Starting a Business Questionnaire India (Mumbai)

Transcription

1 Starting a Business Questionnaire India (Mumbai) Dear Contributor, We would like to thank you for your participation in the Doing Business project. Your expertise in the area of Starting a Business in India is essential to the success of the Doing Business report, one of the flagship publications of the World Bank Group that benchmarks business regulations in 190 economies worldwide. The Starting a Business indicator, which measures the number of procedures, time, cost and paid-in minimum capital requirement for a small and medium-size limited liability company to start up and formally operate, is one of the 11 indicator sets published by the Doing Business report. The report attracts much attention around the world. The latest edition, Doing Business 2017: Equal Opportunity for All, introduced improvements in the paying taxes and protecting minority investors indicators, and included a gender component in 3 of 11 Doing Business indicator sets. It received over 7,000 media citations within just a week of its publication on October 25, 2016 and the report was downloaded almost 40,000 times within that same period. A record 137 economies implemented a total of 283 reforms. Low and middle income countries carried out more than 75% of these reforms, with Sub-Saharan Africa accounting for 80 of them. Governments worldwide read the report with interest every year, and your contribution makes it possible for the Doing Business project to disseminate the regulatory best practices that continue to inspire their regulatory reform efforts. Since 2004, more than 170 economies have implemented more than 580 reforms making it easier to start a business. In 2015/16, 49 economies implemented such reforms. For Starting a Business, most focused on simplifying pre-registration and registration formalities. We are honored to be able to count on your expertise for Doing Business Please do the following in completing the questionnaire: Review the assumptions of the case study before updating last year's information in the questionnaire. Describe in detail any reform that has affected the process for starting a business since June 1, Be sure to update your name and address if necessary, so that we can mail you a complimentary copy of the report. Kindly return the questionnaire to Morgann Reeves at mross@worldbank.org. We thank you again for your invaluable contribution to the work of the World Bank Group. Sincerely, Morgann Reeves Tel: mross@worldbank.org

2 Primary Contributor Information: Please check the box next to information you do not want us to publish. Do not publish Never Published Name Title (Mr., Ms., Dr.) [Mr. ] First Name [Shailendra ] Last Name [Singh ] Position (e.g. manager, associate, partner) Profession (e.g. judge, lawyer, notary) Contact details [ Joint Secretary] [ ] Do not publish Firm name [Department of Industrial Policy and Promotion] Website [dipp.nic.in ] Do not publish address [ singh.shai len@nic.in] Do not publish Phone [ ] Never Published Do not publish Fax [ ] Mobile phone [ ] Firm Address Street [ ] P.O. Box [ ] City [ ] State/ Province [ ] Zip/Postal code [ ] Country [ ] Additional Contributor(s): If there are more people whom you would like us to acknowledge, kindly send us an . Name Occupation Phone Address [title] [first name] [last name] [title] [first name] [last name] [title] [first name] [last name] [firm] [position] [profession] [firm] [position] [profession] [firm] [position] [profession] [ ] [phone] [mobile] [ ] [phone] [mobile] [ ] [phone] [mobile] [street] [state/province] [city/country] [street] [state/province] [city/country] [street] [state/province] [city/country] Paperless Option for Complimentary Report and Certificate Last year contributors saved nearly half a million pieces of paper by selecting the paperless report option. We welcome you to join us in conserving resources: Please me an electronic copy of the report and my certificate of appreciation, rather than mailing me a paper copy.

3 1.Case Study Assumptions The Starting a Business indicators record all procedures officially required, or commonly done in practice, for an entrepreneur to start up and formally operate an industrial or commercial business, as well as the time and cost to complete these procedures and the paid-in minimum capital. These procedures include obtaining all the necessary licenses and permits and completing any required notifications, verifications or inscriptions for the company and employees with relevant authorities. Please provide responses to the questions in sections 2 and 3 of the questionnaire based on the case study assumptions and information below. You are setting up the following company: Type of limited liability company Location In Mumbai. Company size Activities Assets and office space Company deed 10 pages long. Private Limited Company. The business has 5 owners (shareholders) and is 100% domestically owned. Start-up capital: INR 1,022,896 (equivalent to USD 15,900). Annual sales (turnover): INR 10,228,958 (equivalent to USD 159,000). Number of employees: employees (within 1 month of commencement of operations). All are nationals of India. The business conducts general industrial or commercial activities, such as production or sale of goods or services to the public. The business does not qualify for investment incentives or any special benefits. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It does not use heavily polluting production processes. The business does not own real estate. It leases the commercial plant and offices. The amount of the annual lease for the office space is INR 102,290 (equivalent to USD 1,590). The size of the entire office space is approximately 929 square meters (10,000 square feet).

4 2.Reform Update When answering the questions below, please use the case study assumptions provided in section Has there been any reform (in practice or in laws and regulations) related to the process of starting a business SINCE June 1, 2016? If applicable, please indicate the name and date of the law and provide an online link to the legal text: Response If yes, has this reform simplified or complicated the process of starting a business? Please explain: The following reforms have introuced significant efficiencies of time in the process of Starting a Business. 1. REDUCTION OF APPLICABE PROCEDURES FROM 14 to 5: The applicable number of procedures have been reduced from 14 to 5 with the introduction of the "Simplified Proforma for Incorporating a Company electronically" (SPICe aka INC 32). SPICe is the only default application for incorporation of companies. The "mandatory" SPICe form combines 5 procedures across agencies (MCA and CBDT) to 1 procedure. Listed below are the erstwhile procedures which have now been subsumed as 1 procedure: (a) Incorporation of company (b) Obtain director identification number (DIN) (c) Reservation of company name (d) Application for Permanent Account Number (PAN) (e) Application for Tax deduction and collection Account Number (TAN) 2. REDUCED APPLICATION FEE FOR INCORPORATION: Application Fee for incorporation of company has been reduced from INR 2,000/- to to INR 500/- 3. ONLINE AND REALTIME APPLICATION PROCESS FOR ESIC & EPFO WITHOUT THE REQUIREMENT OF INSPECTION OR PHYSICAL TOUCH POINTS: Procedures associated with Employee State Insurance Corporation (ESIC) and Employee Provident Fund Organization (EPFO) have been made electronic and are now provided in real time. Inspection procedures associated with both procedures have been dispensed with. 4. ONLINE AND REAL TIME REGISTRATION UNDER SHOPS & ESTABLISHMENT's ACT IN MUMBAI: Applications are processed electronically inspection procedures have been dispensed with. There are a total of 1538 approvals were given in one day out of total 1673 application received in January, ESTABLISHMENT OF CENTRAL REGISTRATION CENTRE (CRC): MCA rolled out the first phase of CRC in January, THE CRC is process re-engineering initiative which utilises a combination of automation, rationalization of rules, deployment of certified professionals and centralized processing to reduce time taken to incorporate a new company. Resultantly, the time taken to incorporate a company has been brought down to an average of 0.3 days in December, In Mumbai, the procedures for VAT registration and Profession Tax have been clubbed into 1 consolidated procedure which one may apply online. There are a total of approvals were given in one day out of total application received in January, 2017

5 2.2 Are you aware of any reform (in practice or in laws and regulations) related to the process of starting a business that is expected to be adopted PRIOR TO June 1 7. The following CORRECTIONS are to be made: 7.1 DIGITAL SIGNATURE CERTIFICATE (DSC): DSC's are counted as a procedure in the past year's ranking procedure, however the requirement of DSC is not specific to Incorporation of a Company and is in fact a necessary aspect of validating electronic transactions world-wide. In the event an applicant has an existing DSC, he is free to utilise the same for Incorporation of a Company and will not be required to apply for a DSC. 7.2 COMMON / CORPORATE SEAL: The requirement of Common / Corporate seal was dispensed with in the Companies (Amendment) Act, 2015, yet it has been considered in last years' Doing Business Report. 7.3 BANK ACCOUNT: Bank accounts are not required "mandatorily" for any forms during the procedures associated with starting a business and hence are incorrectly counted as a "procedure". Only ESIC registration used to require bank account details previously, however, the practice was discontinued in April, The provision of bank account information has been made optional at the time of registration since then. 8. The procedures and timelines for starting a Business is as follows: 1. Incorporate a company with Name Reservation, DIN, PAN and TAN using SPICe Form online-0.5 day The cost of the procedure is as follows: Filing of Memorandum of Association: INR 2,000 Filing fee for Articles of Association: INR 400 Filing fee for integrated INC-32 (SPICe): INR 500 Stamp Duty: INR 10 Stamp Duty for Articles of Association: INR 200 Stamp Duty for Memorandum of Association: INR 750, 2017?

6 (The process for drafting Memorandum and Articles of Association has been simplified with the introduction of emoa and eaoa.) 2. Register with ESIC-0.5 Day (Simultaneous Process)-No Charge 3. Register with EPFO-0.5 Day (Simultaneous Process)-No Charge 4. Register with VAT and Profession Tax; online and real time-0.5 Day-the cost is INR Register with Shops and Establishment Act (online and real time)-0.5 Day (Simultaneous Process)-INR 4800 The procedures which are completely eliminated are: Procedure-1: Obtain a digital signature-the requirement of obtaining digital signature is not specific to registration of companies and a person may have digital signature readily available for a variety of online transactions. Hence, to count it as an additional procedure may reflect an incorrect stance. Evidently, this would not count as a procedure in case an individual is in possession of a digital signature. Further it takes only four hours to get the digital signature in India from Certifying Authorities. The cost of obtaining a digital signature is INR 899. Procedure-5: Make a company stamp- The companies Act has already amended and removed the requirement of company seal in ESIC and PAN do not any longer require corporate seals. India's central bank and monetary authority, the Reserve Bank of India (RBI) has issued an advisory to the Indian Banks Association (IBA) to educate banks that corporate / common seal is not mandated by law for opening of a bank account, unless the company's Memorandum and Articles of Association specify the same. Accordingly, banks do not insist on obtaining company seal at the time of opening accounts of the company. Procedure-7: Open a bank Account-Opening of a bank account is not a "mandatory" requirement at the time of filing of an application for incorporation. Accordingly, to treat opening of a bank account as a separate procedure, despite the fact that it is not required for incorporation would reflect an incorrect position both de jure and de facto. The absence of a bank account would not stop the process of starting a business / incorporation of a company. Any company would require a bank account to make monetary transactions whether the transaction be with the government, or otherwise, in any country of the world.

7 Procedure-13: Receive inspection and obtain the shops and Establishment Registration certificate- Municipal Corporation of greater Mumbai has removed the requirement of inspection. Procedure-14 Registration for Profession Tax: This procedure is merged with VAT registration using an integrated online common application form. 9. The total cost of incorporting a compoany stands at INR 3860, which is reduced from DBR, 2017 figure of INR The total cost for starting a business in India Company incorporation-inr 3860 Digital Signature- INR 899 DIN for 2 directors-inr 1000 PAN-INR 107 TAN-INR 63 VAT-500 Registration under Shops and Establishment- INR 4800 The total is INR ( USD 165) which is around 10% of income per capita ( USD 1590).

8 Response If yes, is this reform expected to simplify or complicate the process of starting a business? Please explain: The registration for ESIC and EPFO will be done through a common application form. 2.3 Are you aware of any reform (in practice or in laws and regulations) related to the process of starting a business that is ongoing and is expected to be adopted AFTER June 1, 2017? Response If yes, is this reform expected to simplify or complicate the process of starting a business? Please explain: INTRODUCTION OF A SINGLE TAXATION REGIME UNDER GOODS & SERVICES TAX (GST): GST will be implemented nationwide fromom 1st June, All indirect taxes will be subsumed under GST (i.e. including Value Added Tax, Central SalesTax, Service Tax etc). 2.4 How many Private Limited Company registrations did you or your company oversee in the past year? -Click to Select-

9 3.The Business Start-up Process For your convenience, last year s aggregate answers are included in this survey. They represent a unified answer based on the answers we received from various contributors. Thus, they may not match the specific answers that you or your colleagues provided last year. If you feel that the unified answers do not reflect the current reality in your economy, kindly provide us with your own answers and a clear indication of the reasons for your different views. Please describe in detail any change to the data and indicate when the change took effect. Please specify the reason why you think the data for this year should be different: (i) Correction: our unified answer is wrong and does not reflect the current practice in your economy; (ii) Reform: the different answer resulted from a modification of practice or law after June 1, 2016; (iii) Other: please specify. Definitions A procedure is any interaction of the company founder with external parties, for example, government agencies, lawyers, auditors or notaries. Interactions between company founders or between company officers and their employees are not considered separate procedures. Both pre- and post-incorporation procedures that are required for an entrepreneur to legally operate a business (including procedures required after the company incorporation) are recorded. If female entrepreneurs have to comply with additional requirements compared to male entrepreneurs, such additional requirements are included in the list of procedures and are marked as "applies to women only". Time is recorded in calendar days, not working days. The time span for each procedure starts with the first filing of the application or request and ends once the company has received the final document, such as the company registration certificate or tax number (for example, it includes the time to make an appointment with a notary or any waiting time once the documents are filed). It is assumed that the entrepreneur has had no prior contact with any of the officials. Procedures that can be fully completed online and in less that 1 day are counted as half a day. Costs include only official fees and taxes. Bribes are excluded. If possible, please indicate the relevant fee schedule or calculation formula (for example, as a percentage of the company s capital). Fees for professional services (such as those of notaries, lawyers or accountants) are included only if the company is required by law to use such services or if the use of professional services are solicited by the majority of entrepreneurs. Paid-in minimum capital requirement is the amount that an entrepreneur is required to deposit in a bank or with a notary prior to or within 3 months of company registration. Please note that all time and cost estimates for each procedure should be provided assuming that no bribe is offered to the officials. Similarly, please assume that no procedure can be skipped through a bribe payment.

10 3.1 Please update the data below, taking into account the case study assumptions provided in section 1. Please describe in detail any change to the data and indicate when the change took effect. When your answers differ from last year's information, please specify whether this is due to a correction, a reform or other reason. Last year's information Please update last Comments (correction, year's information reform, other) Most common type of Private Limit ed Same as previous domestic limited liability Company year company in India (Mumbai). Minimum capital requirement INR 0 Same as previous year Paid-in minimum capital INR 0 Same as previous requirement (minimum amount to be deposited prior to or within 3 months of company registration) year 3.2 Please revise as needed the following list of procedures to start a company in Mumbai based on the scenario described in section 1. Procedure 1 Time: Cost: Agency: Procedure Details: Obtain a digital signature certificate Time last year: 1-3 days Time update: NA Can this procedure be done simultaneously with another procedure? -Click to Select- If so, which other procedure can it be done simultaneously with? NA Cost last year: INR 700 to INR 2,500 per Digital Signature Certificate Cost update: 0 Legal basis for the fee (including a link to the fee schedule where available): The fee attributable to DSC is levied by a private agency for issuance and does not stem from a statutory requirement. Any variance of cost (INR ) is associated with the term and class of DSC. Agency last year: Authorized private agency (Federal) Agency update: Details: The applicant must obtain a Class-II Digital Signature Certificate from a certification agency authorized by the Controller of Certification Agencies. These include private agencies like NIC, E-Mudhra, MTNL Trust line, to which company directors submit the prescribed application form along with notarized proof of identity and address. A Class-II Digital Signature Certificate can be obtained for either a period of 1 year or a period of 2 years, and then needs to be renewed for another 1 or 2 years upon payment of renewal fees. Each agency has its own fee structure, ranging from INR 700 to INR The cost will vary in accordance with the duration of the Digital Signature Certificate. Once the Digital Signature Certificate is obtained, the authorized personnel (directors/manager/secretary) are required to register the same with MCA for statutory e-filing. Your comments: The requirement of a DSC is not specific to registration of companies and a person may have a DSC readily available for a variety of online transactions. Hence to count it as an additional process, may reflect an incorrect stance. Evidently, this would not count as a step in case an individual is in possession of a DSC.

11 If you made changes to last year s information, please indicate whether these reflect a correction or a reform Correction Please explain the changes and provide the legal basis when applicable: Can this procedure be done online? Please provide a link to the website: Multiple agencies If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 2 Time: Cost: Agency: Procedure Details: Obtain director identification number (DIN) online Time last year: 1 day Time update: 0 day Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Under the new mandatory SPICe form (INC 32) Procedures 2, 3, 4, 6 and 11 have been combined under one application process. The procedure hence gets subsumed in procedure 4. Cost last year: INR 500 per DIN Cost update: INR 500 over and above INR 500 fee prescribed for SPICe form in subsequent procedures Legal basis for the fee (including a link to the fee schedule where available): The Companies (Incorporation) 5th amendment rules 2016 states application for allotment of Director Identification Number (DIN) shall be acommpanied with fee of INR 500 in addition to registration fees specified in Companies (Registration of Offices and Fees) Rules, Refer: Agency last year: Ministry of Corporate Affairs (Federal) Agency update: Details: In accordance with the Companies Act, 2013, every private limited company must have at least 2 directors, each obtaining a DIN and DSC. 1) Form DIR 3 has to be filed online with the Ministry of Corporate Affairs (MCA) along with a photograph and scanned copy of supporting documents, i.e., proof of identity and proof of residence not older than 2 months. 2) Form DIR 3 has to be signed and submitted electronically by the applicant using his or her own Digital Signature Certificate (DSC). 3) Form DIR 3 has to be verified digitally by: (i) a chartered accountant, company secretary or a cost accountant in practice (Practicing Professional); or (ii) a company secretary in full-time employment of the company or a director of the company in which the applicant is to be appointed as director. 4) In case the Form DIR 3 is certified by a Practicing Professional and is not identified by the system as a potential duplicate, the DIN will be approved and generated by the system immediately. In all other cases, a DIN application number is generated. The DIN application is then reviewed by MCA officials. In case the MCA officials are satisfied with the application based on the information provided, the DIN will be generated within a month of the date of application. If

12 the eform is not approved, then status of provisional DIN will appear as "Lapsed." Legal basis: Companies (Appointment and Qualifications of Directors) Rules, 2014 and FAQs published by Ministry of Corporate Affairs. The fee for obtaining a DIN number is specified in the Companies (Registration Offices and Fees) Rules, Your comments: DIN allotment is no longer a pre-requisite for filing for incorporation as Application Process has been integrated for Incorporation of company wherein an applicant can file for procedures 2,3,4,6 and 11 through a single application process. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Reform Please explain the changes and provide the legal basis when applicable: The application process to incorporate companies in India has been amended to integrate procedures 2,3,4,6 and 11 by an amendment to the Companies (Incorporation) 5th Amendment Rules, Can this procedure be done online? Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 3 Reserve the company name with the Registrar of Companies (ROC) online Time: Time last year: 2-7 days Time update: 0 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Under the new mandatory SPICe form (INC 32) Procedures 2, 3, 4, 6 and 11 have been combined under one application process. The procedure hence gets subsumed in procedure 4. Cost: Cost last year: INR 1,000 Agency: Procedure Details: Cost update: INR 500 for integrated SPICe form (INC 32) for procedures 2, 3,4,6 and 11 Legal basis for the fee (including a link to the fee schedule where available): As per Companies (Registration of Offices and Fees) Rules, Agency last year: Registrar of Companies, Ministry of Corporate Affairs (Federal) Agency update: Details: In order to reserve a unique company name, a name search is conducted on the website of MCA and eform INC-1 is required to be filed pursuant to Section 4(4) of the Companies Act, 2013 and Rule 8 & 9 of Companies (Incorporation) Rules, The name reservation fee is provided under the Companies (Registration offices and fees) Rules, The process is as follows: 1. Check availability of the proposed name by checking on the MCA21 portal for other companies or LLPs having similar names. Alternatively, engage a professional (practicing chartered accountant, company secretary or cost accountant) to perform the check on the MCA 21 portal and provide a search report which can be attached to the application. 2. Prepare the application in eform INC-1 with all relevant details and declarations. If a professional has been engaged to check availability of name, have the professional certify and

13 Digitally sign the eform. 3. Upload the eform INC-1 to the MCA 21 portal and pay fees of INR 1,000 electronically (net banking or credit card). 4. If the e-form has been certified by a professional (as described above), the proposed name shall be approved by the Registrar of Companies on a priority basis via the Straight Through Process ("STP"), provided the name is not similar to any existing trademark, any of the words proposed in the company's name does not exactly match any existing company's name and the name does not consist of a single word (other than private limited). 5. The name, if made available to the applicant, will be reserved for the applicant to use for 60 days from the date of application. If the proposed company is not incorporated during this 60-day period, the approval will lapse and the name will be available to other applicants. Your comments: Provisions related to reservation of the name for a period of 60 days shall not apply in case of incorporation using the SPICe form (INC 32) as the application process has been integrated for procedures, 2,3,4,6 and 11. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Reform Please explain the changes and provide the legal basis when applicable: The Companies (Incorporation) Amendment Rules, 2016 have integrated procedures 2,3,4,6 and 10. Can this procedure be done online? Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 4 Time: Cost: Agency: Procedure Details: Pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation Time last year: 5 days on average Time update: 0.5 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Under the new mandatory SPICe form (INC 32) Procedures 2, 3, 4, 6 and 11 have been combined under one application process. This procedure subsumes procedure 2, 3, 6 and 11. Cost last year: see comments Cost update: INR 500 for integrated SPICE form (INC 32) for procedures 2,3,4,6,11 Legal basis for the fee (including a link to the fee schedule where available): AAs per Companies (Registration of Offices and Fees) Rules, Agency last year: Registrar of Companies, Ministry of Corporate Affairs (Federal) Agency update: Details: Pursuant to Section 7 (1) of the Companies Act, 2013, and pursuant to Rules 10, 12, 14 and 15 of Companies (Incorporation) Rules, 2014, the following forms are required to be electronically filed on the Ministry of Corporate Affairs website for incorporation purposes: a) Form-INC-7 (Application for Incorporation of Company). Scanned copies of the signed Memorandum and Articles of Association of the company, have to be attached to Form-INC-7. b) Form-INC-22 (Notice of situation or change of address of the registered office of the company). Proof of registered office address such as conveyance/ lease deed/ rent agreement

14 etc. along with the rent receipts as well as copies of the utility bills (proof of evidence of any utility service like telephone, gas, electricity etc.) depicting the address of the premises not older than two months is required to be attached to Form INC 22. c) Form- DIR-12 (Particulars of appointment of directors and the key managerial personnel and the changes among them). Fee schedule for a small company of paid-up share capital between INR 500,000 and INR 1,000,000: - Filing of the Memorandum of Association: INR 2,000 - Filing fee for filing the Articles of association: INR Filing fee for Form INC-7: INR Filing fee for Form INC-22: INR Filing fee for Form DIR-12: INR Stamp duty: INR Stamp duty for Articles of Association: IINR 2,000 (INR 1,000 on every INR 5 Lakhs of authorized capital or part thereof subject to a maximum of 50 Lakhs of Stamp Duty) - Stamp duty for Memorandum of Association: INR 200 Your comments: Under the new mandatory SPICe form (INC 32) Procedures 2, 3,4,6 and 10 have been combined under one application process. INC 7,22 and DIR-12 are no longer required to be furnished at the time of incorporation and associated costs have been accordingly dispensed with. The following changes have been effected in the fee schedule. CHANGE IN FEE SCHEDULE: Fee schedule for a small company of paid-up share capital of INR 500,000: Filing of Memorandum of Association: INR 2,000 Filing fee for Articles of Association: INR 400 Filing fee for integrated INC-32 (SPICe): INR 500 Stamp Duty: INR 10 Stamp Duty for Articles of Association: INR 200 Stamp Duty for Memorandum of Association: INR 750 In addition the process for drafting Memorandum and Articles of Association has been simplified. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Reform Please explain the changes and provide the legal basis when applicable: Required fee for filing incorporation of a company reduced from INR 2,000 to INR Can this procedure be done online? Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 5 Time: Make a company stamp Time last year: 1 day (simultaneous with previous procedure) Time update: Company stamp is no longer mandatory as and is not required for incorporation of a company Can this procedure be done simultaneously with another procedure? -Click to Select-

15 If so, which other procedure can it be done simultaneously with? NA Cost: Cost last year: INR Agency: Cost update: NA Legal basis for the fee (including a link to the fee schedule where available): NA Agency last year: Authorized vendor (Private) Agency update: Procedure Details: As per the amendment to the Companies Act 2013, making a company seal is no longer Details: a legal requirement. However, making a company rubber stamp is still commonly used in practice. The stamp is normally required to be affixed by a director upon signing on behalf of the company in order to file several applications relevant to business startup. This includes but is not limited to opening a bank account, application for registration with the Employee State Insurance Corporation (ESIC) and application for a company Permanent Account Numbers (PAN). Your comments: ESIC and PAN do not any longer require corporate seals. India's central bank and monetary authority, the Reserve Bank of India (RBI) has issued an adviosry to the Indian Banks Association (IBA) to educate banks that corporate seal is not mandated by law for opening of a bank account, unless the MoA and AoA of the company specify so. Accordingly, banks shall not insist on obtaining company seal at the time of opening accounts of the company. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Correction Please explain the changes and provide the legal basis when applicable: Companies (Amendment) Act, 2015 eliminated the requirement for company seal. Also, as per Companies (Incorporation) Fifth Amendment Rules, 2016, company has to mandatorily apply for PAN using the integrated e-form SPICe using digital signature. PAN after allotment by the Income Tax Department is affixed in the CoI and issued. Refer Can this procedure be done online? -Click to Select- Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? -Click to Select- If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? -Click to Select- If yes, please explain: Procedure 6 Time: Cost: Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Time last year: 7-10 days Time update: 0 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Under the new mandatory SPICe form (INC 32) Procedures 2, 3, 4, 6 and 11 have been combined under one application process. The procedure hence gets subsumed in procedure 4. Cost last year: INR 93 plus service tax Cost update: INR 93 plus service tax Legal basis for the fee (including a link to the fee schedule where available): As per National Securities Depository Limited (NSDL) notification, the fees for PAN application is INR Part II contains fee. Link of MCA

16 Agency: Procedure Details: Agency last year: Private agencies authorized by UTI or NSDL, as outsourced by the Income Tax Department (Federal) Agency update: Application to MCA while issuance is through Central Board of Direct Taxes (CBDT) Details: Under the Income Tax Act 1961, each person must quote his or her permanent account number (PAN) for tax payment purposes and the tax deduction and collection account number (TAN) for depositing tax deducted at source. The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. Since 2003/04, UTI and NSDL have become the authorized agencies that process PAN registration applications on behalf of the Income Tax department. The applicant completes Form 49A (statutory form for applying for PAN), pays the due fees of INR 93 (plus applicable taxes currently at 12.36%) either online or otherwise and submits the application form together with proof of identity, proof of address and 2 recent photographs to the authorized agent/designated service centers for verification. After being allotted a PAN number, UTIISL or NSDL will print the PAN card and deliver it to the applicant. Your comments: Stakeholders have to now mandatorily apply for PAN and TAN alongwith the integrated e-form SPICe for incorporation of a company. Stakeholders do not have to separately apply for PAN after company incorporation and instead have to apply for it in the integrated SPICe incorporation form itself. PANs for Companies are affixed in with Certificate of Incorporation (CoI) by the Ministry of Corporate Affairs. This ensures 100% coverage for allotment of PAN to companies, as it is being done simultaneously with incorporation of the company. On approval of SPICe forms, the Certificate of Incorporation (CoI) is issued with PAN as allotted by the Income Tax Department affixed on the CoI. An electronic mail with Certificate of Incorporation (CoI) as an attachment along with PAN and TAN is also sent to the user If you made changes to last year s information, please indicate whether these reflect a correction or a reform Reform Please explain the changes and provide the legal basis when applicable: As per the Companies Incorporation (Amendment) Rules, 2017, 18. The Certificate of Incorporation shall be issued by the Registrar in Form No.INC-11 and the Certificate of Incorporation shall mention permanent account number of the company where it is issued by the Income-tax Department. On approval of SPICe forms, the Certificate of Incorporation (CoI) is issued with PAN as allotted by the Income Tax Department. An electronic mail with Certificate of Incorporation (CoI) as an attachment along with PAN and TAN is also sent to the user. Referhttp:// Can this procedure be done online? Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 7 Time: Cost: Open a bank account Time last year: 2 days Time update: NA Can this procedure be done simultaneously with another procedure? No If so, which other procedure can it be done simultaneously with? Cost last year: no charge

17 Agency: Procedure Details: Cost update: Legal basis for the fee (including a link to the fee schedule where available): Agency last year: Bank Agency update: Details: The company must open a bank account. The bank account details must be provided by the company in various post-registration applications, such as registrations for taxes. Your comments: Opening a bank account is not a "mandatory" requirement at the time of filing of an application for incorporation. Accordingly, to treat opening of a bank account as a separate procedure, despite the fact that it is not required for incorporation would reflect an incorrect If you made changes to position last year s both information, de jure and please de facto. indicate The absence whether these of a bank reflect account a correction would or not a stop reform the Correction process of Please explain the changes and provide the legal basis when applicable: Can this procedure be done online? Please provide a link to the website: multiple If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? If yes, please explain: Procedure 8 Time: Cost: Agency: Register with Employees' Provident Fund Organization Time last year: 7 days on average, simultaneous with previous procedure Time update: 0.5 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Application for DIN, Reservation of name, Incorporation of Company, Appointment of Directors and obtaining TAN and ESI and Shops and Establishment registration Cost last year: no charge Cost update: 0 Legal basis for the fee (including a link to the fee schedule where available): docs/pdfs/olre PDFs/OLRE with DSC Revised Sep2016.pdf Agency last year: Employees Provident Fund Organization (Federal) Agency update:

18 Procedure Details: Details: The Employees Provident Fund Organization (EPFO) is a statutory organization under the Ministry of Labor and Employment. The Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies to an establishment, employing 20 or more persons and engaged in any of the 183 Industries and Classes of business establishments, throughout India excluding the State of Jammu and Kashmir. Pursuant to launch of OLRE (online registration of establishment portal) by the Employee Provident Fund department, employers are required to apply online for registering their establishment. For verification purposes, the employer shall send the copies of all the documents mentioned in the application form along with the copy of the application generated at the time of submission after the issuance of PF Code intimation letter to the EPFO office. Your comments: The EPFO registration is granted from URL) in online manner in real time. The requirement for Bank details have been made optional while registering with EPFO, and a business may choose not to provide the bank account details. No manual intervention / approval is required for registration.

19 If you made changes to last year s information, please indicate whether these reflect a correction or a reform -Click to Select- Please explain the changes and provide the legal basis when applicable: Can this procedure be done online? Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 9 Time: Cost: Agency: Procedure Details: Register for VAT online Time last year: 10 days, simultaneous with previous procedure Time update: 0.5 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Registration of Professional Tax has been combined with VAT registration Cost last year: INR 500 (Registration Fee) + INR 25 (Stamp Duty) for compulsory VAT registration Cost update: Legal basis for the fee (including a link to the fee schedule where available): Agency last year: Department of Sales Tax Agency update: Details: VAT online registration is conducted via the website After the completed application form is submitted online, an acknowledgment containing the date and time for attending before the registering authority along with code/designation and address of registering authority is generated. The company should print a copy of the completed e- application and submit it along with the acknowledgement to the registration authority for verification and photo attestation on a given date and time along with relevant documents. If the application is correct and complete in all respect along with relevant documents, then the registering authority will generate TIN after verification of the documents. Registration certificate will be printed and issued to the company on the appointed date. The appointment date is usually scheduled in the next 10 days. Other accompanying documentation includes: - Certified true copy of the memorandum and articles of association of the company. - Proof of permanent residential address. - Proof of place of business (lease agreement) - One recent passport size photograph of the applicant - Copy of Income Tax Assessment Order having PAN or copy of PAN card - Chalan in Form No. 210 (original) showing payment of registration fee at INR 5000/in case of voluntary RC and INR 500/in other cases Your comments: An electronic application process has been created under which Professional Tax registration (Procedure 13) may also be applied for. There is no need of a separate procedure-13. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Reform

20 Please explain the changes and provide the legal basis when applicable: Can this procedure be done online? Please provide a link to the website: If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical inspection visit, etc.)? No If yes, please explain: Procedure 10 Time: Cost: Agency: Procedure Details: Register for medical insurance (ESIC) Time last year: 9 days, simultaneous with previous procedure Time update: 0.5 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Under the new mandatory SPICe form (INC 32) Procedures 2, 3,4,6 and 11 have been combined under one application process. Cost last year: no charge Cost update: 0 Legal basis for the fee (including a link to the fee schedule where available): Employee State Insurance Act, 1948 Agency last year: Employees' State Insurance Corporation (Federal) Agency update: Details: As per the Employees' State Insurance (General), Form 01 is the form required to be submitted by Employer for registration. The Employer Code Number issued will be included in the "intimation letter" which is sent by post to the employer. Employers can now submit application online for registration under ESI Act on the ESIC website ( The Employee s individual insurance is a separate process and occurs after Employer s registration. The Employer is responsible for submitting the required Declaration Form and employees are responsible for providing correct information to the employer. Your comments: The employer registration is now totally electronic without need for submitting any physical document. On successful submission of information the the employer number is generated automatically and a system generated registration letter is automatically sent to the of the address. The user id and password is also sent by immediately on generation of the employer code which can be used by the employer for doing all online activities. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Correction Please explain the changes and provide the legal basis when applicable: Can this procedure be done online? Please provide a link to the website: Login.aspx If yes, do the majority of entrepreneurs use this online service? If not, what are the main obstacles? If the procedure is done online, is any further in-person interaction still needed at the agency (i.e. a visit to submit physical documents in addition to the electronic submission; a visit to obtain the final document; receive a physical

21 inspection visit, etc.)? No If yes, please explain: Procedure 11 Time: Cost: Agency: Procedure Details: Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department Time last year: 7 days, simultaneous with previous procedure Time update: 0 days Can this procedure be done simultaneously with another procedure? If so, which other procedure can it be done simultaneously with? Under the new mandatory SPICe form (INC 32) Procedures 2, 3, 4, 6 and 11 have been combined under one application process. The procedure hence gets subsumed in procedure 4. Cost last year: INR 55 application fee plus service tax Cost update: Subsumed under INR 500 for SPICe form processing fee Legal basis for the fee (including a link to the fee schedule where available): Agency last year: Private agencies authorized by NSDL, as outsourced by the Income Tax Department (Federal) Agency update: Application is submitted to MCA and TAN issued by Income Tax Department Details: The tax deduction and collection account number (TAN) is a 10-digit alphanumeric number required by all persons responsible for deducting or collecting tax, as per Section 203A of the Income Tax Act. Any authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) can accept and process the TAN application. TAN applications can be made either online through the NSDL website or offline. The application must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-tds returns. The processing fee is INR 55 (plus applicable taxes). After verification of the application, it is sent to Income Tax Department which issues the TAN to the applicant. The national government levies the income tax. Your comments: Stakeholders have to now mandatorily apply for PAN and TAN alongwith the integrated e-form SPICe for incorporation of a company. Stakeholders do not have to separately apply for PAN after company incorporation and can instead apply for it in the integrated SPICe incorporation form itself. PANs for Companies are issued simultaneously with Certificate of Incorporation (CoI) by the Ministry of Corporate Affairs. This ensures 100% coverage for allotment of PAN to companies, as it is being done simultaneously with incorporation of the company. On approval of SPICe forms, the Certificate of Incorporation (CoI) is issued with PAN as allotted by the Income Tax Department. An electronic mail with Certificate of Incorporation (CoI) as an attachment along with PAN and TAN is also sent to the user. If you made changes to last year s information, please indicate whether these reflect a correction or a reform Reform Please explain the changes and provide the legal basis when applicable: Using the newly launched integrated e-form SPICe/INC-32, stakeholders can now apply for FIVE services/procedures simultaneously v.i.z., company name, company integration, DIN of the directors, PAN and TAN for the newly incorporated company. In the notified Form for SPICe, Field No. 9 Additional Information for applying Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) has been made mandatory. As per the Companies Incorporation (Amendment) Rules, 2017, 18. The Certificate of Incorporation shall be issued by the Registrar in Form No.INC-11 and the Certificate of Incorporation shall mention permanent account number of the company where it is issued by the Income-tax Department. On approval of SPICe forms, the Certificate of Incorporation (CoI) is issued with PAN as allotted by the Income Tax Department. An electronic mail with Certificate of Incorporation (CoI) as an attachment along with PAN and TAN is also sent to the user.