Starting a Business in Chandigarh, India

To check whether the name is acceptable or available, the entrepreneur can use the website of the Ministry of Company Affairs (“MCA”) – www.mca.gov.in.

For any clarification or doubt the office of the Registrar of Companies (‘ROC’),

Address: Kothi No. 286, Defence Colony, Jallandhar - 144001
Phone: 0181-223843
Fax: 0181-223843

After the name has been finalized, six names in order of preference can be inserted in the prescribed Form 1-A for making the application to the agency notified by the MCA (MCA PFO, SCO 91-92-93, Sector 34A, First Floor, Chandigarh) for seeking availability of desired name. The said Form 1A is thereafter forwarded to the office of RoC for further processing

While filing Form 1A it should be ensured that:

• The details are filled in correctly as no change is entertained in the Form once the Form is filed.
• Guideline Instructions issued by the Department of Company Affairs for deciding the availability of name for the formation of a Company are compiled with.
• As per the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950, use of improper names is prohibited.

The status of application filed can be ascertained from the MCA’s website.

The Ministry of Company Affairs has laid down guidelines as regards the use of key words in a company’s name. In order to have a key word as part of the company’s name, the following minimum authorized share capital requirements have to be fulfilled: -

INR 500 (for MOA) + INR 1,000 (for AOA) (INR 500 if the paid up capital not exceed INR 100,000)+ INR15 (stamp paper for declaration in Form 1)

The Memorandum and Articles of Association is drafted on plain paper and then presented to the Officer of Stamps for stamping. Special adhesive stamps are affixed on the MOA and AOA.

The application should be accompanied necessarily by the following:

(i) Two Blank Copies of the Memorandum of Association and Articles of Association.

(ii) Payment receipt.

The copies submitted to the Superintendent of Stamps for stamping have to be unsigned and no promoter or subscriber has written anything on it by hand. The Superintendent returns the copies one of which is duly stamped, signed and engrossed evidencing the payment of the requisite stamp duty.

The print out of the Memorandum and Articles of Association of the Company on the non judicial stamp paper are to be signed by at least two subscribers, each of whom shall also write in his own hand, his fathers name, occupation, address and the number of shares subscribed for. There will at least be one witness to these signatures, who shall also sign and write in his own hand, his fathers name, occupation and address. Get the following documents prepared:

• Form 1 (Declaration of Compliance) - This is to be given by an advocate of the Supreme Court or of a High Court or a Secretary or a Chartered Accountant, in whole time practice in India who is engaged in the formation of a Company or by a person named in the Articles of the company as a director, manager, or secretary of the company that all the requirements of the Companies Act, 1956. This declaration should be on the non judicial stamp paper INR 10/- of the appropriate value with reference to the State in which the office of the Registrar of Companies situate.
• From- 18 (Notice of situation of the registered office)-This form is to be signed by the First Director of the Company named in the Articles and must be lodged with the Registrar together with the Memorandum and Articles of Association at the time of lodgment for the incorporation of the proposed company
• Form 32 (in duplicate) (Particulars of Directors )
• Power of Attorney (on Non-judicial stamp paper INR 100/- ) to be given in favor of one of the promoter/subscriber or chartered accountant or company secretary or an advocate for fulfilling various formalities at Registrars' office for incorporation of a company.

The fees paid to the Registrar for registration are scaled according to the amount of the share capital of a company as stated in its memorandum. The schedule is as following:

For registration of a company whose nominal share capital does not exceed INR 100,000: INR 4,000.

For registration of a company whose nominal share capital exceeds INR100,000, the above fee of INR4,000 with the following additional fees regulated according to the amount of nominal capital:-

(a) INR 300 for every INR10,000 of nominal share capital or part of INR10,000 after the first INR1,00,000 up to INR5,00,000;

(b) INR 200 for every INR10,000 of nominal share capital or part of INR10,000 after the first INR5,00,000 up to INR50,00,000;

(c) INR 100 for every INR10,000 of nominal share capital or part of INR10,000 after the first INR50,00,000 up to INR1 crore;

(d) INR 50 for every INR10,000 of nominal share capital or part of INR10,000 after the first INR1 crore.

The above stated fees are required to be paid in the office of the ROC by way of a Demand Draft/ Treasury Challan.

The DD has to be drawn in favor of either the office of the concerned ROC or in favor of the Pay and Accounts Officer, Department of Company Affairs.

Schedule of RoC filing fees for the Articles and for the other forms l, 18 and 32:

• INR 200 In respect of a company having a nominal share capital of INR 100,000 or more but less than INR 500,000;
• INR 300 In respect of a company having a nominal share capital of INR 500,000 or more but less than INR 2,500,000;
• INR 500 In respect of a company having a nominal share capital of INR 2,500,000 or more.

The ROC will then scrutinize the documents filed by the Company and if necessary the authorized person will on intimation make the necessary corrections under his initials. Obtain the Certificate of Incorporation of the company from the office of the ROC. The company can commence its business on getting incorporation certificate from RoC. The other procedures given below can be done after the business is started.

Although the process of electronic filing has begun to take place, as of April 2006, the person incorporating has two choices. He or she can either file the company documents in the traditional manner, or can prepare a soft copy of all forms (which are now available online), save them in a floppy or CD, and take it to the registry where it is uploaded to the new system and filed. Once the electronic system is fully implemented, the goal is that an entrepreneur will be able to incorporate the company from any computer. All documents for company incorporation will be available for electronic filing subject to the condition that the person has obtained a Digital Signature Certificate. To obtain a Digital Signature Certificate an application is required to be submitted with the agencies, which are notified by the MCA

Another new requirement is the Directors Identification Number (DIN); which will be mandatory for every person who is a director on the board of the company. Directors can receive a provisional DIN through the Web. The provisional number is used in the same way as the final number, which will be issued in about 30 days. A person can only have one DIN and it is used for all companies for which he or she is a director

Company shall arrange for its Common Seal from the vendor dealing in seals and stamps.

INR 72 (INR 60 + service tax at 12.24% for fee and INR 5 for application form)

The Company is required to apply for allotment of the Permanent Account Number (PAN) from the Unit Trust of India office in Chandigarh on or before 31st May of the relevant assessment year. Income Tax department has outsourced the allotment of PAN to Unit Trust of India and accordingly application is to be submitted to the IT PAN Services Centre, office of the UTI.

Documents required will be certificate of Registration issued by the Registrar of Companies. The Unit Trust of India issues tamper proof PAN cards to the applicant. Application for PAN number may also be submitted with the authorized centers of National Securities Depository Limited in the same form 49A. This generally takes 15 days for allotment of PAN number. Certified True Copy of the Memorandum and Articles of Association of the Company is to be filed along with the application.

The work of allotment of PAN is also assigned to National Securities Depositories Limited (NSDL). So the application can also be made with any one of the designated Tax Information Network (TIN) Facilitation Centres. Related link is www.incometaxindia.gov.in.

15 days, simultaneous with procedure 5

INR 56 (INR 50 + service tax at 12.24% for fee)

The Company is required to apply for allotment of the Tax Deduction Account Number from the Income Tax Department, under section 203A of the Income Tax Act, 1961 by making an application in Form No. 49B. Concerned authority for TAN is the Office of the Joint Commissioner of Income Tax of respective range. Application is to be accompanied with the copy of Memorandum and Articles of Association of Company, list of Directors and board’s resolution in favor of any director authorizing him to apply for the TAN. TAN must be applied immediately after first deduction of tax at source. Application for TAN number may also be made to the authorized centers of National Securities Depository Limited (NSDL). Here application is to be made in Form 49B. Certified true copy of the Memorandum and Articles of Association of the Company is required to be filed along with the application. In Chandigarh NSDL has authorized Alankit Assignments Limited at SCO 16-17, Ground Floor, Sector 34A Chandigarh and also at No-2386, Sector 22C, Chandigarh for this purposes. Apart from this Karvy Consultants and Shell Transource Limited are also authorized.

20 days, simultaneous with procedure 6

INR 545 (Challan of INR 25 towards Central Sales Tax registration plus INR 15 towards the cost of non judicial stamp papers of two sureties plus INR 5 for an affidavit and INR 500 for VAT)

All Companies that are required to get itself registered both with the Central Sales Tax authorities with an application in form 'A" prescribed under the Central Sales Tax Act for Central Sales Tax registration.

Application is to be made in form VAT –1 along with the receipt, in form VAT-2, of a fee of INR 500 as prescribed under the Punjab Value Added Tax Act, 2005 and rules there under. Application to the designated officer is to be made within 30 days of the company becoming liable to pay tax. The security is also required to be furnished for registration, in the form of a bank guarantee from a local scheduled bank or in the form of a personal bond with two solvent sureties, acceptable to the designated officer, in form VAT-3.

Every dealer, whose gross turnover during the year immediately preceding the commencement of this Punjab Value Added Tax Act, 2005 exceeds the taxable quantum shall be liable to pay t by way of VAT on the taxable turnover.

The taxable quantum for registration as a taxable person for VAT, means-

(a) In relation to any person, who imports taxable goods for sale or use in manufacturing or processing any goods in the state: INR 1

(b) In relation to a person, who receives goods on consignment/branch transfer basis from within or outside the state on which no tax has been paid under the act: INR 1

(c) In relation to a person, liable to pay purchase tax: INR 1

(d) In relation to a manufactures: INR 100,000

(e) in relation to voluntary registration: INR 500,000

(f) in relation to any other person: INR 2,500,000

In Chandigarh registration under The Employees' Provident Fund and Miscellaneous Provisions Act, 1952 is made at S.C.O. No.4-7, Sector 17D, Chandigarh-160 017. The Act provides for the institution of compulsory Provident Fund, Pension Fund and Deposit Linked Insurance Fund, for the benefit of the employees in factories and other establishments. The Act applies to every factory and establishment in which 20 or more persons are employed and which is engaged in any industry as specified. The company would be required to cover its employees under the provisions, once it crosses the limit of 20 employees.

For registration under the said Act, an application in the Employer's Registration Form is required to be submitted with the office of the Regional Provident Fund Commissioner, Office of Provident office.

7 days, simultaneous with procedure 7

The Employees' State Insurance Act, 1948 provides for grant of cash benefits to the employees in the recognized contingencies of sickness, maternity and employment injury. It also provides for medical benefit, in kind, to the employees and their families. The Act is applicable to all non-seasonal factories and certain establishment.

For registration under the Act, an application in the prescribed Form is required to be made to Regional Office of Employee State Insurance Corporation (Panchdeep Bhawan, Block No. 3, Sector - 19A, Madhya Marg, Chandigarh 160020). ESIC Registration is optional if employee strength is less than 20.

The application under the Punjab Shops and Commercial Establishment Act 1958, is required to be made to the Inspector of Shops and Establishment of the circle where the registered office of the company situates. Prescribed form is Form F (to be filed in triplicate). The employer of every establishment shall, within thirty days from the date of commencement of its work, submit with the Inspector of the area concerned, a statement in the prescribed form along with the applicable fee (depending on number of workers working in the establishment) for registration of the establishment.

The statement shall consist of the following information:

• the name of the employer and the manager, if any;
• the postal address of the establishment; and
• such other particulars as may be prescribed.

The Inspector shall then register the establishment by entering the name of the establishment in the register of establishments and shall issue a certificate of registration to the employer. The certificate of registration is required to be prominently displayed at the establishment. The certificate of registration so issued is required to be renewed after the expiry of such period as prescribed in the State Act. The employer is also required to inform about the closure of the establishment to the Inspector within fifteen days from the date of closure and return the certificate of registration to the Inspector.