How much money do you need to start a private limited company in India? Legally, there is no minimum. The Companies (Amendment) Act, 2015 removed the minimum paid-up capital requirement for private companies, and no minimum authorised capital applies either.
That does not make capital unimportant. The figures you choose at incorporation decide your government fees and stamp duty, the shareholding of each founder, the amount you must deposit in the company’s bank account before commencing business, and how banks and investors view the company. This guide explains the rules as they stand in 2026 and how we advise founders to set their capital.
Is There a Minimum Paid-Up Capital for a Private Limited Company?
No. When the Companies Act, 2013 first came into force, a private company needed a minimum paid-up share capital of ₹1 lakh. The Companies (Amendment) Act, 2015 deleted that requirement. Since then, a private limited company can be incorporated with whatever paid-up capital the founders decide.
There is no minimum authorised capital either. You may still read that “₹1 lakh authorised capital is mandatory”. That is outdated. ₹1 lakh remains a popular figure only because it is convenient and inexpensive, not because the law requires it.
A private limited company needs at least two shareholders, and they subscribe to shares at incorporation. So every company has some paid-up capital, even if the amount is small.
Authorised, Subscribed and Paid-Up Capital: What Each Means
Founders often treat these terms as the same thing. They are not.
Authorised capital is the maximum share capital the company may issue. It is stated in the capital clause of the Memorandum of Association (MoA). It is only a ceiling; nobody pays it in.
Issued and subscribed capital is the part of the authorised capital that the company offers and that shareholders agree to take up.
Paid-up capital is the money the company has actually received from shareholders for the shares issued to them. It appears in the balance sheet under share capital.
Paid-up capital can never exceed subscribed capital, and subscribed capital can never exceed authorised capital. In most new companies, the subscribers pay the full value of their shares, so subscribed and paid-up capital are the same.
A simple example
Two founders incorporate a private limited company with an authorised capital of ₹5 lakh, divided into shares of ₹10 each.
- Founder A subscribes to 5,000 shares, worth ₹50,000.
- Founder B subscribes to 5,000 shares, worth ₹50,000.
Once both deposit their money, the paid-up capital is ₹1 lakh and each founder owns 50% of the company. The company can still issue shares worth another ₹4 lakh without changing its MoA. If it later needs more funds, it issues further shares and its paid-up capital rises.
How Much Capital Should You Choose?
The law leaves the choice to you, so decide on practical grounds.
Authorised capital. In our experience, ₹1 lakh to ₹10 lakh suits most new businesses. Keeping authorised capital at or below ₹15 lakh means you pay no SPICe+ filing fee. Above ₹15 lakh, the MCA fee follows the Table of Fees, and stamp duty on the MoA and AoA also rises with capital. Leave some headroom above your paid-up capital for the first round of share issues or an ESOP pool, but do not choose ₹25 lakh or ₹1 crore just to look bigger. Capital can always be increased later.
| Authorised capital | SPICe+ filing fee | What else applies |
|---|---|---|
| Up to ₹15 lakh | Nil | ₹1,000 name reservation fee and state stamp duty |
| Above ₹15 lakh | As per MCA Table of Fees | Name reservation fee and higher state stamp duty |
For a full breakdown of government fees, stamp duty and professional charges, see our guide on Pvt Ltd company registration fees.
Paid-up capital. Keep it at the amount the founders can actually bring in now. It should be enough to cover early expenses such as rent, software, deposits and the first few months of operations. A very low figure is legal, but banks, large customers and investors do look at the paid-up capital when they assess a new company.
Paying In the Capital: Subscription Money and INC-20A
Subscribing to shares is a promise to pay. After incorporation, the company opens its bank account and the shareholders deposit their subscription money into it.
Within 180 days of incorporation, the company must file Form INC-20A, the declaration for commencement of business under Section 10A. In it, a director declares that every subscriber to the MoA has paid the value of the shares they agreed to take. The company cannot start business or borrow until this declaration is filed, and the subscription money must be in the company’s account before it can be filed.
Missing INC-20A attracts a penalty of ₹50,000 on the company and ₹1,000 per day on each defaulting officer, up to ₹1 lakh. The ROC can also strike off the company’s name.
The company must also issue share certificates to the subscribers within two months of incorporation (Section 56(4)).
How to Increase Capital Later
Authorised capital. The company alters the capital clause of its MoA under Section 61 by a resolution of the members in a general meeting (an ordinary resolution, unless the articles require a special resolution), and files Form SH-7 with the ROC within 30 days. Additional MCA fees and stamp duty are payable on the increase.
Paid-up capital. The company issues further shares, either to existing shareholders through a rights issue (Section 62) or to new investors through a private placement (Section 42). After each allotment, it must update the register of members and file the return of allotment in Form PAS-3 within 15 days.
Share Premium Is Allowed; Discount Is Not
A company may issue shares above their face value. If a ₹10 share is issued at ₹50, the extra ₹40 per share is a premium and is credited to the securities premium account (Section 52). Founders often bring in investors at a premium, so the investor pays more per share than the founders did.
A company cannot issue shares at a discount, that is, below face value. Section 53 prohibits it, and the only exception relevant to most private companies is sweat equity shares issued to directors or employees under Section 54 for their know-how or value additions.
Where Paid-Up Capital Matters Legally
Paid-up capital is not just a balance-sheet figure. It decides which rules apply to your company.
Small company status. Since 1 December 2025, a private company with paid-up capital up to ₹10 crore and turnover up to ₹100 crore is a small company. It files the shorter MGT-7A annual return and needs only two board meetings a year.
Dematerialisation of shares. Small companies are exempt from the mandatory demat requirement. A private company that crosses the small company limits must move its securities into demat form.
Other Requirements to Incorporate a Private Limited Company
Capital is only one part of eligibility. You also need:
- Directors: at least two, and up to 15 (more can be appointed by a special resolution). At least one director must have stayed in India for 182 days or more during the financial year. Indian citizenship is not required.
- Shareholders: at least two and at most 200. The same people can be both directors and shareholders.
- Registered office: an address in India, residential or commercial, with a recent utility bill and the owner’s No Objection Certificate.
Common Mistakes Founders Make with Paid-Up Capital
- Choosing unrealistically high capital. It raises stamp duty and, above ₹15 lakh, MCA fees, and it commits founders to deposit money they may not have.
- Not depositing the subscription money. Founders sometimes subscribe at incorporation and never pay in. INC-20A cannot be filed until the money is in the company’s account.
- Confusing paid-up capital with revenue or profit. Paid-up capital is the owners’ contribution, not income.
- Skipping allotment formalities. Every issue of shares needs board and shareholder approvals as applicable, updated statutory registers and the right ROC filings.
- Planning to issue shares at a discount. This is prohibited, except sweat equity.
Frequently Asked Questions
What is the minimum paid-up capital for a private limited company in India?
There is none. The Companies (Amendment) Act, 2015 removed the earlier ₹1 lakh minimum. A company can be incorporated with any paid-up capital its shareholders choose.
Is ₹1 lakh authorised capital mandatory?
No. There is no minimum authorised capital. ₹1 lakh to ₹10 lakh is a common practical choice, and keeping it at or below ₹15 lakh means no SPICe+ filing fee.
Can I start a private limited company with ₹10,000?
Yes. The law sets no minimum, so two founders can start with a small amount. Make sure the capital, along with any loans from directors, covers the company’s early expenses.
When must the paid-up capital be deposited?
The shareholders should deposit their subscription money in the company’s bank account soon after incorporation. It must be received before the company files INC-20A, which is due within 180 days of incorporation.
Can paid-up capital be increased later?
Yes. The company can issue further shares to existing shareholders or new investors, subject to the Companies Act, 2013 and the required ROC filings. If the new shares would exceed the authorised capital, the authorised capital is increased first.
Is paid-up capital the same as the company’s profit?
No. Paid-up capital is the money shareholders have invested in exchange for shares. Profit is what the business earns after expenses.
