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Starting a Business Questionnaire – India (New Delhi) www.doingbusiness.org

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 2018. 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, 2016.

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 [email protected].

We thank you again for your invaluable contribution to the work of the World Bank Group. Sincerely, Morgann Reeves Tel: +1 202 473-8243 Email: [email protected]

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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

Private Limited Company. The business has 5 owners (shareholders) and is 100% domestically owned.

Location In Delhi.

Company size

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: 10-50 employees (within 1 month of commencement of operations). All are nationals of India.

Activities

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.

Assets and office space

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).

Company deed 10 pages long.

2. Reform Update

When answering the questions below, please use the case study assumptions provided in section 1. 2.1 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:

Yes The following reforms have introuced significant efficiencies of time in the process of Starting a Business. 1. REDUCTION OF APPLICABE PROCEDURES FROM 12 in Delhi to 5: The applicable number of procedures have been reduced from 12 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 FOR DELHI VAT: Value Added Tax (VAT) Registration is now processed within 24 hour with no requirement of inspection. 5. ESTABLISHMENT OF CENTRAL REGISTRATION CENTRE (CRC): MCA rolled out the first phase of CRC in January, 2016. 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, 2016. 6. The following CORRECTIONS are to be made: 6.1 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. Further, it takes only 4 hours to get the Digital Certificate. 6.2 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. 6.3 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, 2016. The provision of bank account information has been made optional at the time of registration since then. 7. The actual 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 (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 online and real time-0.5 Day-The cost is INR 500 5. Register with Shops and Establishment Act (online and real time)-0.5 Day (Simultaneous Process)-No cost The procedures which are completely eliminated are: Procedure-1: Obtain 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 2015. 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 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. 8. The total cost of incorporting a compoany stands at INR 3860, which is reduced from DBR, 2017 figure of INR 5293. 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 The total is INR 6424 ( USD 94) which is around 6% of income per capita ( USD 1590).

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, 2017?

Response If yes, is this reform expected to simplify or complicate the process of starting a business? Please explain:

Yes EPFO and ESIC forms will be combined into a single 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:

Yes INTRODUCTION OF A SINGLE TAXATION REGIME UNDER GOODS & SERVICES TAX (GST): GST will be implemented nationwide fromom 1

st June, 2017. 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-

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.

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 year's information

Comments (correction, reform, other)

Most common type of domestic limited liability company in India (New Delhi).

Private Limited Company

Same as previous year

Minimum capital requirement INR 0 Same as previous year

Paid-in minimum capital requirement (minimum amount to be deposited prior to or within 3 months of company registration)

INR 0 Same as previous year

3.2 Please revise as needed the following list of procedures to start a company in Delhi based on the scenario described in section 1. Procedure 1

Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)

Time:

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: 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 700 - 2500) is associated with the term and class of DSC.

Agency: Agency last year: Certified private agencies

Agency update:

Procedure Details:

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 1-2 years upon payment of renewal fees. Each agency has its own fee structure, starting from INR 700. 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 the practive of affixing a DSC for authentication of transactions is a prevalent practice internationally as well as in India for digital documents in lieu of erstwhile physical signatures. The procedure of applying for a DSC is redundant for individuals who are already in possession

of one. Furthermore, the questionaire incorrectly attributes the DSC from a private agency "authorized by Ministry of Corporate Affairs (MCA)". The certifying authority for DSC's is in fact the Controller of Certifying Authorities, Ministry of Electronics and Information Technology which regulates the work of Certifying Authorities, as mandated under section of the Information Technology Act, 2000. A copy of the Information Technology Act, 2000 which identifies the regulatory agency is accessible at http://meity.gov.in/content/information-technology-act Hence counting the application process of DSC as an additional process does not reflect a correct de jure or de facto position. Evidently, in case an individual is in possession of a DSC the associated procedure is redundant.

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: The requirement of a DSC is not specific to registration of companies and the practice of affixing a DSC for authentication of transactions is a prevalent practice internationally as well as in India for digital documents in lieu of erstwhile physical signatures. The procedure of applying for a DSC is redundant for individuals who are already in possession of one. Furthermore, the questionaire incorrectly attributes the DSC from a private agency authorized by Ministry of Corporate Affairs (MCA). The certifying authority for DSC's is in fact the Controller of Certifying Authorities, Ministry of Electronics and Information Technology which regultes the work of Certifying Authorities, as mandated under section of the Information Technology Act, 2000. Hence to count the application process of DSC as an additional process does not reflect a correct de jure or de facto position. Evidently, in case an individual is in possession of a DSC the associated procedure is redundant. A copy of the Information Technology Act, 2000 which identifies the regulatory agency is accessible at http://meity.gov.in/content/information-technology-act

Can this procedure be done online? Yes Please provide a link to the website: 1. https://www.emudhradigital.com/ 2. https://www.ncodesolutions.com and multiple other certified agencies as regulated by the Ministry of Electronics and Information Technology

If yes, do the majority of entrepreneurs use this online service? Yes

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

Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal

Time:

Time last year: 1 day

Time update: 0 day

Can this procedure be done simultaneously with another procedure? Yes

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 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): Fees charged as per Table of Fees (pursuant to rule 12 of the Companies (Registration of Offices and Fees) Rules, 2014. (Link: http://www.mca.gov.in/Ministry/pdf/tableoffee_01042014.pdf) and SPICe form fees as per Companies (Incorporation) Fifth Amendment Rules, 2016. 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.

Agency: Agency last year: Ministry of Corporate Affairs

Agency update: NA

Procedure Details:

Details: As per Companies Act, 2013, the current procedure for obtaining DIN is as detailed below. Every private limited company must have at least 2 directors, each would obtain a DIN number. 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 in practice or a company secretary in practice or a cost accountant in practice (Practising 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 Practising 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 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, 2014. 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) 5

th Amendment Rules, 2016.

Can this procedure be done online? Yes Please provide a link to the website: Refer to SPICe form (INC 32) accesible on http://www.mca.gov.in/MinistryV2/companyformsdownload.html




Procedure 3

Reserve the company name online with the Registrar of Companies (ROC)

Time:


Time update: 0 days



Cost: Cost last year: INR 1,000

Cost update: Subsumed under application fee of 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): Fees are charged as per the table of fees [pursuant to rule 12 of the Companies (Registration of Offices and Fees) Rules, 2014] refer http://www.mca.gov.in/Ministry/pdf/tableoffee_01042014.pdf

Agency: Agency last year: Registrar of Companies (ROC)

Agency update: Central Registration Centre, MCA

Procedure Details:

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, 2014. The name reservation fee is provided under the Companies (Registration offices and fees) Rules, 2014. 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 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: Reserving a company name is no longer a required to be a seperate procedure since the launch of SPICe (INC 32) form which has integrated the procedures for procedures 2,3,4,6 and 11.


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? Yes Please provide a link to the website: Refer to SPICe form (INC 32) accesible on http://www.mca.gov.in/MinistryV2/companyformsdownload.html



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

Pay stamp duties online, file all incorporation forms and documents online and obtain the Certificate of Incorporation

Time:

Time last year: 5 days

Time update: 0.5 day


If so, which other procedure can it be done simultaneously with? , 6 and 11.

Cost: Cost last year: see comments

Cost update: INR 500 for integrated SPICE form (INC 32) for procedures 2,3,4,6,10

Legal basis for the fee (including a link to the fee schedule where available): As per Companies (Registration of Offices and Fees) Rules, 2014 http://www.mca.gov.in/Ministry/pdf/tableoffee_01042014.pdf

Agency: Agency last year: Registrar of Companies (ROC)

Agency update:

Procedure Details:

Details: Pursuant to Section 7 (1) of the Companies Act, 2013 and pursuant to Rule 10, 12, 14 and 15 of Companies (Incorporation) Rules, 2014, the following forms are required to be electronically filed on the website of the Ministry of Corporate Affairs 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 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 400 - Filing fee for Form INC-7: INR 400 - Filing fee for Form INC-22: INR 400 - Filing fee for Form DIR-12: INR 400 - Stamp duty: INR 10 - Stamp duty for Articles of Association: IINR 1,483 - 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 with the introduction of eMoA and eAoA.


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 500 http://www.egazette.nic.in/WriteReadData/2016/172018.pdf

Can this procedure be done online? Yes Please provide a link to the website: http://www.mca.gov.in/MinistryV2/companyformsdownload.html




Procedure 5

Make a company stamp

Time:

Time last year: 1 day (simultaneous with previous procedure)

Time update: Company stamp is no longer mandatory and is not required for incorporation of a company


If so, which other procedure can it be done simultaneously with? NA

Cost: Cost last year: INR 500-1,000

Cost update: NA

Legal basis for the fee (including a link to the fee schedule where available): NA

Agency: Agency last year: Authorized vendor (Private)

Agency update:

Procedure Details:

Details: As per the amendment to the Companies Act 2013, making a company seal is no longer 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 / 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.


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 http://www.mca.gov.in/Ministry/pdf/AmendmentAct_2015.pdf

Can this procedure be done online? No Please provide a link to the website:

If yes, do the majority of entrepreneurs use this online service? -Click to Select-



Procedure 6

Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department

Time:


Time update: 0 days



Cost: Cost last year: INR 93

Cost update: INR 93 plus applicable 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 93 plus applicable service tax https://tin.tin.nsdl.com/pan/correctiondsc.html Part II contains fee.

Agency: Agency last year: Private agencies authorized by UTI or NSDL, as outsourced by the Income Tax Department (Federal)

Agency update: Application is made to MCA and PAN alloted by IncomeTax Department

Procedure Details:

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


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://www.egazette.nic.in/WriteReadData/2016/172018.pdf

Can this procedure be done online? Yes Please provide a link to the website: http://www.mca.gov.in/MinistryV2/companyformsdownload.html




Procedure 7

Open a bank account

Time:

Time last year: 2 days

Time update: NA


If so, which other procedure can it be done simultaneously with?

Cost: Cost last year: no charge

Cost update: NA

Legal basis for the fee (including a link to the fee schedule where available):

Agency: Agency last year: Bank

Agency update:

Procedure Details:

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 with 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 position both de jure and de facto. The absence of a bank account would not stop the process of starting a businesss / incpororation of a company. Any company would required a bank account to make monetary transactions whether the transaction be with the government, or otherwise, in any country of the world.


Please explain the changes and provide the legal basis when applicable:

Can this procedure be done online? Yes Please provide a link to the website: multiple



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.)? Yes If yes, please explain: Submission of accompanying proofs

Procedure 8

Register with the Employees' Provident Fund Organization

Time:

Time last year: 7 days (simultaneous with previous procedure)

Time update: 0.5 days

Can this procedure be done simultaneously with another procedure? No

If so, which other procedure can it be done simultaneously with? Application for Employees State Insurance, Application for VAT, Registration under shops & establishment's act


Cost update: 0

Legal basis for the fee (including a link to the fee schedule where available): http://www.epfindia.com/site docs/PDFs/OLRE PDFs/OLRE with DSC Revised Sep2016.pdf

Agency: Agency last year: Employees Provident Fund Organization (Federal)

Agency update:

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. The application portal of the EPFO Official Website is www.epfindia.gov.in. Employers are required to select „For Employers‟, under „Our Services‟ and then select the fourth item, „Online Registration of Establishment (OLRE Portal)‟ to register their establishments. The OLRE portal was launched and made available with effect from September 28, 2015.The required documents are: • Name of the Company/Establishment • PAN Number • Address • Email Id • Mobile Number • Proof of Address (Bank Statement, Bill or Any License etc.) • Date of Set up of Company • Company Type (Proprietorship/Partnership/Private Limited/Limited etc.) • Each Owner Detail: • Establishment is on Owned/Hired on rent • Bank Details a. IFS Code of the branch b. Bank Name* c. Bank Branch* d. Account Number* e. Account type* • BRANCH DETAILS: IN CASE BRANCHES AT DIFFERENT LOCATIONS • Nature of Business (As per attached list of Primary Business Activity) 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.

If you made changes to last year‟s information, please indicate whether these reflect a correction or a reform -Click to Select-


Can this procedure be done online? Yes Please provide a link to the website: http://www.epfindia.com/site_en/OLRE.php




Procedure 9

Register for medical insurance at the regional office of the Employees' State Insurance Corporation

Time:


Time update: 0.5 days


If so, which other procedure can it be done simultaneously with? Application for EPF, Application for VAT, registration under Shops and Establishment's Act


Cost update: 0

Legal basis for the fee (including a link to the fee schedule where available): The Employee State Insurance Act, 1948

Agency: Agency last year: Employees' State Insurance Corporation, Ministry of Labor and Employment

Agency update:

Procedure Details:

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 (www.esic.in). 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 email of the address. The user id and password is also sent by email immediately on generation of the employer code which can be used by the employer for doing all online activities. https://www.esic.in/ESICInsurance1/ESICInsurancePortal/Signup.aspx



Can this procedure be done online? Yes Please provide a link to the website: http://esic.nic.in/




Procedure 10

Register for Value-Added Tax (VAT) at the Department of Trade and Taxes, Government of NCT of Delhi (State)

Time:




If so, which other procedure can it be done simultaneously with? Registration for ESI, EPFO and shops and establishment's act

Cost: 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): http://dvatonline.gov.in/docs/AboutUs/CitizenCharter_3.pdf

Agency: Agency last year: Department of Trade and Taxes, Government of NCT of Delhi

Agency update: Department of Trade and Taxes, Government of India

Procedure Details:

Details: Form DVAT 04: Application for Registration under Delhi Value Added Tax Act, 2004 must be filed with Department of Trade and Taxes, Government of NCT of Delhi. Online registration for VAT has been introduced on April 30, 2015. The following documents are required to be submitted along with the application: (i) Parts A, B, C & D of the Form-DVAT-04 duly filled in (ii) Proof of incorporation of the applicant dealer i.e. in case of a private company, incorporation certificate and constitutional documents (iii) Proof of identity of authorised signatory signing the Registration Application Form (iv) Two self addressed envelopes (without stamps) (v) In case of a dealer applying for registration and simultaneously opting for payment of tax under composition scheme, an application in Form DVAT 01 is to be attached along with this application Your comments: The provision of providing Bank Account details, at the time of applying for registration under DVAT & CST Act, as envisaged in Form DVAT 04, Part (Column No 16) is optional, on the part of the applicant.


Please explain the changes and provide the legal basis when applicable: Circular No.DVAT20/2016-17 dated 13.01.2017http://dvatonline.gov.in/Docs/Circulars/1691930.pdf

Can this procedure be done online? Yes Please provide a link to the website: https://play.google.com/store/apps/details?id=dvat.dvatmsewa&hl=en




Procedure 11

Obtain a Tax Account Number (TAN) for income taxes deducted at the source from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL), as outsourced by the Income Tax Department

Time:


Time update: 0 day


If so, which other procedure can it be done simultaneously with? The procedure for allotment of first TAN for a newly incorporated company has been revised wherein, using the newly launched integrated e-Form SPICe/INC-32, for procedures 2,3,4, 6 and 11 in one process. The procedure hence gets subsumed in procedure 4.

Cost: Cost last year: INR 55 application fee

Cost update: INR 55 plus applicable service tax

Legal basis for the fee (including a link to the fee schedule where available): https://tin.tin.nsdl.com/tan/form49B.html

Agency: Agency last year: Private agencies authorized by UTI or NSDL, as outsourced by the Income Tax Department (Federal)

Agency update: Applcation is submitted to MCA and allloted by Income Tax Department

Procedure Details:

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 www.tin-nsdl.com 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.


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.

Can this procedure be done online? Yes Please provide a link to the website: www.mca.gov.in



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: 0.5

Procedure 12

Register online under the Delhi Shops and Establishments Act

Time:

Time last year: Less than one day (online procedure, simultaneous with previous procedure)



If so, which other procedure can it be done simultaneously with? Application for ESI and EPF and VAT


Cost update:


Agency: Agency last year: Department of Labor - Government of NCT of Delhi

Agency update:

Procedure Details:

Details: Under the Delhi Shops and Establishments Act 1954, the company shall send to the Chief Inspector a statement in prescribed form A containing: (a) the name of the employer and the manager (b) the postal address of the establishment (c) the name of the establishment, (d) the category of the establishment, i.e. whether it is a shop/commercial establishment (e) the number of employees working in the establishment; and (f) such other particulars as may be prescribed. Upon receipt of the statement, a registration certificate will be generated online instantly. Your comments:

If you made changes to last year‟s information, please indicate whether these reflect a correction or a reform -Click to Select-


Can this procedure be done online? Yes Please provide a link to the website: http://www.labour.delhigovt.nic.in/ser/



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:

3.3 Additional procedures to start a business. Please specify any new or existing procedures that have been omitted from the general list. For example, are there any missing procedures related to:

Registration of employer and/or employees with the relevant social security agency

Registration of employer and/or employees with the Ministry of Labor

Registration of employer with the relevant tax authority and/or VAT

Registration or inspection of the company‟s office space by any agency

Additional procedure 1

Time:



Cost:


Agency:

Procedure Details:

Please indicate the sequence of this new procedure (for example, between procedures 2 and 3):

Can this procedure be done online? -Click to Select- Please provide a link to the website:




Additional procedure 2

Time:



Cost:


Agency:

Procedure Details:

Please indicate the sequence of this new procedure (for example, between procedures 2 and 3):

Can this procedure be done online? -Click to Select- Please provide a link to the website:




3.4 Please verify the time required for all procedures to start and operate a business in Delhi

Question Answer

Last year, the overall time to start an operate a limited liability company in Delhi – including all the procedures required before, during and after registration - was estimated at:

26 days

This year, based on your experience and using the case study assumptions explained in Section 1, what is the overall average time to start and operate a business?

3 days

Based on your experience and the same case study assumptions, what can be the fastest time in practice to start and operate a business?

1 days

Based on your experience and the same case study assumptions, what can be the longest time in practice to start and operate a business?

7 days

If there is a difference between the fastest and the longest time, what is the main reason behind it? The SPICeINC32

hasbeenintegratedfor

DIN/applicationfor

incorporationn/ appointment ofdirectors/ TAN/PAN.

However, itis notintegratedfully withVATS EPFOand ESI.

Once this is done the

longest time will further be

reduced

4. Research Questions

This year, Doing Business is collecting data on the quality of infrastructure, accessibility of information and legislative framework for the registration of limited liability companies. This section measures data for India. Please provide your answers to the questions below as well as your comments when applicable. 4.1 Quality of infrastructure at the company registry

Answer Comments

4.1.1 Is there a centralized business registry with full national coverage (India)?

Yes MCA21 - MCA's e-Governance Project has ensured 100% coverage of company registry being completely online - for registration, record keeping as well viewing purpose.

4.1.2 Are all company records stored in digital form in the economy (India)?

Yes

4.1.3 Is there an electronic database to search all company records?

Yes

If yes, is the search available for individual cases?

Yes

If yes, is the search available in bulk (i.e., the result would show all companies that satisfy the search criteria)?

Yes

4.1.4 Is there an electronic system that covers the entire company registration process?

Yes

4.1.5 Is there a fully electronic filling of changes of ownership?

Yes

4.1.6 Is there an electronic payment for all fees related to company incorporation?

Yes

4.1.7 Is there an electronic signature or another electronic form of authentication (with relevant legal framework) used for online company registration?

Yes

4.1.8 Is there an automated electronic exchange of information between the business registry and other stakeholder agencies (tax authority, social security, pension fund, etc.)?

Yes MCA-CBDT integration is succesfully completed for automatic and simultaneous allotment of CIN, PAN and TAN.

4.1.9 Is a Unique Business Identification number (UBI) for all companies used by all government agencies (business registry, tax authority, social security, etc.)?

Yes CIN of a specific company is used as the unique identifier by different agencies.

4.2 Accessibility of information about companies

Answer If online, please provide link

Comments

4.2.1 Does the company registry

Answer If online, please

provide link Comments

provide public access to information about the:

• Name of company? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

• Company ID? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

• Name of directors? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

• Name of shareholders? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

Access to the required information allowed through paid service "View Public Document" on Ministry's website

• Name of beneficial owners? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do


• Articles of association? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do


• Year of incorporation? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

• Legal address? Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

• Physical address? No http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

• Type of main activity? Yes, online http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do


• Annual accounts? Yes, online http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do


• Annual returns? Yes, online http://www.mca.gov.in/mcafoportal/viewPublicD

Access to the required information allowed through paid service "View Public

Answer If online, please

provide link Comments

ocumentsFilter.do Document" on Ministry's website

• Capital structure (types, numbers and rights of outstanding shares)?

Yes, online http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do


• Corporate structure (corporate family tree, subsidiaries, holding companies, etc.)?

Yes, online http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do


4.2.2 Is the list of documents needed to incorporate a limited liability company available to the general public?

Yes, online http://www.mca.gov.in/MinistryV2/spicefaq.html

4.2.3 Is the list of all fees (including their amount) required for company incorporation available to the general public?

Yes, online http://www.mca.gov.in/mcafoportal/enquireFeePreLogin.do

MCA's website includes service of a "Fee Calculator" for the staekholder to check fees of a specific service/e-Form online.

4.2.4 Are the service standards for company incorporation (e.g. commitment from the administration to deliver the document within a specific timeframe) available to the general public?

Yes, online Citizen‟ s / Client‟s Charter for (Ministry of Corporate Affairs) (2016-2017)

4.2.5 Are statistics about newly registered limited liability companies available to the general public?

Yes, online http://www.mca.gov.in/MinistryV2/incorporatedorclosedduringthemonth.html

If yes, what is the number of new limited liability companies in the economy (India) in 2016?

Yes, online http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

4.3 Legislative framework for company registration

Answer If yes, please provide a specific legal basis

Comments

4.3.1 Is it mandatory to verify the company name?

Yes http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

4.3.2 Is it mandatory to verify the identity of the entrepreneurs?

Yes

If yes, who is held responsible for verifying the identity of the entrepreneurs? Please select all

Registrar Notary Lawyer

KYC & DIN

that apply: Other

Answer Legal basis Comments

4.3.3 Is it mandatory to register changes of company name at the business registry?

Yes Form INC 1

If yes, what is the time limit for registering such changes?

30 days from change of company name

flining annual return (Form MGT 7)

4.3.4 Is it mandatory to register changes in shareholder details at the business registry?

Yes flining annual return (Form MGT 7


Yes, Once a year

Form MGT 7 is to be filled within 60 days of AGM (Annual General Meeting)

4.3.5 Is it mandatory to register changes in the articles of association at the business registry?

Yes Form MGT 14


30 days from changes in AOA

4.3.6 Is it mandatory to register bankruptcy cases?

Yes Insolvency and Bankruptcy Code 2016

If yes, what is the time limit for registering such cases?

180 days of filing applications for Insolvency resolution process under IBC, 2016.

4.3.7 Is it mandatory to register beneficial owner details and changes thereof?

Yes Form MGT 4 to 6 of Companies (Management and Administration) Rules, 2014


30 days from the date of change occurs in the benefecial interests

4.3.8 Are there legal provisions on preventing the corporate identity theft?

Yes Section 447 of the Act provides punishment for fraud

Referrals

Please help us expand our list of contributors by referring us to other experts in the private or public sector (lawyers, notaries, public officials or any expert on this field) who could respond to Doing Business questionnaire.

First Name Last name Firm name Position Phone Email Profession -Click to Select- Topic of Interest -Click to Select-

Thank you very much for completing the questionnaire!

We sincerely appreciate your contribution to the Doing Business project. The results will appear in Doing Business 2018 and on our website: http://www.doingbusiness.org. Your work will be gratefully acknowledged in both.