Setting Up of Business, Industrial and Labour Laws · Startups and its Registration

Registrations and Licences for Starting a Business in India

Updated 11 October 2026 · Fact-checked

Starting a business needs a layered set of registrations. First comes the entity's incorporation and PAN, then TAN, GST, state-level Shops and Establishment registration, optional Udyam (MSME) registration, Import Export Code for trade, and trademark for brand protection. Match each to its trigger: turnover, employees, activity or goal. Then state the conclusion.

Understand Registrations and Licences for Starting a Business

A business does not need one single licence. It needs a set of registrations, and each one exists for a different reason. Some identify the entity, some collect tax, some regulate workplaces, and some give benefits or protection.

Start with identity. A company or LLP is registered with the Registrar and gets a certificate of incorporation. It then needs a PAN (Permanent Account Number) for income tax. A TAN (Tax Deduction and Collection Account Number) is needed by anyone who must deduct or collect tax at source, for example while paying salaries or professional fees.

Next come registrations triggered by activity. GST registration is needed when aggregate turnover crosses the prescribed threshold, or when you fall in a category where it is compulsory whatever the turnover, such as inter-State supply of goods in the cases the law requires, or e-commerce operators. Shops and Establishment registration is a State-law requirement for commercial establishments and is made with the State authority. Professional Tax, EPF and ESI apply when you have employees and cross the limits in the relevant law. Always check the current threshold in the study material, as limits change.

Some registrations are voluntary but useful. Udyam Registration is an online, paperless registration for micro, small and medium enterprises under the MSMED Act, 2006. It gives access to credit and scheme benefits. A trademark gives exclusive rights over your brand name or logo. The Import Export Code (IEC), issued by the Directorate General of Foreign Trade, is needed to import or export goods, with limited exceptions. A service exporter generally needs it only to claim benefits under the Foreign Trade Policy.

In the exam, think of this topic as a map: for each registration, know the authority, the trigger, and whether it is mandatory or optional.

Key rules to remember

PAN: PAN = identity for income tax; issued by the Income Tax Department; Needed for tax filing, opening bank accounts and most registrations. A 10-character alphanumeric number.
TAN: TAN = needed by a person who deducts or collects tax at source; Not for every taxpayer. Quote TAN in TDS and TCS returns and challans.
GST registration trigger: Register if aggregate turnover > prescribed threshold OR if compulsory registration applies; Thresholds differ for goods and services and for special category States. Quote the limit only as given in your study material.
Udyam Registration: Online registration on the Udyam portal; based on self-declaration, with PAN and GSTIN linked; Classification depends on investment in plant and machinery or equipment, and turnover, as prescribed under the MSMED Act, 2006.
IEC: IEC issued by DGFT; one IEC per PAN; A PAN-based 10-character code. It is valid for life, but the holder must confirm or update the details on the DGFT portal every year in April-June. An IEC that is not updated can be deactivated.
Trademark: Application to the Registrar of Trade Marks under the Trade Marks Act, 1999; Registration gives exclusive right to use the mark for the goods or services covered.

How to solve Registrations and Licences for Starting a Business questions

Use this method for any question on registrations a business needs.

1Read the facts and identify the entity type, the activity (goods, services, trade), the turnover and the number of employees.
2List the registrations that apply to every entity: incorporation or formation, PAN, and TAN if tax is deducted.
3Test GST: check whether turnover crosses the threshold or whether a compulsory-registration case applies.
4Test state and employee-based registrations: Shops and Establishment, Professional Tax, EPF and ESI.
5Check optional or purpose-based items: Udyam for MSME benefits, IEC for import or export, trademark for brand protection.
6For each registration, name the authority and the trigger in one line.
7Write the conclusion: say which registrations are mandatory now, which are optional, and which can wait.

Quickest way: Trigger-and-authority table in your head

When to use it: Use when you have limited time or the question is a short note or list type.

Write the registration name.
Write its trigger in four words, for example turnover above threshold.
Write the authority, for example DGFT for IEC.
Mark it mandatory or optional.
Close with a one-line conclusion tied to the facts.

Common mistakes in Registrations and Licences for Starting a Business

Saying GST registration is always compulsory for every startup.
Students remember that GST is common and forget that it depends on a turnover threshold.
Fix: Write that registration is needed above the threshold or in compulsory cases, then check the facts for either.
Treating Udyam registration as mandatory for all small businesses.
Students mix up the benefit-giving nature of Udyam with a legal compulsion.
Fix: Say it is generally a voluntary registration that opens credit and scheme benefits, unless another law or scheme requires it.
Confusing PAN and TAN.
The names look alike.
Fix: PAN identifies the taxpayer. TAN is only for the person deducting or collecting tax.
Giving wrong authorities, such as saying the Registrar of Companies issues IEC.
Students learn registrations as a list without linking each to its authority.
Fix: Pair each registration with its authority: DGFT for IEC, State authority for Shops and Establishment, Registrar of Trade Marks for trademark.
Stating a threshold figure from memory without checking the current limit.
Limits change by notification and old notes circulate.
Fix: Use the figure in the current study material. If unsure, state the rule and say the threshold is as prescribed.

Worked examples

Example 1

Nirmal Tech Private Limited, a Bengaluru startup, provides software services to Indian clients and has 12 employees. It has just been incorporated. List the registrations it should obtain and justify each.

Show the solution

Incorporation: it is already registered as a company, so it holds the certificate of incorporation.
PAN: it needs a PAN for income tax. For a company it is normally obtained along with incorporation.
TAN: it has employees and will pay salaries, so it must deduct tax at source and needs a TAN.
GST: register once aggregate turnover crosses the threshold applicable to services, or earlier if a compulsory case applies or it opts for registration voluntarily.
Shops and Establishment: its office is a commercial establishment, so it must register under the Karnataka State law.
Employee-based registrations: with 12 employees, it must check whether Professional Tax, EPF and ESI apply under their limits.
Optional: Udyam for MSME benefits, and trademark for its brand name.

Answer: Nirmal Tech needs incorporation, PAN, TAN and Shops and Establishment registration now. GST depends on turnover or a compulsory case. Professional Tax, EPF and ESI depend on their limits. Udyam and trademark are optional, and IEC is not needed because it serves only Indian clients and does not import or export goods or services.

Example 2

Asha starts a handicraft business through a proprietorship and plans to export products to Europe. She wants bank credit under MSME schemes. Which registrations does she need?

Show the solution

Identity: a proprietorship is not separately incorporated, so she uses her own PAN.
Export: she needs an Import Export Code from the DGFT, because she will export goods. It is based on PAN.
Credit and scheme benefits: she should register on the Udyam portal as a micro enterprise. This is voluntary but gives access to benefits.
GST: she needs registration if her turnover crosses the threshold or a compulsory case applies. Exporters often register for refund of tax.
Local law: she should register under the State Shops and Establishment law if her premises qualify as an establishment.
Brand: if she uses a brand name, she may apply for a trademark.

Answer: Asha needs PAN, an IEC for exports and Udyam for MSME credit benefits. GST and Shops and Establishment depend on her turnover and premises. A trademark is advisable to protect her brand.

Exam tips

In list-type questions, give the authority and trigger for each registration. A bare list scores poorly.
Always separate mandatory from optional registrations. Examiners look for this distinction.
For GST, write the rule with its conditions (threshold or compulsory case) and apply it to the facts before concluding.
Link the topic to related chapters: Udyam from the MSMED Act, 2006, and the labour code registrations for employees.
Do not quote threshold figures unless you are sure they are current. Write 'as prescribed' if in doubt.

Practice questions from Startups and its Registration

Registrations and Licences for Starting a Business: frequently asked questions

Which registrations are required to start a startup in India?

Every startup needs its entity registration and PAN. TAN, GST, Shops and Establishment, and employee-related registrations depend on facts such as tax deduction, turnover and employees. Udyam, IEC and trademark are for specific purposes.

Is GST registration mandatory for startups?

Not always. It is mandatory when aggregate turnover crosses the prescribed threshold, or when a compulsory-registration case applies regardless of turnover. A startup below the threshold can still register voluntarily.

How does Udyam registration work for MSMEs?

It is an online process on the Udyam portal, using the owner's details with PAN and GST information. On completion, the enterprise receives a registration number and certificate. Classification depends on the investment and turnover limits in the MSMED Act, 2006.

Do I need an IEC if I only provide services in India?

No. An IEC is needed to import or export goods, with limited exceptions. A service exporter generally needs it only to claim benefits under the Foreign Trade Policy. A business serving only Indian customers does not need it.