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PRIVATE LIMITED COMPANY

A private limited Company is that form of a Company that is privately held by a director or a group of Directors for a small scale business. The liability of the members of this firm of a Company is limited to the number of shares that are held by them. The share of the Pvt Ltd Company registration cannot be publicly traded. 

 

Guidelines for Pvt ltd registration

A Private Limited Company is the most popular as well as the most preferred choice of business entity in India. For a new private limited Company registration, it requires a minimum of 2 members, it is most appropriate for small and medium-sized businesses and start-ups. This Pvt Ltd firm is a business entity with limited liability which allows for a 100% foreign direct investment with government approval.

 

If you register Pvt ltd, then it can be started with a minimum of 2 shareholders. The maximum limit maybe two hundred shareholders. The compliances of a private limited Company are very much simpler to that of a Public limited Company when compared. One of the directors needs to be a resident in India in order to register a Company and the resident director can be a spouse or family member of the non-resident directors.

 

Benefits of Pvt limited Company registration India:

When you apply for Pvt ltd Company registration in India, benefits would follow. There are many benefits for a Pvt Ltd Company registration of which cannot be debated about. Let us look into some of the benefits of a Pvt limited Company registration in India. These are as follows:

 

  1. Ease of Formation- A Private Limited registration just needs to have a minimum of 2 directors by filing SPICe E Form INC-32 along with link form SPICe MOA (INC-33) and SPICe AOA (INC-34). After the verification of the documents, the Certificate of Incorporation (COI) can then be issued to the Company by MCA. This is done within 2 to 3 days under Fast Track Registration the firm’s continuity.
  2. Limited Liability- The liabilities of each and every member of the Company is limited. If there is any liability which arises then the members are not affected PERSONAL MATTERSly. They are just liable for the unpaid shares they hold in the firm. There is no risk of any PERSONAL MATTERS or individual asset of the shareholders.
  3. Secrecy- A Private Limited Company is not allowed to publish its accounts and file several documents, as prescribed by the Company Law. Thus, if you register as Pvt Ltd firm then you can maintain business secrets.
  4. Investment- A Private Limited Company can easily raise loans and investments from NRIs and foreigners, without any problems.
  5. Owning Property- The Company cannot be claimed to be owned by any of the shareholders of the Company as they are not the owners of the firm. No single person can acquire, own, enjoy and alienate, property in their own name.

 

Dual Relationship- 

The Private Limited Company can also make a valid and effective contract with any of its members if it wishes to. A person can work for the Company and at the same time control the Company which means a person can be a shareholder, creditor, director and even an employee of the Company.

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FAQ - Frequently asked questions

Is there any local partner (Indian Resident) required by Indian Law?

Companies Act 2013 brought a new provision wherein there must be at least 1 Resident Indian Director in Board of an Indian Company. The resident director is defined as a citizen of India who has resided at least 182 days in a calendar year.


What is Tax audit and what is section 44AB under Tax audit?

Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfilment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB is called tax audit.


What is the objective of the tax audit?

One of the objectives of the tax audit is to ascertain/derive/report the requirements of Form Nos. 3CA/3CB and 3CD. Apart from reporting requirements of Form Nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they truly reflect the income of the taxpayer and claims for deduction are correctly made by him


What is the due date by which a taxpayer should get his accounts audited?

A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before 30th September of the relevant assessment year


What is the penalty for not getting the accounts audited as required by section 44AB?

The penalty shall be lower of the following amounts: a. 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in the profession, in such year or years. b. Rs. 1,50,000. However, according to section 271B, no penalty shall be imposed if reasonable cause for such failure is proved.