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Snapshot of Incorporated (For-Profit) Forms of Business Presence in India


Legal Entry Private Limited Company (PLC) Limited Liability Partnership (LLP)
Legal status Most common entity form used by foreign entities to establish business presence in India. Hybrid entity form bringing together the features of a PLC and flexibility of a partnership.
Governance structure Two tier governance structure – shareholders (owners) and directors (managers) Two tier governance structure – partners (owners) and designated partners (managers)
Foreign ownership Possible to set up 100% foreign owned PLC subject to sector ownership restriction prescribed by regulatory authorities Possible to set up LLP only for operating in sectors in which 100% foreign ownership is permitted and there are no investment-linked performance conditions.
Sectors which have investment restrictions include single brand retail trading, digital media, defence etc.
Shareholding and minimum capital requirement At-least two shareholders. No minimum capital requirement At-least two partners. No minimum capital requirement
Management body At-least two directors of which at-least one should be in India (resident director). Directors need to be natural persons. The concept of corporate directors is not there in India. At-least two directors of which at-least one should be in India (resident director). Directors need to be natural persons. The concept of corporate directors is not there in India.
Liability of owners and management Limited Limited
Compliance requirements High Comparatively lower compliance than company law.
Income tax Liable to tax on global income. The base corporate tax rate varies from 15% to 30% depending on the nature of activities, annual turnover and fulfilment of certain other conditions. Surcharge and education cess are applicable on the base corporate tax rate. Most companies qualify for corporate tax rate of 25.17% inclusive of surcharge and cess Corporate tax rate applicable to LLPs is 30% plus applicable surcharge and cess

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