Various Initial Registrations and Licenses: formula sheet

Key formulas

Registration layers

Existence → PAN/TAN → GST → Operating registrations → Sector licences

Use this order to structure any answer on initial registrations.

Liability by entity

Proprietorship and Partnership: unlimited | LLP and Company: limited

Limited liability exists because LLPs and companies are separate legal persons.

Separate legal identity

Proprietorship: No | Partnership: No | LLP: Yes | Company: Yes

A partnership firm is not a separate legal person under the Partnership Act, 1932.

Governing law

Partnership Act, 1932 | LLP Act, 2008 | Companies Act, 2013

A proprietorship has no entity-specific statute; general and tax laws apply.

Minimum persons

Proprietorship: 1 | Partnership: 2 | LLP: 2 partners | Private company: 2 members | OPC: 1

State the minimum when asked which entity suits a given number of founders.

PAN format

10 characters: 5 letters + 4 digits + 1 letter

For example, AAACB1234C. The fourth character shows the holder's status, and a company's PAN carries the letter C there. The fifth character is the first letter of the entity's name, or the surname for an individual. In the example, B would be the first letter of the company's name.

TAN format

10 characters: 4 letters + 5 digits + 1 letter

For example, DELA12345B. The first three letters indicate the jurisdiction or city code, and the fourth letter is the initial of the deductor's name.

Who needs PAN

Taxpayers, persons required to file a return, and persons carrying out specified transactions

A company needs PAN to file its return, pay tax and enter specified high-value transactions.

Who needs TAN

Every person who deducts or collects tax at source

TAN is needed to deposit TDS or TCS, file TDS or TCS statements and issue TDS certificates.

Where TAN must be quoted

TDS or TCS returns, tax payment challans, TDS or TCS certificates

PAN is not a substitute for TAN in these documents.

Applying for a company

At incorporation: SPICe+ gives PAN and TAN. After incorporation: apply online

Check the latest procedure notified by the tax department for any change.

Structure of GSTIN

GSTIN = 2-digit State code + 10-character PAN + 1 entity number + Z + 1 check digit (15 characters)

The 13th character shows how many registrations the same PAN holds in that State. The 14th is the letter Z by default.

Aggregate turnover

Aggregate turnover = taxable supplies (excluding inward supplies under reverse charge) + exempt supplies (including non-taxable supplies) + exports of goods and/or services + inter-State supplies, of persons with the same PAN on an all-India basis; excluding central tax, State/UT tax, integrated tax and cess

Computed on an all-India basis for persons with the same PAN. It covers outward supplies. Taxes and cess, and inward supplies on which tax is payable under reverse charge, are left out of the figure.

Time limit to apply

Normal person: within 30 days from the date of becoming liable. Casual/non-resident taxable person: at least 5 days before commencing business

For a normal person, registration is effective from the date of liability if applied in time (from the date of grant if applied late). For a casual or non-resident taxable person, it is effective from the date of grant of registration or commencement of business, whichever is later.

General threshold limits

Goods: ₹40 lakh; Services: ₹20 lakh (lower for special category States)

Notified limits. State the limit as per current notification and mention that it is notifiable.

Separate registration

One registration per State per PAN; separate registration for each business vertical is allowed

A person with places of business in several States must register in each State.

Who must register

Shop or commercial establishment as defined in the state Act → register with the designated authority

Coverage depends on the state definitions. Always say 'as defined under the applicable state Act'.

Registration steps in short

Application/intimation (online) → fee → verification → registration certificate → display at premises

Fees, time limits and portals differ by state.

Employer duty after registration

Display certificate + follow hours, leave, wages, women and young person rules + maintain registers + notify changes

Notice of closure or change of employer, name or address is usually required within a prescribed period.

Law applicable

Place of business decides the Act: the law of the state or UT where the establishment is located

A business with branches in many states registers separately under each state's law.

Micro enterprise

Investment ≤ ₹2.5 crore AND turnover ≤ ₹10 crore

Limits in force from 1 April 2025. Both conditions must be met.

Small enterprise

Investment ≤ ₹25 crore AND turnover ≤ ₹100 crore

The enterprise must exceed the micro limits on investment or turnover.

Medium enterprise

Investment ≤ ₹125 crore AND turnover ≤ ₹500 crore

The enterprise must exceed the small limits on investment or turnover.

Composite rule

Category = higher of the category by investment and the category by turnover

If the two tests give different categories, the enterprise takes the higher one.

Turnover calculation

Turnover for classification = total turnover − exports

Export turnover is left out when checking the turnover limit.

Earlier limits (for contrast)

Micro ₹1 crore / ₹5 crore; Small ₹10 crore / ₹50 crore; Medium ₹50 crore / ₹250 crore

Investment / turnover limits before 1 April 2025. Do not use them for June 2027 answers.

Registration essentials

Online, free, self-declaration, Aadhaar-based, PAN and GSTIN linked

Aadhaar is of the proprietor, managing partner or authorised signatory. One registration per enterprise, with all its units listed.

Professional tax - source and cap

Levied by the State under its own Act; maximum ₹2,500 per person per year (Article 276(2) of the Constitution)

Rates and slabs differ by state. Not all states levy it. Do not quote one state's slab as the national rule.

EPF - coverage

Under the Code on Social Security, 2020: as per the Code's coverage provisions, the scheme provisions and notifications

Thresholds and extensions operate through the Code's provisions and notifications. The earlier EPF Act, 1952 used 20 or more employees as its threshold. Use that figure only as the earlier position or when the question supplies it.

EPF - contribution rate

Employee 12% of wages + Employer 12% of wages (figures under the existing scheme and rules, subject to notification)

Wages here mean wages as defined in the Code on Social Security, 2020 and the notified rules. The Code has a unified definition, under which specified exclusions generally cannot exceed 50% of total remuneration. Use the wage figure given in the question. Under the earlier pension arrangement, the employer's 12% is split: 8.33% to the pension scheme (on wages up to a notified ceiling, earlier ₹15,000 a month) and the balance to the provident fund. If the question gives different rates or ceilings, use those.

ESI - coverage

Under the Code on Social Security, 2020: as per the Code's coverage provisions, with extensions through notification

The earlier ESI scheme used 10 or more employees and a wage ceiling of ₹21,000 a month. These are the figures commonly used from that scheme and are subject to notification. Use the figures given in the question. Do not state them as a fixed rule under the Code.

ESI - contribution rate

Employer 3.25% + Employee 0.75% = 4% of wages (figures commonly used from the earlier ESI scheme, subject to notification)

Rates are fixed by notification, so use the rates given in the question. Earlier, employees earning very low daily wages were exempt from their own share, but the employer still paid its share.

Core difference

EPF = retirement savings and pension; ESI = medical and cash benefits; PT = state tax on employment

Use this as a one-line comparison in any 'distinguish' question.

IEC basics

IEC = 10-character code, issued by DGFT, linked to PAN, valid for life

Apply online. Details must be confirmed or updated every year. Name the exceptions such as personal use.

Who needs IEC

Import or export of goods (and service benefits under the Foreign Trade Policy) → IEC required

Do not say it is needed for every business. Domestic traders do not need it.

FSSAI tiers

Basic registration → State licence → Central licence (rising with turnover and activity)

Match tier to the facts. Check the current limits in your study material.

Trade licence vs shop registration

Trade licence = municipal body, public health and safety. Shop registration = State labour department, working conditions

Two separate registrations. One does not replace the other.

Trademark

Trade Marks Act, 1999 → Registrar of Trade Marks → registration of a mark

Gives exclusive right to the mark. It is not a licence to start business.

Quick revision

• Entity type decides the registrations needed, so name the entity first in any case question.
• PAN identifies a taxpayer; TAN is needed by those who deduct or collect tax at source.
• GST registration depends on turnover thresholds, the nature of supply and the state; check conditions before answering.
• Some persons must register under GST regardless of turnover; learn this list from your study material.
• Shops and establishments registration is under state law, so rules and timelines vary by state.
• Udyam registration is online and classifies an enterprise as micro, small or medium.
• Professional tax is a state levy, so it applies only in states that impose it.
• EPF and ESI registrations are tied to employee numbers and wage limits; confirm the current limits.
• The Import Export Code is needed for import or export, with limited exceptions listed in your material.
• Always end the answer with the consequence of non-registration, such as penalty or loss of benefits.
• For labour registrations, use the current labour code terminology where your material does.

Common mistakes

• Saying a partnership firm is a separate legal person. Fix: Remember: only the LLP and the company are separate legal persons. A firm is a group of partners.
• Saying registration of a partnership firm is compulsory. Fix: Say it is optional, but an unregistered firm faces restrictions on enforcing rights in court.
• Saying TAN can be used in place of PAN when filing a return. Fix: Remember that PAN is for the taxpayer and TAN is only for the person deducting or collecting tax. They are not interchangeable.
• Quoting PAN on a TDS challan or TDS certificate as the deductor's number. Fix: Quote TAN as the deductor's identity in TDS or TCS documents. The deductee's PAN is also quoted, but separately.
• Applying the threshold to every person Fix: Always check compulsory categories first. Threshold relief does not apply to them, unless a notification exempts the particular case.
• Computing turnover for one State only Fix: Aggregate turnover is all-India for the same PAN, so add all branches and businesses.
• Writing that there is one central Shops and Establishments Act for all of India. Fix: Say it is a state subject. Each state or UT has its own Act, and the Act of the state where the premises is located applies.
• Quoting a specific time limit, fee or employee threshold as if it applies everywhere. Fix: Write 'within the time prescribed under the state Act'. Give a specific number only if the question names the state and you are sure.
• Using the old limits of ₹1 crore, ₹10 crore and ₹50 crore for investment. Fix: Learn the revised limits: ₹2.5 crore, ₹25 crore and ₹125 crore for investment, and ₹10 crore, ₹100 crore and ₹500 crore for turnover. Mention the old ones only as contrast.
• Classifying on investment alone and ignoring turnover. Fix: Always test both. If they give different categories, take the higher one.

Exam tips

• Write answers in ICSI style: the rule, the application to the facts, then a clear conclusion naming the entity.
• Learn a comparison table in your head: identity, liability, governing Act, minimum persons, compliance. Reproduce it as short points.
• Link each registration to a fact in the question rather than listing all of them.
• For scenario questions, always reject the unsuitable entities briefly before choosing one.
• Revise the related topics on PAN and TAN, GST and Udyam registration so you can add one line of detail for each.
• Questions are often short notes or differences. Learn a four-point comparison: meaning, purpose, format, where quoted.
• Always link the number to the person in the facts. Write which role the company plays: taxpayer, deductor, or both.
• Mention SPICe+ when the case involves a newly incorporated company.