Company registration in India

The main advantages of doing business in India are related to access to a promising and large domestic market. This South Asian country has a population of over 1.4 billion people, and the income level of its citizens is constantly growing. However, registering a company in India also has other positive factors: a rapidly growing economy and optimised legislation based on English common law.

Business for foreigners in India can be an interesting, promising and more stable alternative to China. This is especially important for cross-border investment projects aimed at entering Asian markets. Additional advantages of registering a company in India include a favourable tax regime, the jurisdiction’s good reputation in the global corporate community, and the country’s Special Economic Zones (SEZs).

Advantages of setting up a company in India for specific business areas

A favourable environment for launching and developing commercial projects of virtually any kind stimulates the inflow of foreign investment and further growth of economic potential. However, registering a legal entity in India often comes with a number of additional advantages that are particularly evident for specific areas of commercial activity.

What are the benefits of setting up a business in India?

The Indian market is becoming increasingly attractive to investors and businesspeople every year. Corporate legislation simplifies organisational procedures, making it easier to launch and develop new commercial projects in 2026. If you are interested in the cost of registering a company in India, have questions about the specifics of the procedure, or need further assistance, please contact our specialists.

Legal forms of business

Corporate registration rules in India give business people a fairly wide choice of legal types of companies. This determines not only the taxation of the business, but also the degree of liability of the participants, the possibility of 100% foreign ownership or attracting additional financing, audit/reporting requirements, and authorised capital.

Characteristics of the main business formats in India:

A separate legal form is an office or representative office of a foreign company without registering a subsidiary in India. Corporate law provides for three options for such foreign presence. Of these, only a branch office has the ability to conduct business. A liaison office is focused on performing representative tasks and cannot engage in commercial activities. In both cases, approval from the regulator — the national bank (RBI, Reserve Bank of India) — is required to launch such a project. A Project Office is registered for a specific business structure, which requires a contract with an Indian company. To launch a non-profit structure for charitable and social purposes ( ), we recommend the Section 8 Company format.

Corporate regulation

The terms of company registration in India, the amount of authorised capital, the requirements for legal entity officials, the possibility of 100% foreign ownership, and the degree of liability of participants are regulated by corporate law. It is stricter than in typical offshore jurisdictions, but the general business-friendly attitude greatly simplifies the launch and development of any commercial projects. However, legal support for company registration in India is practically mandatory.

Corporate requirements for legal entities that are entitled to conduct business:

Foreigners who want to open a company in India usually choose the Private Limited Company – Pvt Ltd format. The key advantages of this legal form are the possibility of 100% foreign ownership, limited liability, transparency for partners and banks, ease of further scaling and attracting investment, and no need to obtain RBI approval.

For individual business projects, we recommend a Branch Office and LLP, and less often a Liaison Office or GIFT IFSC. However, in this case, careful preliminary research and assessment of the compatibility of the company type with the set goals are mandatory. You can obtain detailed information on choosing the right business form for you from our specialists.

Taxation of individuals

The rules for calculating tax liabilities differ from those adopted in most onshore jurisdictions. Personal taxation in India is based on the status of the individual.

The conditions for calculating tax liabilities for different categories of taxpayers are as follows:

• Resident. An individual must reside in India for 182+ days in the current financial year or 60+ days, provided that the taxpayer has been in the country for 365+ days over the past 4 years. For Indian citizens and OCIs (Overseas Citizens of India), the period may be extended from 60 to 182 days. The taxable base includes all income regardless of the jurisdiction of its source and repatriation to India.
• Full resident — ROR, Resident and Ordinarily Resident. The main condition is compliance with the requirements for residents. Additionally, two conditions must be met: to have been a resident for at least 2 of the past 10 years and to have lived in India for more than 730 days during the last 7 years. The rules for forming the tax base are the same as for residents.
• Resident but Not Ordinarily Resident (RNOR). The conditions for granting resident status must be met, but the individual does not meet the RNOR Income received in India or actually transferred to the country is included in the tax base.
• A non-resident is an NRI, Non-Resident Indian. The main condition for obtaining resident status is not met. Personal income tax is paid on Indian income, and on foreign income only if it has been transferred to India.

Another subtle point in determining financial obligations is the possibility of choosing a taxation scheme: the old tax regime or the alternate personal tax regime – APTR. The main differences between them are the established rates and the applicability of benefits/deductions. They do not apply to the old regime, but the rates will be higher. For the APTR option, the ratio is the opposite.

Old tax regime:

Indian legislation provides for numerous tax breaks, deductions and the possibility of carrying forward losses. Typical examples include compensation for travel and housing rental expenses, mortgage payments, professional tax and some others. There are special privileges for persons aged 60 to 80, for whom the tax-free minimum is increased to ₹300,000, and for those who have already reached the age of 80, to ₹500,000.

The approach based on the use of two fiscal regimes creates an additional level of freedom for taxpayers, as they now have a choice. However, the old tax regime is considered outdated, and APTR is used by default. For many individuals, this option will be more advantageous, as it provides an absolute reduction in the tax burden, without taking into account the applicability of benefits.

APTR tax regime:

In some key areas, personal taxation in India is closer to offshore taxation. There is no separate tax on wealth, inheritance, property, or gifts in this jurisdiction. Some types of income generate an additional tax burden, such as long-term capital gains or securities transactions. Therefore, before setting up a company in India, ask our specialists to calculate possible changes in your personal financial obligations.

Corporate taxes in India

Fiscal business legislation has been in force in the country since 1961. It has been well studied, and legal instruments for optimising the financial burden have been developed. However, the old regulatory act no longer met the requirements, reducing India’s investment attractiveness. Therefore, the Income Tax Act for 2025 announced a large-scale tax reform, which will come into effect on 1 April 2026. The key innovation is the unification and simplification of the country’s tax system, its adaptation to global trends. Details of the legislative initiative are not yet available.

Determination of the resident status of a legal entity

There are two formal indicators, but additional criteria may be used in practice. A stricter set of eligibility criteria applies to companies receiving passive income, while the approach will be softer and more flexible for legal entities engaged in active operations.

Basic criteria for granting resident status:

• company registration in India, the actual place of business is irrelevant;
• compliance with the POEM criterion – Place of Effective Management, the actual place of business management for all foreign companies.

Additional POEM indicators are based on the actual centre of a number of specific events:

• board meetings;
• making strategic decisions on business management;
• physical location of top managers;
• development of key business strategy.

The personalities of those who actually, rather than nominally, manage the company will also be taken into account: their resident status, citizenship, place of permanent residence and location of their centre of vital interests.

Corporate income tax

The status of a particular legal entity directly affects the rules for calculating the tax base. Indian residents must include all income in it, while non-residents must include only that part of it that was generated from sources within the jurisdiction.

Corporate tax rates in India for 2025/2026 depend on the company’s income:

Effective rates differ in that they include an additional surcharge. For resident companies, this is 0%, 7% or 12%, and for non-resident companies, it is 0%, 2% or 5% of the base rate. After that, contributions to the national health and education systems are added to the total amount — 4%, which are fixed and do not depend on total income.

Indian companies can choose a special preferential regime 115BAA / 115BAB. The main advantage is a reduction in the base corporate tax rate. Section 115BAA — up to 22%, Section 115BAB — up to 15%. The surcharge will be fixed at 10%, while contributions to healthcare and education will remain at 4%. As a result, tax payments for the company are reduced.

MAT tax regime

Unlike the Section 115BAA and Section 115BAB schemes, the Minimum Alternate Tax mechanism is not an alternative; it cannot be chosen or switched to. In fact, MAT is a safeguard in case a company’s tax liabilities calculated according to standard rules are too low. Examples of possible reasons include unsuccessful business or aggressive, but legal, tax optimisation.

MAT is calculated at a rate of 15% of Book Profit, which is the accounting profit on the P&L, adjusted according to the rules of Section 115JB. Surcharges for resident and non-resident companies — 0%, 7%, 12% and 0%, 2%, 5% — as well as deductions to state funds remain in force. The company must calculate both amounts — according to the standard scheme and MAT — and pay the higher one.

This rule applies not only to resident legal entities. If a foreign company has a branch or representative office in India, or if its income is not subject to withholding tax, the calculations are also mandatory. MAT does not apply when choosing one of two schemes — 115BAA or 115BAB.

Other major corporate taxes in India:

• VAT (GST — Goods and Services Tax). Rates — 0%, 5%, 12%, 18%. 28%, they apply to retail sales, services and imported goods. The mandatory registration threshold depends on the total annual turnover (all-India turnover). For the sale of goods — ₹4 million, for the provision of services — ₹2 million. The standard VAT rate is 18%.
• Withholding tax (TDS/WHT). Dividends and interest — 10%, royalties and technical services — 10-20%, rent, contractors, professional services — 1-10%. The WHT rate may be reduced through double taxation avoidance agreements.
• Capital gains tax. There is no separate tax, it is part of corporate income tax, but with special rates, usually 10%, 15% or 20%, depending on the asset and the period of ownership.
• Securities Transaction Tax (STT). Applies only to stock exchange transactions — purchases or sales, as well as derivatives.
• Stamp Duty. Paid when issuing shares, transferring business interests, concluding contracts and buying/selling real estate. Rates are set at the state level.

Stages of registering a business in India

In most cases, opening a new legal entity is not difficult. The registration of a foreign company in India is regulated by several basic legislative acts. The main one is the Companies Act 2013. The rules for controlling foreign investment are described in the relevant document, the Foreign Exchange Management Act (FEMA) 1999. The tax status of a foreign legal entity is currently determined by the old Income Tax Act 1961, and the possibility of registration through the MCA is specified in the Registrar of Companies (RoC) Rules.

Businesspeople who decide to launch a commercial project in India may encounter a special, specific approach to administrative issues. In any case, everything will be done according to the law, but independent actions are often associated with significant delays, and the problem affects not only foreigners but also citizens of the country. Therefore, we recommend contacting the specialists at Imperial & Legal to discuss a plan of action with them.

Registration of a company with foreign participation in India:

Our corporate services in India also include some additional services. For example, it is important for foreign investors to achieve FEMA and FDI compliance. Certain areas of business may require additional licences and permits.

How we can help you

Company law in India is clear and transparent. However, launching and setting up a real business project involves numerous legal subtleties that are very difficult to understand. Therefore, we recommend discussing all the details with the specialists at Imperial & Legal before taking any practical steps.

Our services for registering a company in India:

• extensive advice on choosing the jurisdiction and type of commercial structure for specific requirements;
• accounting support in India;
• personal and corporate banking services;
• Comprehensive support for foreign businesses in India;
• tax optimisation;
• assistance in starting a business in India.

There are several options for entering the global Asian market. The advantages of registering a company in India are not only related to the regulator’s favourable policy, relatively affordable labour force, investment protection or tax incentives. The jurisdiction will be of interest due to its relative versatility and favourable balance of opportunities.

Imperial & Legal will help you start a turnkey business in India, including opening a bank account and obtaining licences. We will calculate any additional or changed tax obligations and support your company as it takes its most important first steps. Our specialists can provide you with comprehensive information on doing business in India.