How to Set Up an Entity in India

India is one of the world’s fastest-growing major economies, offering access to a large domestic market, a skilled workforce, and a rapidly digitizing regulatory environment. For international companies, setting up a local entity in India enables direct participation in sectors ranging from technology and manufacturing to professional services, often with full foreign ownership permitted under liberalized foreign direct investment rules.

Although India has streamlined incorporation through digital filing systems, foreign founders should expect a structured process with multiple registrations, detailed documentation, and ongoing compliance. These requirements can be complex, particularly when managing tax, labor, and regulatory obligations across different authorities. However, for companies planning long-term growth, the payoff is substantial: a locally registered entity with direct access to India’s talent market, greater credibility with customers and partners, and the ability to scale revenues compliantly within one of the world’s most dynamic economies.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in India?

Opening an entity in India means registering a legal business presence with the central government, granting the company the right to operate, contract, hire employees, and generate income in India. This process is overseen primarily by the Ministry of Corporate Affairs and results in the issuance of a Certificate of Incorporation and a Corporate Identification Number. Foreign companies typically choose between incorporating an Indian company (subsidiary) or registering a branch or liaison office.

Entity overview in India

Here is a summary of the key features of company formation in India:

Step-by-step guide: How to open an entity in India

Step 1: Choose the right structure

Foreign businesses most often incorporate a private limited company, which limits shareholder liability and allows equity participation. LLPs may suit professional services firms seeking flexibility, while branch offices are typically restricted to specific activities and require prior approval from the Reserve Bank of India.

Step 2: Verify business name availability

Company names must be unique and compliant with naming rules under the Companies Act, 2013. You can check the name availability online through the MCA portal.

Step 3: Prepare incorporation documents

The following documents are required and submitted electronically through the MCA system:

• Memorandum of Association (Form SPICe+ MOA)
• Articles of Association (Form SPICe+ AOA)
• Proof of registered office address
• Identity and address proof of directors and shareholders.

Step 4: Register with the Ministry of Corporate Affairs

Incorporation is completed by filing the integrated SPICe+ application online via the MCA portal. Upon approval, the company receives a Certificate of Incorporation, a Corporate Identification Number (CIN), and automatically issued tax identifiers.

Step 5: Register for tax and social security

New companies are issued a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) through the MCA process. If applicable, GST registration is completed with the Central Board of Indirect Taxes and Customs. Employers must also register with the Employees’ Provident Fund Organisation and the Employees’ State Insurance Corporation for social security compliance.

Step 6: Open a corporate bank account

A local corporate bank account is mandatory to operate in India. Banks conduct extensive KYC checks, typically requiring incorporation documents, PAN, board resolutions, and, in some cases, in-person verification of directors. Timelines vary but often range from one to three weeks.

Step 7: Set up payroll and employment compliance

To hire employees, companies must implement compliant payroll processes, deduct and remit taxes, enroll eligible employees in statutory benefits, and issue employment contracts aligned with Indian labor laws. Payroll filings and tax withholdings are reported monthly and annually to the relevant authorities.

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Post-registration obligations

After incorporation, companies in India must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File corporate income tax returns, GST returns, and financial statements according to schedules set by the Income Tax Department and GST authorities, under Indian Accounting Standards (Ind AS)
• Corporate registers: Maintain up-to-date records of directors, shareholders, and beneficial owners and report changes to the Registrar of Companies within prescribed timeframes
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines through a compliance calendar or automated service provider to avoid penalties
• Licenses and renewals: Renew any sector-specific licenses or registrations with relevant ministries or local authorities as required
• Recordkeeping: Retain accounting, payroll, HR, and transaction records for at least 8 years, ensuring availability for audits or inspections
• Employment law compliance: Adhere to labor, benefits, social security, and data-protection regulations, including maintaining compliant employment contracts and statutory insurance coverage as required by labor authorities

Taxes and financial considerations

Key obligations include:

• Corporate income tax: 22% for eligible domestic companies, paid annually with advance tax installments
• VAT/GST: Standard rate generally 18%, with mandatory registration once thresholds are met
• Payroll/social contributions: Employer and employee contributions to the provident fund and state insurance schemes
• Accounting standards: Indian Accounting Standards (Ind AS), largely converged with IFRS

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into the United Kingdom—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in India?
Typically 2–4 weeks. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
There is no statutory minimum capital requirement.

Can foreign companies own 100 % of an entity in India?
Yes, 100% foreign ownership is permitted in most sectors under the automatic FDI route.

Do I need a local director or representative?
Yes. At least one director must be a resident of India for a minimum period each year.

How much does it cost to register an entity?
Average costs range from INR 80,000 to 150,000, including government fees and professional support. Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in India?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.