INC 20A Declaration For Commencement Of Business – Complete Guide For Companies In India.

Starting a company in India is an exciting journey, but it also involves several legal compliances that must be fulfilled after incorporation. One of the most important post-incorporation compliances under the Companies Act, 2013 is Form INC-20A, also known as the Declaration for Commencement of Business.

Many entrepreneurs believe that once they receive the Certificate of Incorporation from the Registrar of Companies (ROC), they can immediately start business operations. However, this is not entirely correct. Under Section 10A of the Companies Act, 2013, companies with share capital must file Form INC-20A before commencing business activities.

In this blog, we will discuss in detail what INC-20A is, its importance, due dates, documents required, penalties for non-compliance, and the role of professional guidance from experts like CA Dhiraj Ostwal, recognized among the best CA in Pune for corporate compliance and advisory services.

What is INC-20A?

INC-20A is a mandatory declaration filed with the Registrar of Companies (ROC) confirming that the subscribers to the memorandum have paid the value of the shares agreed to be taken by them.

In simple terms, it is a declaration stating that:

• The shareholders have deposited the subscribed share capital into the company’s bank account.
• The company has verified its registered office.
• The company is ready to commence business operations.

Only after filing this form can the company legally start business activities or exercise borrowing powers.

Applicability of INC-20A

Form INC-20A applies to:

• All companies incorporated after 2 November 2018
• Companies having share capital

However, the following entities are generally not required to file INC-20A:

• Companies incorporated before the introduction of Section 10A
• Companies without share capital
• Certain Section 8 companies depending on their structure

The objective of introducing INC-20A was mainly to prevent the formation of shell companies and ensure genuine business activity.

Due Date for Filing INC-20A

A company must file Form INC-20A within 180 days from the date of incorporation.

For example:

• If a company is incorporated on 1 January, the last date to file INC-20A would be 30 June of the same year.

Failure to file within this period may lead to penalties and possible action by the Registrar of Companies.

Documents Required for Filing INC-20A

To file INC-20A successfully, the following documents are generally required:

1. Bank Statement of Company

A bank statement showing the deposit of share capital by the subscribers.

2. Proof of Share Capital Deposit

Evidence confirming that shareholders have paid the value of shares agreed to be taken.

3. Certificate of Incorporation

Issued by the ROC during company incorporation.

4. Board Resolution

Resolution authorizing filing of INC-20A.

5. DSC of Director

Digital Signature Certificate of the director who will sign the form.

6. Professional Certification

The form must be certified by a practicing Chartered Accountant, Company Secretary, or Cost Accountant.

This is why professional guidance from experts like CA Dhiraj Ostwal, considered one of the best CA in Pune, becomes extremely valuable to ensure accurate filing and compliance.

Government Fees for Filing INC-20A

The filing fee for INC-20A depends on the authorized share capital of the company. Typical fees are as follows:

Authorized Share Capital	Government Fee
Up to ?1,00,000	?200
?1,00,001 – ?4,99,999	?300
?5,00,000 – ?24,99,999	?400
?25,00,000 – ?99,99,999	?500
?1 crore or more	?600

These fees are payable on the MCA portal while submitting the form.

Importance of Filing INC-20A

INC-20A is not just another compliance form; it plays a crucial role in ensuring that a company begins operations legally and transparently.

1. Legal Permission to Start Business

Without filing INC-20A, a company cannot legally commence its business operations.

2. Borrowing Powers

A company cannot borrow funds or obtain loans until this declaration is filed.

3. Prevention of Shell Companies

The government introduced this compliance to ensure that companies are not created merely for illegal or fraudulent activities.

4. Credibility with Stakeholders

Filing INC-20A demonstrates compliance and builds trust with:

• Banks
• Investors
• Clients
• Regulatory authorities

5. Smooth Future Compliance

Early compliance helps companies avoid legal complications during audits, funding rounds, or regulatory checks.

Professional firms like CA Dhiraj Ostwal’s office, known as one of the best CA in Pune, regularly assist startups and companies in handling such post-incorporation compliances smoothly.

Penalties for Non-Filing of INC-20A

Non-compliance with INC-20A can result in significant penalties under the Companies Act, 2013.

1. Penalty on the Company

The company may be liable to pay a penalty of ?50,000.

2. Penalty on Officers in Default

Every officer responsible for the default may face a penalty of ?1,000 per day, subject to a maximum of ?1,00,000.

3. Risk of Company Strike-Off

If the ROC believes that the company is not carrying on business, it may initiate proceedings to remove the company’s name from the register of companies.

These penalties highlight the importance of timely compliance.

Practical Tips for Companies

To avoid complications related to INC-20A, companies should follow these best practices:

Open Bank Account Immediately

Open the company’s bank account soon after incorporation and deposit share capital.

Maintain Proper Documentation

Keep all records such as bank statements, shareholder details, and board resolutions ready.

File INC-20A Early

Do not wait until the last day of the 180-day deadline.

Take Professional Assistance

Professional guidance ensures that the form is filed correctly and within time.

Many startups prefer consulting experienced professionals like CA Dhiraj Ostwal, widely recognized as one of the best CA in Pune, to manage such statutory compliances efficiently.

Role of Chartered Accountants in INC-20A Filing

Chartered Accountants play an important role in ensuring compliance with the Companies Act. Their responsibilities include:

• Verifying share capital deposit
• Certifying INC-20A form
• Ensuring accurate documentation
• Advising companies on post-incorporation compliances
• Preventing legal risks and penalties

An experienced CA can also guide companies regarding GST registration, accounting systems, tax planning, and annual ROC filings after the commencement of business.

Conclusion

Form INC-20A is a crucial compliance requirement for companies incorporated in India. It acts as a declaration that the company has received its subscribed capital and is ready to begin operations legally.

Failure to file INC-20A within the prescribed time can lead to heavy penalties, legal complications, and even strike-off of the company by the ROC. Therefore, businesses must prioritize this compliance immediately after incorporation.

With proper planning and professional guidance from experts like CA Dhiraj Ostwal, recognized among the best CA in Pune, companies can ensure smooth compliance and focus on building their business successfully.

If you are planning to start a company or need assistance with INC-20A filing, ROC compliance, or corporate advisory, consulting an experienced Chartered Accountant can help you avoid costly mistakes and maintain full regulatory compliance.