📃 What is a One Person Company (OPC) and how is it different from an ordinary private limited company?

A One Person Company (OPC) is a new type of business entity that allows a single entrepreneur to register their business as a company with limited liability protection. Unlike a private limited company, which requires a minimum of two directors and shareholders, an OPC can be owned and managed by one person.

📄 What is the minimum capital requirement to start an OPC?

An OPC can be started with a minimum authorized capital of ₹1 lakh. There is no mandatory requirement for paid-up capital, allowing you to start with as little as ₹2. However, if the paid-up capital exceeds ₹50 lakh or if the average turnover for three consecutive years exceeds ₹2 crore, the OPC must convert to a private limited company.

🔍 Is there any tax advantage on forming an OPC?

 

1. Limited Liability Benefit

• The primary benefit of an OPC is limited liability, meaning the sole shareholder is not personally liable beyond their investment in the company. This isn’t a tax benefit but is important for protecting personal assets.

2. Corporate Tax Rate

• OPCs are taxed like private limited companies in India. They currently attract a corporate tax rate of 25% (for turnover up to INR 400 crore) or 30% for higher turnover. This rate can be lower than individual tax rates, especially for high-income individuals, potentially providing tax savings.

3. Dividend Distribution Tax (DDT) Removal

• The abolition of Dividend Distribution Tax (DDT) in 2020 benefits OPCs as dividends are now taxed in the hands of shareholders rather than the company. However, dividends received by the shareholder are added to personal income and taxed at the applicable individual slab rate.

4. No Tax Deduction on Remuneration for Owner

• In OPCs, the single owner can’t claim their salary as a business expense, which limits tax savings as this increases the taxable income of the company. Private limited companies with multiple shareholders can use salaries to reduce taxable profit.

5. Lower Compliance Burden for Small OPCs

• Though not a tax benefit, OPCs are subject to fewer compliance requirements than private limited companies, which can reduce overall operational costs.

6. Carry Forward of Losses and Deductions

• Like other companies, OPCs can carry forward business losses for up to 8 years, offsetting future profits and thus reducing future tax liability.

Limitations

• OPCs don’t receive any specific tax exemptions or incentives that apply exclusively to this entity type.
• Additionally, once an OPC’s turnover crosses ₹2 crore, it’s required to convert into a private limited company, which may change its tax implications.

📅 What are the mandatory compliance requirements that an OPC needs to observe?

 

1. Annual General Meeting (AGM)

• OPCs do not need to conduct an AGM as they have only one member. However, the company’s resolutions need to be recorded in the minutes within 30 days of the resolution’s approval by the director or sole member.

2. Board Meetings

• An OPC must conduct at least one board meeting every six months with a minimum gap of 90 days between the two meetings.

3. Filing of Financial Statements (AOC-4)

• OPCs are required to file their financial statements with the Registrar of Companies (RoC) through Form AOC-4. This includes the company’s balance sheet, profit and loss account, and the director’s report. The due date is within 180 days from the end of the financial year.

4. Annual Return (MGT-7A)

• OPCs need to file an annual return in Form MGT-7A with the RoC, providing details about the management of the OPC, shareholding structure, and other statutory details. This must be filed within 60 days from the end of the financial year (typically by 29th May).

5. Income Tax Returns (ITR-6)

• Like all companies, an OPC must file its annual income tax return in Form ITR-6. The deadline is 31st October of each assessment year. An OPC may also need to file quarterly TDS returns if it deducts tax at source for payments.

6. Statutory Audit of Financial Statements

• An OPC’s financial statements must be audited by a Chartered Accountant. This includes appointing an auditor within 30 days of incorporation, who will conduct an annual statutory audit of the financials.

7. Director’s Report

• The Director’s Report is a part of the annual filing and must include information on the financial position, changes in equity, and other disclosures as required by the Companies Act. This is typically filed with Form AOC-4 along with the financial statements.

8. GST Returns (if applicable)

• If an OPC is registered under GST, it must file monthly or quarterly GST returns (GSTR-1 and GSTR-3B) and an annual GST return (GSTR-9), depending on the turnover and registration type.

9. Event-based Compliances

• Changes in registered office address, director, or nominee: Any such changes must be updated with the RoC by filing appropriate forms like DIR-12, MGT-14, etc.
• Issue or transfer of shares: Though an OPC typically has only one shareholder, if there’s a need for transfer (such as in case of nominee succession), the OPC must comply with the transfer procedure.

10. Conversion of OPC

• If the paid-up share capital of an OPC exceeds ₹50 lakhs or its annual turnover exceeds ₹2 crore for three consecutive years, it must be converted into a private limited company or public limited company. This involves filing Form INC-6.

Penalties for Non-Compliance

• Failure to comply with these requirements can result in fines, penalties, and additional fees imposed by the Ministry of Corporate Affairs (MCA), and in extreme cases, directors may face disqualification.

👤 What is the eligibility criteria for a member of an OPC?

A natural person who is a resident in India and an Indian citizen living in India for at least **182 days** during the preceding financial year is eligible to act as a member and nominee of an OPC. A person can only be a member of one OPC.

🏢 Do I need to be physically present during this process?

The Ministry of Corporate Affairs (MCA) has made the new OPC registration a completely online process. All document flow happens electronically, so there is no need for physical presence.

💰 Is stamp duty payable during the incorporation process?

Yes, stamp duty charges are imposed by the state where the registered office will be located. These charges are applicable on MOA, AOA & form INC-32. The plan covers these charges for all states except Punjab & Madhya Pradesh. Additional charges may apply in these states.

💼 What is the government fee applicable for OPC incorporation?
Below are the charges applicable for DIN and other government forms:
– DIN (1 No): ₹500
– RUN Form: ₹1000
– AoA (up to ₹10 lakh authorized capital): ₹1000
– MoA: ₹1000

📜 What is the stamp duty payable for company incorporation?

The stamp duty payable depends on the state you incorporate in and your authorized share capital up to ₹10 lakh. For example, in Karnataka:
– AoA: ₹1000
– MoA: ₹1000
– Form INC-32 (Form-32): ₹20
Additionally, notary charges of ₹340 will apply for two director affidavits and related stamp duty.

🌍 Our company would like to bring a non-resident Indian as a director in the company. Is this included in the package?

To bring in an additional director, you need to secure two digital signatures (DSC). If the individual resides outside India at the time of application, they must obtain PAN, Aadhaar, and current address attested by the Indian embassy in their country. Any incidental charges are not covered in this package.

❓ My details on my documents have differences. Can I still incorporate my company using them?

You will need to have exactly matching details on all your documents to incorporate your company successfully.

⏳ Why is there a delay in getting our incorporation certificate?

Due to high demand among entrepreneurs wishing to incorporate their companies, the MCA has implemented stringent rules for name approval and issuing certificates. Consequently, processing times may vary between **20-25 working days** for completion and receipt of the certificate.