(This article is written by Aarushi Vats, Chaudhary Charan Singh University, B.A. LL.B., 5th Year, during her internship at LeDroit India.)

Scope of Article

• Legal framework governing company incorporation in India and the constitutional basis for state-level variation
• Step-by-step incorporation procedure through the SPICe+ portal
• Maharashtra-specific stamp duty on the Memorandum and Articles of Association under the Maharashtra Stamp Act, 1958
• Professional Tax registration (PTEC and PTRC) under the Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975
• Registration/intimation under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017
• Ancillary state and municipal approvals relevant to a newly incorporated company operating in Maharashtra
• Relevant judicial precedents, both landmark and recent, bearing on incorporation and stamp duty questions
• Practical difficulties founders commonly face and suggestions for streamlining compliance

Abstract

A one-window procedure for incorporating a company in India is termed as such since the Ministry of Corporate Affairs processes the application through the integrated form, SPICe+. However, this statement holds true only till the issuance of the Certificate of Incorporation. With the Certificate of Incorporation, a company with its registered office in Maharashtra would still have to comply with several other obligations, which are not prescribed by the Companies Act, 2013 but by the state government of Maharashtra, such as the stamp duty on the Memorandum and Articles of Association as per the Maharashtra Stamp Act, 1958. They also include Professional Tax registration under the state Professions Tax Act. Additionally a company must. Inform the authorities under the Maharashtra Shops and Establishments Act, 2017. A company may also need trade licences if such licences are required. This article looks at Maharashtra- requirements while keeping the central incorporation procedure in focus. It also follows changes, to the state stamp duty schedule. Finally this article shows how courts have dealt with disputes that arise from these provisions.The purpose is to give a founder or a student a working sense of what “registering a company” actually involves once the state layer is added to the central one, and where the recurring points of confusion lie.

Keywords: Company incorporation; Maharashtra Stamp Act, 1958; SPICe+; Professional Tax; Shops and Establishments Act, 2017; stamp duty

1. Introduction

Company law in India is largely a core subject. The Companies Act 2013 lays out a procedure for incorporation which applies whether the company’s registered office is in Chennai, Chandigarh or Mumbai. Anyone who has actually gone through the process knows that the experience is not identical across states. This is explained byEntry 44 of List II of the Seventh Schedule to the Constitution which puts stamp duty on instruments within the competence of the states. The Memorandum of Association (MOA) and the Articles of Association (AOA) are both instruments so the duty payable on them is fixed by the state in which the registered office is situated not by Parliament. Beyond stamp duty a company also has to comply with state labour legislation like the Shops and Establishments Act and state level Professional Tax law from the moment it starts operating with even a single employee or director drawing remuneration. Maharashtra is worth studying separately because it houses more registered companies than any other state and several of its state-level charges have changed in the last two years. This article looks at the incorporation process as it actually unfolds for a company which will have its registered office in Maharashtra focusing on what is different from a generic, state-neutral description of the SPICe+ process.

2. The Central Framework- Incorporation Under the Companies Act, 2013

Section 3 of the Companies Act 2013 gives the option to form a company for any purpose. A company can be created by one person if it is a One Person Company. It can also be formed by two or more people for a company or seven or more people for a public company. Section 7 lists the documents needed for incorporation. These include the Memorandum of Association (MOA) the Articles of Association (AOA) a declaration of compliance and information about the subscribers and directors. Since 2020 all these documents are filed online using a form called SPICe+ (INC-32).This form is divided into two parts: Part A is used for name reservation and Part B includes the incorporation process, Director Identification Number (DIN) allotment and applications for PAN and TAN. The AGILE-PRO-S linked form adds GST registration, EPFO, ESIC, Profession Tax registration where applicable by the state and a bank account opening request.

For a founder based in Maharashtra the key steps are: obtaining Digital Signature Certificates (DSC) for the proposed directors reserving a company name via Part A of SPICe+ or in Part B drafting the MOA and AOA and then filing Part B along with the associated forms. The process becomes state-specific when it comes to stamping the MOA and AOA. The system directs the applicant to the estamping portal managed by the Stock Holding Corporation of India Limited (SHCIL) and the stamp duty amount is calculated according to the state’s schedule, based on the location of the registered office.

3. Stamp Duty on Incorporation Documents: The Maharashtra Position

In Maharashtra stamp duty on the MOA and AOA is governed by the Maharashtra Stamp Act, 1958 which replaced the Bombay Stamp Act, 1958. Article 39 in Schedule I sets a duty of ₹1,000 for the MOA when it is filed with the AOA, which is always the case at incorporation. Article 10 covers the AOA. Has undergone a change. Before October 2024 the AOA was subject to a duty of ₹1,000 for every ₹5 lakh of authorized share capital or part of it with a maximum of ₹50 lakh. From October 14 2024 this has been replaced by a duty of 0.3 per cent of the share capital with the ceiling raised to ₹1 crore. This means companies with low capital pay about the same as before. Those with large capital may pay more because the maximum duty has doubled.

In practice a private company incorporated in Mumbai or Pune with ₹1 lakh authorized capital will pay around ₹1,400 in stamp duty. Including the MOA charge the AOA charge and a small fixed fee for the SPICe+ eForm. The cost increases with capital because the AOA duty is now proportional rather than fixed. Since the duty is based on capital not paid-up capital, a founder who sets a high authorized capital just to allow room, for future fundraising ends up paying more stamp duty than needed upfront. The better approach, commonly followed by professionals is to start with an authorized capital and increase it later using Form SH-7 when the company actually issues more shares. This way stamp duty is only paid on the increase keeping costs lower.

It is worth noticing that this is not a small administrative note.Under Section 33 of the Indian Stamp Act, 1899 an instrument that is not properly stamped cannot be used as evidence.Under Section 40 missing stamp duty can bring a penalty that’s up to ten times the missing amount.The Registrar of Companies will not register the incorporation documents unless the stamp duty shown by the SHCIL e‑stamp certificate equals the amount required by law. Therefore an error in stamp duty is not an annoyance but a real obstacle, to obtaining the Certificate of Incorporation.

4. Professional Tax: PTEC and PTRC

A second obligation that is peculiar to the state is registration under the Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975. This law requires two separate certificates, and the distinction between them trips up a lot of new founders. A Professional Tax Enrolment Certificate (PTEC) is obtained by the company itself, and separately by every director in their personal capacity, to discharge the tax on the calling of being a company or being a director, at a flat ₹2,500 a year and with no periodic return to file. A Professional Tax Registration Certificate (PTRC), by contrast, is required only once the company starts paying salaries to employees above the threshold, because it is the PTRC that allows the employer to deduct Professional Tax from salaries and deposit it with the state, along with monthly or annual returns depending on the total liability.

If you have just started a company and still have no employees you only need the PTEC for the company and, for each director. The PTRC only becomes relevant when the first salary is paid and you must apply for the PTRC within thirty days after that payment. Many people overlook this two‑stage process because most incorporation checklists list “Professional Tax registration” as an item but in practice the PTEC and the PTRC unfold into two separate steps that each have their own trigger.

5. Shops and Establishments Registration

Every company operating an office, or any other place where business is carried on, in Maharashtra also falls within the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, which replaced the older 1948 Act. The compliance obligation under this Act depends on the number of workers. An establishment employing ten or more workers has to obtain formal registration from the local Facilitator within sixty days of starting business, while an establishment with fewer than ten workers only has to file an online intimation, in Form F, within the same sixty-day window. Most early-stage private companies fall into the second, lighter category, which is a genuine relief compared to the erstwhile position where every commercial establishment needed a licence regardless of size.

This registration or intimation is not a formality hidden in labour law. In life banks and the GST department often ask for the Shops and Establishments certificate as address proof for the registered office. So a company that skips the Shops and Establishments certificate often finds itself blocked later when opening a current account or applying for GST registration. Therefore treating the Shops and Establishments certificate as part of the incorporation checklist then, as a separate labour‑law compliance to be handled afterward helps avoid this bottleneck.

6. Other State and Municipal Approvals

The type of business and where the business is located can mean that a few extra approvals are needed. These are not always required. If a business is running from space inside a Municipal Corporation area like the Brihanmumbai Municipal Corporation or the Pune Municipal Corporation a business may have to obtain a trade licence under the Municipal Corporations Act. This licence is required when the business activity is one that the corporation controls, for example food service, manufacturing or specific types of retail. Businesses that do any manufacturing may also need Consent to Establish and Consent to Operate from the Maharashtra Pollution Control Board. If a business hires twenty or more people that business must register under the Employees Provident Funds and Miscellaneous Provisions Act. Also under the Employees State Insurance Act. These laws are made by the government but they are carried out by state offices.

Getting a GST registration is a requirement of the Central Goods and Services Tax Act, 2017. Even though the law is the same over India the administration is split by state. Therefore a business which is  registered in Maharashtra is handled by the Maharashtra GST office. The business must thereby follow that state’s rules as part of its compliance duly.

7. Judicial Guidance: Reading the Case Law

Two court decisions help explain how judges deal with the matters mentioned earlier. One is a landmark case. The other is more recent. The first case that everyone looks at when talking about why forming a company is important is Salomon v A Salomon & Co Ltd [1897] AC 22. The House of Lords decided that when a company is properly created under the Companies Act that company becomes its legal person separate from the people who own that company. Because of this Salomon could not be held responsible for that company’s debts even though Salomon owned almost every share of that company and set up that company mainly for himself. The court said that the fact that that company was essentially a business did not make Salomon personally liable.

On the state stamp duty question specifically, the Supreme Court’s decision in State of Maharashtra & Anr. v. National Organic Chemical Industries Ltd. (2024 INSC 270) is directly relevant. The respondent company had increased its share capital in 1992 and paid stamp duty on the resulting alteration of its AOA under the old Bombay Stamp Act. In 1994, the state introduced a cap of ₹25 lakh on the stamp duty chargeable on any AOA alteration. When the company later increased its capital again and paid a further amount up to that cap, it argued that it had already paid more than the capped amount at the earlier stage and was entitled to a refund on the second payment. The Supreme Court agreed, holding that the statutory maximum operates as a one-time ceiling on the stamp duty payable in respect of a company’s share capital as recorded in its Articles, not as a per-transaction cap that resets with every subsequent increase. The judgment is a useful reminder that the interaction between a company’s evolving capital structure and the state’s stamp schedule is not always intuitive, and that founders and companies alike would do well to track what has already been paid rather than assume each capital increase starts the calculation afresh.

8. Common Practical Difficulties

A few recurring problems are worth flagging separately from the statutory position. First, founders frequently declare an authorised capital that is far higher than what they need in the first year, thinking this gives flexibility for future investors, without realising that in Maharashtra, as in several other states, the AOA duty now scales with capital rather than being a flat figure. Second, the distinction between PTEC and PTRC is genuinely confusing on a first reading of the Act, and a fair number of newly incorporated companies either miss the PTEC deadline for directors or wrongly assume PTRC is needed from day one even without employees. Third, the Shops and Establishments intimation is sometimes treated as optional paperwork rather than as a document that downstream authorities, particularly banks, will ask for. None of these are complicated once explained, but they are exactly the kind of detail that a generic, state-neutral description of “how to register a company in India” tends to leave out.

9. Conclusion

The Companies Act, 2013 gives India a single incorporation procedure on paper, but the actual cost and sequence of compliance still depends heavily on where the registered office is located. For a company being set up in Maharashtra, this means budgeting for stamp duty calculated under a schedule that was substantially revised in October 2024, obtaining Professional Tax enrolment for the entity and its directors from the outset, and completing the Shops and Establishments intimation within the statutory window even where only informal steps are apparently needed. None of these are difficult in isolation, but taken together they form a distinctly state-flavoured layer on top of the central process, and a founder or a student examining “company registration” only through the lens of the Companies Act and the SPICe+ form is looking at an incomplete picture. Reading the state stamp legislation and the state labour statutes alongside the central Act is, in that sense, not an optional extra but a necessary part of understanding how incorporation actually works on the ground in Maharashtra.