requires identity proof submission and fees of Rs. 500 per applicant.

2. Name Approval

You need to propose 1-6 unique names in order of preference and get availability approvals. Check name rules. Approval validity is 60 days.

3. Prepare Incorporation Documents

Key documents include draft MOA, AOA and forms like INC-32, INC-22 etc. with digital signatures.

4. Company Incorporation Application

File the documents and fees for company registration application with the ROC. Typical fees is Rs. 4700 for normal incorporation.

5. Make Company Seal/Stamp

Companies must obtain a company seal/stamp bearing their approved name, registered address, and CIN within 60 days.

6. Company PAN and Bank Account Opening

You need to then apply for company PAN. Then open a business bank account in company name within 30 days.

7. Commence Operations

With certificate of incorporation, company name, PAN and bank account – you can start business operations.

8. Maintain Records and Compliance

Keep meeting reporting rules, submit filings, and maintain all registers/statements to avoid non-compliance penalties.

Approximate Breakdown of Private Limited Company Registration Costs

ExpenseEstimated Cost
Government registration and services feesRs. 1,559
Consultant/lawyer charges/CA charges for
incorporation procedure
Rs. 5,000
Stamp dutyRs. 1,300
Digital signatureRs. 2,500
PAN applicationRs. 141
Company seal/stampRs. 1,500
The cost of in-depth consultation for company type selection varies depending on the complexity of your specific case.

Additional post-incorporation running costs apply as highlighted before.


What types of private limited companies exist?

Based on business activity, some types are trading, manufacturing, investments, holding, services, producer companies etc. There are also One Person Companies.

What is minimum paid-up capital for private limited company registration?

No minimum paid up capital is prescribed in Companies Act 2013. You can start with just Rs. 1 lakh or less.

Is a private limited company right for my small business?

A private limited company may be an appropriate business structure for seeking external investment, liability protection, perpetual succession, and credibility with banks and vendors.

Can foreigners set up a private limited company in India?

Yes, foreigners can invest in Indian private limited companies by getting government approvals through RBI under FDI rules and meeting eligibility criteria.


We’ve covered the ins and outs of private limited companies in India – from understanding what they are and their features to weighing the pros and cons with real examples. Additionally, we’ve provided you with a handy checklist covering rules to follow, expected costs, and a step-by-step guide on how to register under the Companies Act 2013.

Transitioning to practical assistance, if you’re considering setting up a private limited company, turn to FilingWala for expert support. We specialize in guiding you through the entire process – from initial registration to ongoing maintenance. Beyond that, we adeptly handle other aspects like taxes and compliance, ensuring a seamless experience for you.

Goods and Services Tax (GST) in India: Super Guide

Goods and Services Tax (GST) in India: Super Guide

Everything You Need to Know About GST Implementation, Objectives, Advantages, Components, and Compliances

Goods and Services Tax (GST) is one of the biggest tax reforms that has happened in India’s indirect taxation system. Implemented on July 1, 2017, it has replaced a plethora of indirect taxes levied by the central and state governments.

GST aims to unify the country under a single, comprehensive tax system for goods and services. It has been in the works for over 17 years before final implementation. With its far-reaching impact on businesses and consumers alike, GST is truly a historic transformation of India’s taxation landscape.

This guide is from the experts of will provide a deep dive into all aspects of GST in India. We’ll explore what GST is, the journey to its implementation, its objectives and advantages, the tax components, and the major compliances under the GST regime.

By the end of this guide, you’ll have a 360-degree understanding of this landmark tax reform that has transformed the way trade and commerce operate in India.

Let’s get started!

Table of Contents

  • What is GST?
  • The Journey of GST Implementation in India
  • Objectives of GST
  • Advantages of GST
  • GST Tax Components: CGST, SGST, and IGST
  • Tax Structure Before GST
  • How GST Has Helped Reduce Prices
  • New Compliances Under GST
    • e-Way Bills
    • e-Invoicing
  • Frequently Asked Questions

What is GST?

Goods and Services Tax or GST is an indirect, consumption-based tax levied on the supply of goods and services in India. It is a comprehensive destination-based tax on the value-added at each stage of the supply chain.

In straightforward terms, GST is a singular tax that has assimilated nearly all indirect taxes applicable to goods and services. It applies to the final consumer but collects at each stage of the supply chain, providing credit for taxes paid in the preceding stages.

Some key characteristics of GST:

  • Multi-stage tax – It is levied across the entire supply chain i.e. from manufacture to sale, whenever there is a supply of goods or services.
  • Value added – At each stage, GST levies tax exclusively on the value added. For instance, during the manufacturing stage, businesses pay tax on the value added by converting raw materials into finished products.
  • Destination based – GST is applicable in the destination state, which is where the consumer finally consumes the product.
  • Comprehensive – GST has subsumed around 17 indirect taxes under a single umbrella.
  • Digital – The entire GST framework functions online via portals and provides for electronic compliance procedures.

So in summary, GST is a comprehensive, multi-stage, value-added tax on goods and services that is applicable on the final point of consumption.

The Journey of GST Implementation in India

Developing over a span of 17 years, the implementation of the Goods and Services Tax in India originated from the proposal in the year 2000. It navigated through various twists and turns before finally reaching full implementation in 2017.

2000 – The Vajpayee government sets up a committee to draft GST laws.

2004 – The Kelkar Task Force suggests a comprehensive GST model based on VAT.

2006 – The government presents a proposal to implement GST by April 1, 2010.

2011 -The Parliament introduces the Constitution Amendment Bill, but it lapses with the dissolution of the 15th Lok Sabha.

2014 -The Parliament passed the Constitution (122nd Amendment) Bill after incorporating changes recommended by the Select Committee of Rajya Sabha.

The Parliament passed the Constitution (122nd Amendment) Bill after incorporating changes recommended by the Select Committee of Rajya Sabha.

2016-In September 2016, the Parliament finally passed the Constitution (122nd Amendment) Bill, formally becoming the Constitution Amendment Bill.

2017 – The GST Council finalizes all rules and rates for GST implementation.

1st July 2017 – The Goods and Services Tax Finally Comes Into Effect in India.

As you can see, GST implementation has been a long, arduous journey spanning over 17 years. But the results have been worth it, as GST transforms India into a unified market under a single tax umbrella.

Objectives of GST

The Goods and Services Tax in India was introduced with some key objectives in mind:

  • One Nation, One Tax – To create a unified national market by replacing a web of local taxes. GST establishes a common national tax across the country.
  • Subsume multiple taxes – To merge the plethora of indirect taxes like VAT, excise duty, service tax etc. into a single tax structure. This greatly reduces compliance burden for businesses.
  • Eliminate cascading effect – Remove the cascading effect of taxes i.e. tax on tax. Under GST, there is a seamless flow of credit across the supply chain.
  • Improve tax compliance – A unified tax system results in higher tax compliance and transparency. All activities fall under a common portal.
  • Boost “Make in India” – The reduction in tax burden promotes manufacturing activity and investments in India.
  • Higher revenue – Widening the tax base and including more taxpayers leads to higher tax revenue.
  • Simplified tax system – Having a centralized tax structure makes compliance much simpler for businesses.

Keeping these key objectives in mind, the designers have structured the GST tax system, and the results so far show encouragement on all these fronts.

Advantages of GST

The implementation of GST has bestowed several benefits to various stakeholders of India’s economy:

For businesses

  • Elimination of cascading effect – No double taxation
  • Seamless flow of credit – Set off available across supply chain
  • Unified tax structure – One tax for goods and services
  • Simpler compliance – Single point interface on GSTN portal
  • Improved logistics and faster delivery of goods
  • Warehouse consolidation

2. For consumers

  • Reduced prices – No cascading effect so lower prices
  • Uniform prices – One unified national market
  • Simple tax structure – Easier to understand
  • More transparency – Details available on portal

3. For government

  • Wider taxpayer base – Better tracking of transactions
  • Increased tax collection – Higher revenues
  • One unified market – Easier to regulate
  • Less tax evasion – Improved compliance and tracking
  • Ease of doing business – Simplified and online procedures

4. For economy

  • Boost to ‘Make in India’ – Encourages manufacturing and exports
  • Higher investment – Due to easier tax compliance
  • Jobs creation – Increase in economic activity
  • GDP growth – Expanded tax base contributes to growth

GST has also made India more competitive globally by removing the disadvantages of the previous indirect tax structure. Overall, it has led to economic growth, higher revenues, and a simplified tax system.

GST Tax Components: CGST, SGST, and IGST

There are 3 taxes applicable under the GST regime:

CGST – Collected by Centre on an intra-state sale

SGST – Collected by State on an intra-state sale

IGST – Collected by Centre on inter-state sale

Here is an overview of the GST tax components:

  • Intra-state supply – When goods or services are sold within the same state, CGST + SGST will apply. Revenue is shared equally between Centre and State.
  • Inter-state supply – IGST (Integrated GST) applies on sales to another state. IGST is levied by Centre and revenue is later apportioned between destination state and Centre.
  • Imports – Imports are deemed as inter-state supply and subject to IGST plus customs duties.
  • Exports – Exports are zero-rated under GST i.e. no tax is charged but credit is available for taxes paid on inputs.

This comprehensive dual GST model has integrated the country into a single market. CGST and SGST have given both Center and States the power to levy GST simultaneously. IGST has resolved the problem of taxing inter-state transactions.

Tax Structure Before GST

India had a complex indirect tax structure before GST implementation. There were a multitude of taxes levied by the state and central governments:

State Taxes

  • VAT
  • Central Sales Tax
  • Purchase Tax
  • Entertainment Tax
  • Luxury Tax
  • Entry Tax
  • Taxes on Lottery, Betting etc.

Central Taxes

  • Excise Duty
  • Additional Excise Duty
  • Service Tax
  • Countervailing Duty (CVD)
  • Special Additional Duty (SAD)
  • Cesses and Surcharges

This led to significant complications for businesses. Some taxes were levied concurrently by Centre and State. Taxes paid on inputs were not available as credit against output GST. This resulted in cascading of taxes and higher overall tax burden. There were also additional compliance obligations for taxpayers who had to deal with multiple authorities.

GST has integrated all these taxes into a simple, unified GST structure leading to lower compliance burden and reduced prices for consumers.

How GST Has Helped Reduce Prices

One of the major benefits of GST is that it has reduced the final price of goods and services for consumers. Let’s see how it achieved this.

Under the earlier tax regime, there was a cascading effect of taxes i.e. tax on tax. Consumers bore this cumulative burden of taxes that got added at every stage of the supply chain.

For example, VAT was charged on the finished product. But embedded in the cost were already excise duties paid on raw materials inputs etc. This cascading effect led to artificially inflated prices for consumers.

GST removes this cascading effect by providing seamless flow of credit across the entire supply chain. Taxes paid at earlier stages can be claimed as credit against GST charged at later stages.

This helps reduce the price as the tax is calculated only on the value addition at each stage. The final price paid by consumer is lower compared to earlier regimes.

To illustrate, let’s take the example of chocolate manufacturing:

Earlier Regime

StageCost10% TaxTotal
Total Tax$44

GST Regime

StageCost10% GSTGST PaidTotal
Total Tax$19

As you can see, the price paid by consumer is lower under GST due to input tax credits and elimination of cascading effect. This is a win-win for both consumers and businesses.

New Compliances Under GST

The GST regime has introduced some new compliances that taxpayers need to adhere to:

e-Way Bills

E-way bills are electronic documents that must be generated for transporting goods valued over Rs. 50,000 within or between states. They contain details of the shipment, goods, recipient, etc.

E-way bills bring in a digital and unified system for tracking movement of goods. It helps boost tax compliance and makes cross-border trade easier by reducing delays and bottlenecks.


E-invoicing is mandatory for businesses with turnover over Rs.100 crore. They need to generate all B2B invoices by uploading details on the Invoice Registration Portal.

It obtains an IRN (Invoice Reference Number) that acts as a unique identity for the invoice. This improves accuracy and eliminates duplicate invoices. It also saves time and cost of data entry for filing returns. The tax department also gains better visibility into transactions.

Both e-way bills and e-invoicing improve transparency and compliance under GST. They represent the increasing focus on technology adoption and digitization.

Frequently Asked Questions

Q: What is the GST tax rate in India?

A: India has a four-tiered GST rate structure of 5%, 12%, 18% and 28%. There is also a 0% tax on essential daily-use items. The applicable rate depends on the goods or services.

Q: How is IGST split between Centre and State?

A: IGST is split based on the destination state where goods/services are consumed. The Centre transfers the state’s share of IGST to the destination state.

Q: Is GST charged on imports in India?

A: Imports are chargeable to IGST plus customs duties. The IGST rate on imports is equal to the total of CGST and SGST applicable in case of domestic goods.

Q: Is petrol and diesel covered under GST?

A: No, petrol and diesel along with alcohol, real estate etc. are not included under GST currently. They continue to be taxed separately by states and Centre.


The implementation of Goods and Services Tax is truly historic in transforming India’s indirect taxation ecosystem. It has replaced the complex multi-layered tax system with a simple, tech-driven GST system.

GST has benefited businesses, consumers, government, and the Indian economy alike. It has eased compliance burden, reduced prices, boosted tax collections and enhanced market competitiveness.

Despite some initial hiccups, the implementation of GST has taken firm root in the country and its long-term benefits have begun to materialize. This reform is poised to boost productivity, investments, and growth, propelling India’s economic narrative to the next level.

With the complexities of GST compliance and running a business in India, it becomes essential to have expert help by your side. This is where comes in. As a leading provider of legal, tax and accounting services for businesses, they offer end-to-end solutions for income tax return filing, company registration, trademark services, GST compliance, auditing and more. Their team of experienced Chartered Accountants, Company Secretaries and lawyers leverage technology and process excellence to deliver high quality services on-time. Businesses can rely on their expertise to stay legally compliant, manage finances better and focus on their core operations. So partner with the professionals at and stay worry-free about your business legalities.

The Complete Guide to Goods and Services Tax (GST) in India

Table of Contents

  • Introduction
  • What is GST?
  • Brief History of GST in India
  • Objectives of Implementing GST
  • Key Benefits of GST
  • Components of GST
  • GST Tax Rates
  • GST Registration
  • GST Return Filing
  • Input Tax Credit
  • GST E-Way Bills
  • GST Payment Process
  • Key Differences Between Old and New Tax Regime
  • Frequently Asked Questions


Goods and Services Tax (GST) is considered one of the most significant tax reforms in India’s history. Implemented in 2017, it transformed the country’s complex and convoluted indirect tax structure into a simplified, unified system.

But what exactly is GST and how does it impact businesses and consumers in India? This comprehensive guide provides an in-depth look at everything you need to know about Goods and Services Tax in India.

What is GST?

GST stands for Goods and Services Tax. It is an indirect, multi-stage tax levied on the supply of goods and services across India. Under the GST regime, taxes are levied at every point of sale.

For intrastate transactions, Central GST (CGST) and State GST (SGST) are applicable. For interstate transactions, Integrated GST (IGST) is levied.

GST has subsumed all major indirect taxes previously applicable in India, including:

  • Excise duty
  • Service tax
  • Value Added Tax (VAT)
  • Entertainment tax
  • Luxury tax
  • Octroi
  • CST

By combining all of these taxes into one unified tax system, GST has created a common national market across the country.

Brief History of GST in India

The introduction of a nationwide Goods and Services Tax in India has been in discussion for over a decade.

In 2000, the Vajpayee government first initiated the idea of GST by forming an empowered committee. Over the years, several committees and working groups were formed to analyze and recommend GST models.

Finally, in 2017 after extensive debate, the Indian Parliament passed four GST bills – CGST, SGST, IGST and GST Compensation Cess. The Goods and Services Tax was officially launched on 1st July 2017.

Objectives of Implementing GST

The key objectives behind introducing GST in India were to:

  • Simplify the complex indirect tax structure with a single, unified tax system
  • Eliminate the cascading effect of taxes
  • Improve tax compliance and collection efficiency
  • Reduce tax evasion by curbing black money
  • Boost foreign investment and Make in India initiative
  • Enhance ease of doing business in India
  • Create a common national market with lower tax burden
  • Reduce logistics and transportation costs

Key Benefits of GST

The implementation of GST in India has brought several benefits for businesses, consumers and the overall economy:

1. Elimination of Cascading Effect of Taxes

One of the major advantages of GST is that it has eliminated the cascading effect of taxes.

In the earlier system, taxes were levied at each stage of production and distribution. No credit was available for taxes paid in procuring inputs. This cascading of taxes ultimately increased the cost of goods and services for the end consumer.

GST removes this effect by allowing set-off and input tax credit across the entire supply chain.

2. Improved Tax Compliance and Revenue

GST has made tax compliance much easier via a single online registration and return filing system. This has brought many unorganized sectors under the tax system, widening the tax base.

According to government data, over 1.3 million businesses have registered under GST since its implementation. Tax collections have also gradually increased over the years, crossing the Rs 1 lakh crore mark.

3. Boost to ‘Make in India’ Initiative

Under the GST regime, complex customs duties have been replaced with a simple taxation system. This has facilitated the ‘Make in India’ initiative by making exports more competitive. Domestic manufacturers can now produce goods at low costs and export them worldwide at zero rating.

4. Enhanced Ease of Doing Business

With online, unified tax procedures, GST has eased processes for doing business in India. Common registration, filing, and compliance norms under CGST and SGST have reduced difficulties faced earlier in inter-state trade. Overall, it has improved the ease of doing business ranking of India globally.

5. Creation of Unified National Market

GST has dismantled inter-state trade barriers and created a common national market. Earlier, states had their own VAT rates and regulations, causing delays and costs for movement of goods across state borders. GST has eliminated this fragmentation through a pooled taxation system.

6. Lower Logistics Costs

The e-way bill system under GST has eliminated inter-state check posts. This has reduced transit times and logistics costs for transport of goods considerably across the country.

Components of GST

There are 3 main taxes under the GST regime in India:

CGST: Collected by the Central Government on an intrastate sale

SGST: Collected by the state governments on an intrastate sale

IGST: Collected by the Central Government on interstate sale

In most cases, the GST tax structure is as follows:

TransactionTaxes Applicable
Intrastate supplyCGST + SGST
Interstate supplyIGST

The CGST and SGST are parallel taxes which run alongside each other without any tax on tax. IGST is a single consolidated tax levied on interstate supplies.

The IGST mechanism ensures proper revenue collection for both the origin and destination states in case of interstate transactions.

GST Tax Rates

There are 4 main GST tax rates applicable on goods and services in India:

  • 0% – This GST rate is applicable on essential commodities and services like food grains, dairy products, books, etc.
  • 5% – This lower GST slab rate is applicable on mass-use items like spices, packaged food, footwear, etc.
  • 12% – The 12% GST rate applies to processed food, hair oil, soaps, apparel, etc.
  • 18% – The standard 18% rate applies to most goods and services including electronics, stationery, AC restaurants, etc.
  • 28% – The highest 28% GST rate applies to white goods, automobiles, tobacco products, luxury items, etc.

Besides these rates, some goods like pan masala, aerated beverages, and luxury cars attract a cess over and above the 28% GST.

GST Registration

Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year exceed Rs40 lakh (Rs. 20 lakhs for Northeastern states) have to register for GST. In case of service provider’s, the threshold limit is Rs 20 lakhs (Rs 10 lakh for special category) The registration can be done online via the GST portal.

The documents required for GST registration include:

  • PAN Card
  • Business Address Proof
  • Business Bank Account Details
  • Authorized Signatory Details
  • Digital Signature Certificate

For small businesses, the GST composition scheme allows easy compliance by paying a flat 1-5% tax based on turnover, without input credits.

GST Return Filing

Under GST, a regular taxpayer has to file monthly, quarterly and annual returns summing up their sales and purchases.

GSTR-1: Filed monthly, it provides invoice-level details of all outward supplies, interstate transactions, and taxes collected.

GSTR-2: Filed monthly, it provides the details of all inward supply invoices on which input tax credit will be claimed. (Currently suspended)

GSTR-3: The monthly return that auto-populates values from GSTR-1 and GSTR-2 giving the overall tax liability, ITC claims and settlements.

GSTR-9: Filed annually, it is a consolidated statement providing reconciliation of sales, purchases and input tax credit for the financial year.

For composition dealers, a simple quarterly return (GSTR-4) has to be filed online.

Input Tax Credit

Input Tax Credit (ITC) is a unique feature of GST that eliminates cascading of taxes. ITC allows businesses to claim the tax already paid on inputs, and reduce this from their output GST liability.

For example, a textile firm buying yarn worth Rs. 25 lakhs plus GST at 12% (Rs 3 lakhs) can claim the Rs. 3 lakhs in its return to lower the GST burden on output supplies.

ITC can be claimed on invoices uploaded by vendors as long as the goods or services are used for taxable business purposes. This incentivizes B2B buyers to only source inputs from GST-registered suppliers.

GST E-Way Bills

E-way bills serve as a tax compliance and track and trace mechanism under GST for interstate and intrastate movement of goods.

For consignments above Rs. 50,000 in value, e-way bills must be generated online prior to transit. It contains key details of the shipment, transporter, and vehicle for easy identification by tax officials during transit.

E-way bills have improved efficiencies in logistics by reducing delays and overhead costs of physical verification of goods at state borders.

GST Payment Process

The government has introduced several digital options to make GST payment convenient:

  • NEFT/RTGS: Online payment of GST using internet banking facility from any bank.
  • Net Banking: Over 55 banks allow direct payment of GST from the taxpayer’s account.
  • Credit/Debit Card: Payment can be made using credit or debit cards of Visa, Mastercard, American Express or RuPay.
  • UPI/BHIM: GST can also be paid via BHIM app or other UPI apps like Google Pay, PhonePe, etc.
  • Cash Ledger: Cash or leftover credit in the taxpayer’s ledger account can be utilized for making GST payments.
  • TReDS: Corporates can settle GST dues through Trade Receivables Discounting System (TReDS).

Taxpayers also get MSG alerts via SMS and email whenever any payment is made to their GSTIN.

Key Differences Between Old and New Tax Regime

The transition from previous indirect taxes to GST has brought several crucial changes to the tax and compliance landscape:

  • Wide range of taxes subsumed into a single tax
  • No differentiation between goods and services
  • Credit setoff is available across the entire supply chain
  • Online procedures replace manual processes
  • E-way bills and e-invoicing enhance tracking of goods
  • No Entry Tax or Octroi on state borders
  • Exports are zero-rated under GST
  • Refunds are directly deposited to bank accounts
  • Unified tax slabs across the country

While GST compliance has become much simpler, taxpayers must cautiously manage their working capital by monitoring invoice-level credits and vendor payments. Overall, it is a win-win reform for all stakeholders creating one unified common market.

Frequently Asked Questions

Q. What are the benefits of GST for consumers?

GST has reduced the overall tax burden on consumers by eliminating the cascading effect of taxes. Unified tax rates have also decreased costs of many categories of goods and services. Consumers also benefit from simpler tax-inclusive pricing.

Q. How is GST advantageous for traders?

GST provides traders a simplified way of doing business with availability of input tax credit, online procedures, lowered logistics costs, and a unified tax structure across the country. Traders also benefit from widened market reach.

Q. How is interstate trade of goods operated under GST?

Interstate trade and movement of goods is facilitated through the e-way bill and IGST mechanism under GST. IGST levied on interstate supply can be claimed as input credit to ease the cash flow.

Q. Can input credit be claimed on all business expenses under GST?

No, input tax credit can only be claimed on inputs, capital goods and services used in the course or furtherance of taxable business operations. Credit is not available on ineligible expenses.

Q. How is GST beneficial for the economy?

GST has made India a unified, common market by merging all states into one tax base. It has increased tax revenues, boosted international trade, improved compliance and eased business operations across the country.


The implementation of GST in India has successfully overhauled the convoluted indirect tax structure with a simple, transparent, and technology-driven tax regime. Despite initial transition challenges, it has widened the tax base, removed inter-state barriers, ended the cascading effect of taxes, and enhanced the ease of doing business. With each passing year, the government is taking steps to fine-tune GST rates and compliance procedures based on feedback from taxpayers and experts. Most agree that GST is one of the most progressive policy reforms that has set the stage for a competitive, single unified Indian market.

How to Check Income Tax Refund Status Online in 5 Minutes

How to Check Income Tax Refund Status Online in 5 Minutes
A step-by-step guide to tracking your income tax refund using the income tax e-filing portal

Have you received an intimation from the Income Tax Department about your refund? Eager to find out when it will get credited into your account? Tracking the status of your income tax refund is important to ensure there are no processing delays or failures.

This comprehensive guide will tell you exactly how to check income tax refund status in a few simple steps.

Table of Contents

  1. Why Check Income Tax Refund Status?
  2. Income Tax Refund Process Overview
  3. How to Check Income Tax Refund Status 3.1 Method 1: Check Status on TIN NSDL 3.2 Method 2: Check Status on Income Tax e-filing portal
  4. Understanding Refund Status Messages
  5. What to Do if Refund is Delayed or Failed
  6. FAQs on Checking Income Tax Refunds

Why Check Income Tax Refund Status?

When you file your Income Tax Return (ITR) every year and have paid excess taxes for that financial year, you become eligible for a tax refund (along with interest) under the IT Act.

The Income Tax Department processes crores of ITRs and issues refunds annually. But refunds can sometimes be delayed or fail to get credited due to reasons like:

  • Incorrect bank details
  • Mistakes in data reconciliation
  • High workload/processing delays
  • Errors in data entry

That’s why it’s important for taxpayers to proactively track refund status instead of waiting indefinitely for the credit.

Based on the online refund status, you can:

  • Identify delays and failures early
  • Take corrective action for successful reissue
  • Calculate expected date of credit
  • Plan finances better

So don’t just sit around waiting for the tax refund that never arrives!

Follow this guide on how to check income tax refund status online through the tax department’s website.

Income Tax Refund Process Overview

Before learning how to check refund status online, let’s understand what the income tax refund process typically involves:

Step 1) File Income Tax Return

When you file your ITR declaring your income, deductions, taxes paid etc. for the assessment year, any excess tax paid by you is determined as the refund amount

Step 2) E-verify return

You need to e-verify your tax return electronically through methods like net banking, Aadhaar OTP, EVC etc. Refund processing only begins after e-verification.

Step 3) Initial processing

CPC processes verified returns using automated checks to validate arithmetical accuracy, deductions claimed, taxes paid and calculations of refund/demand.

Step 4) Rectifications

If discrepancies are found, an intimation u/s 143(1) is issued to rectify anomalies in the ITR to reprocess records

Step 5) Refund approval

Once validated, the refund is approved and an intimation is sent to the taxpayer that refund has been determined

Step 6) Refund credit

The refund will then get credited directly to your bank account via electronic mode. In some cases, physical refund cheques are also dispatched.

Processing typically completes within 6 months from e-verification or filing due date (whichever is later). This includes rectifications/rework if any.

Delays can happen during this sequence at various stages. Tracking status helps identify their root cause.

Now let’s see how to check the live status of your refund easily online.

How to Check Income Tax Refund Status

There are two methods to check income tax refund status:

Method 1) Check Status on TIN NSDL

  1. Go to TIN-NSDL website: 
  2. Enter the following details:
    • PAN
    • Assessment Year
    • Captcha text
  3. Click ‘Submit’. Your current AY refund status will be displayed.

The NSDL website will show status as either:

  • Refund Issued: Refund processed successfully
  • Under Processing: Initial processing ongoing; check again later
  • No refund: Return filed with tax owing/nil refund
  • Rectification/re-processing: Discrepancies being rectified

However, NSDL will not show some status messages like ‘Demand determined’, ‘Rectification processed’ etc. that come at later stages.

So while convenient, it doesn’t reveal the full picture.

For complete end to end tracking of your refund trail, you must check status on the Income Tax portal:

Method 2) Check Status on the Income Tax e-filing portal

Follow these steps to check latest income tax refund status:

Step 1) Visit Income Tax e-filing Website

Go to:

Step 2) Login to Your Account

Enter your PAN (as user ID) and password.

If you haven’t registered already, create an account by entering your PAN, name, date of birth etc.

Step 3) Go to ‘e-File’ and Select ‘Income Tax Returns’

Under the ‘e-File’ menu, choose ‘Income Tax Returns’.

Step 4) Click on ‘View Filed Returns’

You will see a chronological list of ITRs filed by you under different Assessment Years.

Step 5) Select the Current AY and Click ‘View Details’

Choose the latest AY (e.g. 2022-23). The portal will display buttons to view details, download or print your filed return.

Step 6) Check Income Tax Refund Status

This is what you’ve been waiting for! The bottom table clearly shows status of your refund as either:

  • Refund issued: Payment done
  • Pending: Processing in progress
  • Failed: Not credited to account

It also displays important details like:

  • Refund amount
  • Refund issue date
  • Bank name/last 4 digits of account no.
  • Failure reasons (if any)

So with just your PAN and password, you can now check latest income tax refund status from anywhere in under 5 minutes!

Next, let’s understand what different status messages mean at various stages of processing.

Understanding Refund Status Messages

While checking income tax refund status online, you may see cryptic messages like:

  • Refund failure
  • Pending for rectification
  • Refund determined

Decode what these statuses imply:

Status MessageMeaning
Under ProcessingReturn yet to be processed by CPC. Check again after 1 month.
Refund IssuedCongrats! Refund has been approved & payment credited to your account via cheque/bank transfer.
Refund FailureInvalid bank a/c no. or IFSC code entered while e-filing. Reissue refund with correct details
PendingBeing processed but expected delays due to workload, reconciliation issues etc.
No refundNil or low refund determined. Possibly tax demand raised. Check 143(1) intimation
RectificationDiscrepancies found. Verify errors via intimation message and file online rectification to correct mistakes
Demand determinedYour refund claim rejected. Tax liability found/recalculated. Settle demand raised to avoid penalties

Important: Don’t ignore intimation messages sent by CPC regarding adjustments, rectification etc. Take prompt action.

We will cover next steps to resolve delayed/failed refunds.

What to Do if Refund is Delayed or Failed

Despite best efforts by the IT Dept, lakhs of refunds get stuck or fail every year due to various mismatches.

If your refund is pending long or status shows failure, here is what to do:

  • First, check if bank account is pre-validated. Login to e-filing account & verify if bank a/c pre-validated under ‘My Account’ > ‘Pre-validated Bank Account’. If not, pre-validate account instantly online.
  • If pre-validated, your refund failure is likely due to incorrect bank details entered while e-filing. Initiate ‘refund reissue’ request by:
    1. Logging in to e-filing account
    2. Going to ‘Services’ > ‘Refund Reissue’
    3. Selecting relevant ITR
    4. Entering correct bank a/c no. & IFSC
    5. Submitting request

This will retrigger the refund with latest details. Do keep checking status periodically for an update.

  • For pending refund beyond 2 months, contact Assessing Officer from your jurisdiction. References:
  • If bank account itself has closed or changed, you unfortunately cannot revise it now. Have to wait until next year to provide updated details. Clarify with bank if pending refunds can still be credited to closed accounts.

Note: The Income Tax Department has stated that from FY2022-23 onwards, refunds will be processed quicker in 10-45 days. So unless there are data mismatches or failures involved, you should receive refunds faster.

We have compiled other common income tax refund queries:

FAQs on Checking Income Tax Refunds

Which website is best to check income tax refund status?

For complete information, always check refund status from the Income Tax e-filing portal. Third party sites like TIN-NSDL only show partial status.

How long does it take to get income tax refund in India?

The typical processing timeline by CPC is 3-6 months from date of e-verification or filing.

But for AY 2023-24 returns, new systems for faster refund under 10-45 days are being tested.

Can I track income tax refund by PAN number?

Yes, only your PAN number is required to check income tax refund status online by logging in to e-filing account.

I haven’t received last year’s refund. What should I do?

If refund of previous AY is still pending, raise a grievance on the e-filing portal under ‘Services’ > ‘Grievances’. You can also contact Assessing Officer of your jurisdiction.

How much time limit is there for income tax refunds?

If refund is due, it must be processed within 9 months from financial year closing (i.e. by 31st December) as per reassessment time limits prescribed.

Can I claim refund after ITR due date?

Yes, you can file a late/belated return to claim refunds up to 31st December of same year. But it’s ideal to file by 31st July due date.

Is income tax refund considered taxable income?

No, the principal tax refund amount is fully exempt and not considered taxable income. However, interest you earn on such refunds will be subject to income tax.

We hope this guide on checking income tax refund status online has been helpful. You can now easily keep track of your refund!

Do reach out to the tax department for any clarifications required on pending refunds.

And consider seeking professional assistance from experts at FilingWala to ensure maximizing eligible refunds when filing income tax returns.

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