India Company Formation

Opening a company in India

Why open a company in India? What are the advantages of the country of India?

India, a huge country in the East, is a convenient solution for many entrepreneurs.

The local currency is the Indian Rupee (INR), and living in the country is exceptionally cheap.

India is full of cheap labor, for example programmers or outsourcing service providers such as customer service for businesses. Although Indians usually have a heavy accent that makes them difficult to understand, they nevertheless understand the English language excellently.

Huge American companies use cheap labor in India to carry out outsourcing jobs that do not require long or difficult training. Therefore, India is an important asset for companies interested in cheap labor.

India is also a perfect place for investment and business expansion. The fact that everything is cheap in the country makes it relatively easy to invest in India.

The Indian economy has been experiencing significant growth in recent years.

The requirement for a local director
An Indian company requires that at least one director on the company's board of directors be a local resident. A local resident does not have to be an Indian citizen, but only someone who has been in the country for more than 180 days in the last calendar year.

The requirement for two shareholders
An Indian company can be opened even if you are an Israeli citizen. This means that the company can be opened with 100% shareholding in the name of an Israeli citizen - in your name, or even in the name of an Israeli company.

However, a minimum of two shareholders are required in the company.

On the other hand, none of the shareholders are required to be local and the company can be 100% foreign-owned.

Process of opening a company in India
DIN number: Opening a company in India starts with a DIN number for each of the directors of the company. This is one of the prerequisites for setting up a business in India. No person can be a director of the company unless he has received a DIN number from the Indian government.

Name Approval: According to Indian company law, the name of every company must be unique. Therefore, the name you want for your new company in India needs to be approved by the Registrar of Companies.

Forms: A notarized power of attorney is required to be signed by a local agent to open a company. The document is then sent urgently to India by courier for processing by a local Indian notary. After several processes in India, the client is required to sign the application for registration with the Commercial Registry, and again send the document to India. At this point, the company already exists legally and can start business activities.

Equity
To open a company, a minimum equity deposit of 100,000 rupees, which is approximately 1,080 dollars, is required.

In India, an actual deposit of the aforementioned equity amount is required. Therefore, as part of the process, a bank account is opened for the purpose of depositing the equity.

Opening a bank account in India – current account for the company
After opening the company in India, it is time to open a current account in India for the company.

In India, it is required to physically visit a branch of the Indian bank to open the account.

However, there is an alternative, which is opening an online bank account. Indeed, similar to our "Zero One" bank, there are online banks in East Asia that will be happy to accept your company in India as a customer.

After opening the bank account and depositing the equity, the company is opened and a company document is issued from the commercial registry (this is the Indian certificate of incorporation).

After opening the company, the bank account that was opened for the purpose of depositing the equity can be used. In other words, the equity account becomes an active current account for all intents and purposes.

Registration as a Foreign-Owned Company for Foreign Exchange Laws
When setting up a company in India that generates profits in India, the company is required to register with the Reserve Bank of India to obtain permission to export foreign exchange (dollars or euros) from the country. There is a similar requirement for setting up a company in South Korea, but the process there is much more difficult than in India.

To obtain such permission from the Reserve Bank of India, it is necessary to meet a number of legal requirements:

1. Register with the Reserve Bank of India (RBI) and obtain a username and password for the company portal, and also register another user as an “authorized reporter”.
2. File FC-GPR. This is a “Gross Provisional Return”: This is a mandatory report under the Foreign Exchange Management Act, 1999 (FEMA), when an Indian company receives foreign investment. FC-GPR is required to be filed when a foreign investor remits money to India, and the company allots shares in return for this investment. In other words, when you invest in your own company, and the company issues you shares in return, you need to file such a report.
3. File CA (Chartered Accountant) certificates. A CA certificate is a document issued by a Chartered Accountant, which confirms the fair value of shares or a company. In fact, it is a professional certificate that the price at which the shares are issued or transferred is fair and justified. This is relevant in a situation where there is an increase or change in the ownership of the company's shares.
4. Meet the requirements of CS (Company Secretary). A Company Secretary is a certified professional (a member of the Institute of Company Secretaries of India), responsible for ensuring that the company complies with all legal and regulatory requirements. This is a kind of company lawyer who does not perform legal services but is only specifically authorized to monitor that the company complies with the requirements of the company in terms of corporate law.

Registration with the authorities
After opening the company, several files will be opened with the authorities in India:

Obtaining a PAN number: A Permanent Account Number (PAN) is a unique 10-character alphanumeric identifier issued by the Income Tax Authority to individuals, companies and other entities.

Obtaining a TAN number: A Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric number issued by the Income Tax Authority to entities liable for deduction or collection of tax at source (TDS/TCS).

GST Registration: The Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services in India. Foreign companies supplying goods or services in India are required to register for GST before commencing their operations.

GST registration is mandatory when the total turnover exceeds Rs 20 lakh (1 lakh is one hundred thousand), or in any case of inter-state supply, import of services, or sales through e-commerce.

Professional Tax Registration: Professional Tax is a state-level tax levied on employment and manual labour in India. Compliance with professional tax requirements is an important aspect of payroll management.

EPF (Employees Provident Fund) and ESIC (Employees State Insurance Corporation) Registration: Opening these accounts is a legal requirement in India, requiring businesses to provide their employees with retirement savings and health insurance.

Obtaining an Import-Export Code (IEC): An Import-Export Code (IEC) is a mandatory business identification number for companies that import or export goods and services in India.

Company Maintenance
The company requires annual maintenance of fees, annual filings, a local address (which we will provide for you), and filings with the tax authorities.

However, all costs in India are low due to the relatively low cost of living.

Corporate Taxation in India
The first thing to know is that in India, exports of goods are zero-rated. Exporters can claim a refund of input tax.

The second thing you need to know is that in India, taxation is complex:

There are different levels of corporate tax according to income amounts,

There are different levels of VAT according to types of goods: goods and services exempt from VAT, precious stones and metals, basic food products, standard food products, luxury goods, and a category whose name can be funny: "sin products".

There is a "tax on tax" - an additional tax amount that goes to education and health that is itself derived from the amount of tax that must be paid (an Indian invention called "Cess")

Navigating between the various tax charges requires a local professional, which we can provide.

Questions and Answers
Question: Is it necessary to physically fly to India to open a company in India?
Answer: The entire process of opening a company is carried out remotely and at no stage is it necessary to physically arrive in India. There is no need to fly to India to open the company. The entire process of opening a company, and in most cases also the company's bank account, is carried out remotely without setting foot on Indian soil.

Question: Who provides the local address for the new company in India?
Answer: We will provide the local address.

Question: Who provides the local director for the new company in India?
Answer: We will provide the local director, if necessary and subject to availability.

Question: How can I find a good accountant who can handle our new company in India?
Answer: We will connect you with a local accountant.

Question: If I want to come to India to open a bank account, what should I do?
Answer: We will try to arrange a meeting for you at the branch in advance to sign the account opening forms, so that everything is in order before you arrive, so that you do not have to wander around the city in search of a branch that will accept you and open a bank account for your new company in India.

Question: What type of company in India should I open?
Answer: There is no need to hesitate because there is only one type of company in India.

This is a limited liability company ("pvt"). This is the LLC that you know.

LLCs are considered the most flexible in terms of organizational structure and easy to operate on a daily basis. They are suitable for investments of various sizes.

Question: Do you need an Indian passport to open a company in India?
Answer: There is no need for an Indian passport. We can open a company in India for any Israeli citizen as long as they have a valid passport.

Question: How long does it take to open a company in India?
Answer: The process of opening a company, including signing and sending the power of attorney, should take about 3 weeks. After that, the process of opening a bank account takes between 3-4 weeks, depending on the banks' willingness to accept the new company as a client. Of course, these times depend on third parties and are therefore only an estimate.

Question: Is it possible to open a company in India for a person with American citizenship or a person living in the US?
Answer: Yes. We know how to open a company in India for a person with American citizenship or a person living in the US.

Question: Can any Israeli company be defined as a subsidiary of a company in India?
Answer: Yes, absolutely, we know how to do such a process with the Israeli Registrar of Companies without any problems and in a completely smooth manner.

Question: How much does it cost to open a company in India?
Answer: Click here to contact us and get an up-to-date quote for free!

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