Do you know, for setting up a business in India, various registrations and licenses are required?
In this blog, we will learn about all the essential registrations and licenses that every business entity must opt for. Maybe one day or the day, when you feel ready to start your own business then, this guide will be of great help to you.
This article will be including the list of mandatory as well as additional registration requirements along with their detailed procedures. Continue reading the full blog and known about the hassle-free process of setting up a business in India.
Mandatory Registration for setting up business in India
- PAN (Permanent Account Number)
PAN is a very basic yet essential document for every Indian taxpayer of India. PAN contains a 10-character alphanumeric number consisting of letters and digits. As per the Income Tax Act 1961, every taxpayer being and individual, partnership and company must have as it serves as an identity proof.
It is said to be a government-recognized identity proof and therefore every company and individual must apply for PAN Card and have it safe with them for life long. Here is a short list of entities compulsorily required to hold a PAN :-
- Body Corporates
- Companies
- Firms other than LLP
- LLP Firm
- Sole proprietorship
- Trust
- Corporations
- Limited Liability Companies
- Private firms
- Other Associations
- Foreign Institutional Investor
- Hedge funds
Why PAN is important for setting up a business in India?
As Permanent Account Number holds a great significance, here are some noticeable reasons highlighted for every reader to know:-
- It has been made mandatory by the Government of India under the Income Tax Act 1961. Also after the act was amended, it now mandates all foreign parties that provide or generate payment. Thus, PAN is important not only for individuals, companies, limited companies but also for other form of entities.
- Where a person is not having a PAN, the Government will be charging tax at the rate of 30% of the total invoiced payment.
- PAN is crucial as it also serves as a reference number of the taxpayer which helps to track the financial transactions of the person.
- Companies registered abroad or in India are required to pay tax for businesses carried out in India. Without PAN, the government has the mandate to deduct tax at the highest possible rate.
- PAN comes in use for paying one’s invoices, and remittances and also required to be mentioned in the income tax return.
- Similar to individuals, companies are required to provide their Tax Registration Number (TRN) t whomsoever is paying them. A TRN can be obtained only when a valid PAN is in existence by the company.
- TAN
TAN is also a 10-digit alphanumeric number necessary to have for every person responsible for deducting or collecting tax. Thus, TAN Registration is also among one of the necessary registrations in India as mandated by the Income Tax Act.
GST Registration is necessary to imply in order to obtain a unique number from the concerned tax authorities for the purpose of collecting tax and also to avail input tax credit for tax paid on inward supplies.
According to the applicability of aggregate turnover, one is required to obtain GST Registration as mentioned under the Central Goods & Services Tax Act 2017. It is a type of registration that is PAN-based and state specific. After GST Registration, GSTIN is allotted which is 15 digit number which is elaborated as follows:-
- The first two digits(2) of GSTIN represents the state code
- The next ten digits (10) will be the PAN number of the taxpayer
- The thirteenth digit (13th) will be assigned based on the number of registration within a state
- The fourteenth digit will be Z by default
- The last digit will be for check code
It is one of the essential regulations that is enacted by every state in India. The Shops & Establishment Ac is designed to regulate the payment of wages, hours of work, leave, holidays, terms of service and other work conditions of people employed in shop and commercial establishments.
All in all, any shop or commercial establishment that commences operation must apply to the Chief Inspector for obtaining Shops & Establishment License. This license is inclusive of the name of the employer, address of establishment, name of establishment, category of establishment, number of employees and other necessary details.
- SSI/MSME
Small Scale and ancillary units should seek registration with the Director of Industries of the concerned State Government. Enterprises may it be a proprietorship, hindu undivided family, association of person, co-operative society, partnership firm or undertaking can apply for MSME and get qualified for the benefits provided under the Act. This scheme is in itself a great privilege as this it, units normally get registered to avail benefits, incentives or support given either by the Central or State Govt.
Some of the popular benefits to SSI/MSME Registration are:-
- Easy availability of funds from bank without collateral requirement
- Stamp duty and Octroi benefits
- Concession in electricity bills
- Excise Exemption Scheme
- Free of cost government tenders
Other Compliances
Charitable Trusts, Societies, Section 8 Companies receiving foreign contributions or donations from foreign sources are required to get registration under Section 6(1) of the Foreign Contribution Regulation Act, 2010.
Other Registration as per the requirement of the sector
IEC i.e. Import Export Code Registration is required by a person for exporting or importing goods. It is a 10-digit code issued by the Directorate General of Foreign Trade (DGFT). Thus, businesses dealing in the import and export of goods require registering under IEC. Being it a mandatory registration for importers, importers shall not be allowed to proceed without this code and exporters also shall not be able to take benefit of exports from DGFTT, customs, and Export Promotion Council, if they don’t have IEC.
- Drug License
For starting with a pharmacy business, a drug license shall be required. The Central Drugs Standard Control Organization and State Drugs Standard Control Organization control the issue of drug license for setting up a pharmacy.
FSSAI is an abbreviation used for the Food Safety and Standards Authority of India. This license is mandatory to provide before starting with any food business. So, all the manufacturers, traders, restaurants involved in food business must obtain 14-digit registration or a license number which must be printed on food packages.
It is necessary to apply for as it ensures the product of the food that shall undergo certain quality checks, thereby reducing the instances of adulteration, and substandard products and improving the accountability of manufacturers by issuing food service license.
Conclusion
All of this registration shall be required by a person for starting a business in India. For any of the registration as mentioned above in the article, feel free to contact EAdvisors. EAdvisors is a platform where every registration is easy and less time-consuming. All you need to do is to consult our experts and get all your query resolved.
We deal in every registration and will be grateful to help you in any of the registration services.
