This FAQs on One Person Company blog provides clear, structured answers to common questions about OPCs, including eligibility, registration steps, taxation, compliance requirements, and conversion rules. Whether you're a solo entrepreneur considering OPC registration or looking for detailed insights on its legal and financial obligations, this guide will help you make an informed decision.
A One Person Company (OPC) is a unique business structure in India that allows a single entrepreneur to legally incorporate a private limited company with limited liability protection. Introduced under the Companies Act, 2013, OPCs bridge the gap between sole proprietorships and private limited companies, offering the advantage of a separate legal identity while allowing single ownership.
This structure is ideal for individual entrepreneurs, freelancers, and small business owners who want to establish a formal corporate entity without the complexities of managing multiple shareholders. OPCs enjoy benefits such as limited liability, ease of ownership transfer, and simplified compliance requirements compared to private limited companies.
The Ministry of Corporate Affairs (MCA) governs OPC registration and compliance, ensuring smooth digital incorporation processes, including online name approvals, electronic document filings, and statutory returns. However, OPCs must convert into a Private Limited Company if they exceed ₹2 crore turnover or ₹50 lakh paid-up capital.
This FAQs on One Person Company blog provides clear, structured answers to common questions about OPCs, including eligibility, registration steps, taxation, compliance requirements, and conversion rules. Whether you’re a solo entrepreneur considering OPC registration or looking for detailed insights on its legal and financial obligations, this guide will help you make an informed decision.
Common FAQs on OPC in India
Common FAQs regarding a One Person Company (OPC) in India include:
What is a One Person Company (OPC)?
A One Person Company (OPC) is a business structure in India that allows a single individual to register and operate a private limited company with limited liability protection. It is a legally recognized entity under the Companies Act, 2013, offering benefits similar to a private limited company while allowing 100% ownership by a single person.
Unlike a sole proprietorship, an OPC has a separate legal identity, ensuring that personal assets remain protected from business liabilities.
How to Form an OPC in India? What are the Documents Required for OPC Registration?
To register a One Person Company (OPC) in India, follow these steps:
Step 1: Obtain a Digital Signature Certificate (DSC): The director must get a DSC from an authorized certifying agency.
Step 2: Apply for a Director Identification Number (DIN): Apply for a DIN through the MCA portal (Ministry of Corporate Affairs).
Step 3: Name Approval from MCA: Submit an application using SPICe+ Form to reserve the company name.
Step 4: File for Incorporation: Submit the SPICe+ (INC-32) Form with supporting documents:
- PAN and Aadhaar of the director
- Address proof of the director
- Proof of registered office (Electricity Bill + NOC from the owner)
- Memorandum of Association (MoA)
- Articles of Association (AoA)
Step 5: Issuance of Certificate of Incorporation: Once approved, the Certificate of Incorporation is issued, and the OPC can start operations.
What are the Advantages of Registering a Company as a One Person Company (OPC)?
- Limited Liability Protection – The director’s personal assets remain safe in case of business losses.
- Separate Legal Identity – The OPC is considered a separate entity, ensuring better credibility.
- 100% Ownership Control – Unlike a private limited company, an OPC can be fully owned by one person.
- Minimal Compliance Requirements – Fewer filings compared to a private limited company.
- Easy Funding Options – Can raise funds through loans, venture capital, and angel investments.
- Perpetual Succession – The OPC continues to exist even after the death/incapacity of the owner, as a nominee takes over.
Can an NRI Register a One Person Company in India? What are the Conditions?
No, an NRI (Non-Resident Indian) cannot register an OPC in India.
As per Rule 3 of the Companies (Incorporation) Rules, 2014, only an Indian citizen and a resident of India (who has stayed in India for at least 182 days in the previous financial year) can incorporate an OPC.
Is Foreign Direct Investment (FDI) Allowed for OPC in India?
Yes, FDI is allowed in an OPC, but only under the automatic route.
However, if an OPC is involved in sectors where government approval is required for FDI, then it must convert into a Private Limited Company before accepting foreign investment.
What are the Conditions When an OPC Must Change into a Private Limited Company or a Public Limited Company?
An OPC must convert into a Private or Public Limited Company if:
- Annual Turnover exceeds ₹2 Crore for three consecutive years.
- Paid-up Capital crosses ₹50 Lakh.
If any of these conditions are met, the OPC must file Form INC-5 with the MCA to initiate the conversion process.
How to Convert an OPC into a Private Limited Company or Public Limited Company in India?
To convert an OPC into a Private/Public Limited Company, follow these steps:
- Board Approval – The director passes a resolution for conversion.
- Alteration of MoA and AoA – Modify the company’s Memorandum of Association (MoA) and Articles of Association (AoA) to reflect multiple members.
- Apply for Conversion – File INC-6 Form with the MCA along with required documents.
- Approval from ROC – The Registrar of Companies (ROC) verifies and approves the conversion.
- Issuance of a New Incorporation Certificate – After approval, the OPC is officially converted into a Private or Public Limited Company.
What Rates of Taxation are Applied on OPCs in India?
🔹 Corporate Tax: OPCs are taxed at 25% of their net profits.
🔹 Minimum Alternate Tax (MAT): 15% of book profits (if applicable).
🔹 Dividend Distribution Tax (DDT): Not applicable after the abolition of DDT in 2020.
🔹 GST: Mandatory if turnover exceeds ₹40 lakh (₹20 lakh for service-based OPCs).
🔹 TDS (Tax Deducted at Source): OPCs must deduct and deposit TDS as per IT rules.
What is the Eligibility Criteria for One Person Company (OPC)?
To register an OPC, the applicant must:
- Be an Indian citizen and a resident of India.
- Not incorporate more than one OPC.
- Appoint a nominee at the time of incorporation.
- Ensure the business is not engaged in financial activities (like banking, insurance, or investment).
What are the Limitations of an OPC?
- Cannot have more than one owner – OPCs must be owned by a single individual.
- Cannot issue equity shares – Unlike private limited companies, OPCs cannot raise funding through public investment.
- Mandatory Conversion – If turnover exceeds ₹2 crore, the OPC must convert into a Private/Public Limited Company.
- Limited Scope for Growth – Restricted in certain industries such as non-banking financial services (NBFCs).
- Taxation Similar to Pvt Ltd – Despite being a single-person entity, OPCs do not receive the same tax benefits as sole proprietors.
Can an OPC Have Two Directors?
Yes, an OPC can have more than one director, but it can only have one shareholder (owner/member).
- The Companies Act, 2013 allows an OPC to have up to 15 directors, but only one person can own the company.
- Additional directors can be appointed to handle operations, compliance, and management.
Can a Single Person Start a Company in India?
Yes, a single person can start a company in India by registering an OPC (One Person Company).
- The person must be an Indian citizen and a resident of India (stayed in India for at least 182 days in the previous financial year).
- The OPC structure provides limited liability protection and a separate legal entity compared to a sole proprietorship.
What is the Turnover Limit for an OPC?
- If an OPC’s annual turnover exceeds ₹2 crore for three consecutive financial years, it must convert into a Private Limited Company.
- The paid-up capital limit is ₹50 lakh. If this is exceeded, conversion to a Private Limited Company is mandatory.
Which is Better: OPC or Private Limited Company?
OPC (One Person Company) is better if:
- You want 100% ownership control.
- You are a solo entrepreneur and don’t need external funding.
- You prefer minimal compliance compared to a Private Limited Company.
Private Limited Company (Pvt Ltd) is better if:
- You plan to raise funds from investors or issue equity shares.
- You want multiple shareholders and directors.
- You aim to scale your business beyond ₹2 crore turnover.
If you want to grow and attract investors, a Private Limited Company is the better option in the long run.
Can an OPC Have Employees?
Yes, an OPC can hire employees like any other company.
The only restriction is that it can have only one shareholder (owner), but it can employ staff in various roles, including managers and executives.
What is the Tax Slab of an OPC?
OPC is taxed as a Private Limited Company with a flat corporate tax rate of 25% (if turnover is below ₹400 crore).
- Minimum Alternate Tax (MAT): 15% of book profits.
- Other applicable taxes: GST (if applicable), TDS, and professional tax.
What is the Due Date for OPC Filing?
Annual ROC Filing Due Dates for OPC:
- Form MGT-7A (Annual Return): Within 60 days from the end of the financial year (by 30th September).
- Form AOC-4 (Financial Statements): Within 180 days from the end of the financial year (by 27th September).
- Income Tax Return (ITR-6): 31st October (if audit required).
Is Audit Compulsory for an OPC?
Yes, an OPC must undergo a mandatory audit if:
- Its turnover exceeds ₹50 lakh in a financial year.
- Its paid-up capital exceeds ₹2 crore.
Even if an OPC makes zero revenue, it must file annual compliance reports.
What is the Annual Cost of Maintaining an OPC?
Annual cost of maintaining an OPC is ₹10,000 – ₹30,000, which includes:
- Statutory Compliance Costs (ROC filing, MCA fees) – ₹5,000 to ₹10,000
- Auditor Fees (if applicable) – ₹5,000 to ₹15,000
- Tax and Accounting Fees – ₹5,000 to ₹10,000
What is the Time Limit for an OPC?
An OPC can operate indefinitely unless:
- Its turnover exceeds ₹2 crore (mandatory conversion).
- The owner decides to close the business voluntarily.
Otherwise, there is no specific time limit for an OPC to function.
What is a Disadvantage of an OPC?
Major disadvantages of an OPC include:
Cannot raise funding by issuing equity shares.
- Mandatory conversion to a Private Limited Company after exceeding the ₹2 crore turnover limit.
- Limited scope for expansion compared to a Pvt Ltd company.
- Higher tax rate (25%) compared to sole proprietorships.
What is the Minimum Curing Period for an OPC?
There is no curing period for an OPC.
- However, if an OPC exceeds ₹2 crore turnover, it must convert to a Private Limited Company within 6 months.
- If it fails to comply, it may face penalties and legal action from the MCA.
Who is Eligible for an OPC?
Eligibility Criteria for Forming an OPC:
- Must be an Indian citizen and a resident of India (stayed 182+ days in the previous financial year).
- Must be an individual (not a company, trust, or LLP).
- Can incorporate only one OPC at a time.
- Must appoint a nominee at the time of registration.
What is the Penalty for OPC Non-Compliance?
If an OPC fails to comply with legal requirements, penalties include:
Failure to Convert After Turnover Limit Exceeded:
- Fine up to ₹10,000 + ₹1,000 per day until rectified.
✔️ Late Filing of ROC Annual Returns: - Fine of ₹100 per day for each delayed filing.
✔️ Non-Maintenance of Proper Financial Records: - Fine up to ₹5 lakh or imprisonment for the director.
What Are the Documents Required for OPC?
Essential documents for OPC registration:
- PAN Card & Aadhaar Card of the applicant.
- Address Proof (Electricity Bill/Bank Statement).
- Registered Office Address Proof (Rent Agreement/NOC from owner).
- Digital Signature Certificate (DSC).
- Memorandum of Association (MoA) & Articles of Association (AoA).
What is the Last Date for OPC Audit Balance Sheet?
Audit Balance Sheet Due Date for OPC:
- Annual Financial Statements: Must be submitted by 30th September each year.
- Tax Audit (if applicable): Due by 31st October.
Who is Eligible to Incorporate an OPC?
Eligibility Criteria for Incorporating an OPC:
✔️ Must be an Indian citizen and a resident of India (stayed 182+ days in the previous financial year).
✔️ Must be an individual (not a company, LLP, or trust).
✔️ Cannot incorporate more than one OPC at a time.
✔️ Must appoint a nominee while registering the company.
How Many OPCs Can One Person Incorporate?
Only one OPC per individual is allowed.
- As per Rule 3 of the Companies (Incorporation) Rules, 2014, an individual cannot incorporate more than one OPC or be a nominee in more than one OPC.
What are the Nomination Requirements for an OPC?
🔹 An OPC must have a nominee at the time of incorporation.
🔹 The nominee takes over the OPC in case of the owner’s death or incapacitation.
🔹 The nominee must be an Indian resident and citizen.
🔹 The nominee’s consent (Form INC-3) must be filed with the MCA.
Is Prior Consent of the Nominee Required to Become a Nominee?
Yes, the nominee must provide prior written consent. This is submitted in Form INC-3 at the time of OPC registration.
Can the Nominee Withdraw His/Her Consent?
Yes, a nominee can withdraw consent. The OPC owner must appoint a new nominee within 15 days and file Form INC-4 with the MCA.
Can the Subscriber Change the Nominee?
Yes, the OPC owner can change the nominee at any time. The change must be reported to the Registrar of Companies (ROC) using Form INC-4, along with a new consent letter (INC-3) from the new nominee.
What Happens If the Subscriber Ceases to Be a Member Due to Death?
🔹 In the event of the owner’s death or incapacity, the nominee automatically becomes the new OPC owner.
🔹 The nominee must update the MCA records by filing necessary forms.
🔹 If the nominee does not wish to continue, they must appoint a new nominee before resignation.
Can an OPC be Converted into a Public or Private Limited Company?
Yes, an OPC can be converted into a Private or Public Limited Company, either:
1️⃣ Voluntarily – After two years from incorporation.
2️⃣ Mandatorily – If turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh.
Process:
✔️ Pass a board resolution for conversion.
✔️ Amend the MoA and AoA to reflect the new company type.
✔️ File Form INC-6 with required documents.
✔️ Obtain a new Certificate of Incorporation from the MCA.
Can a Private Limited Company Convert into an OPC?
Yes, a Private Limited Company can convert into an OPC if:
✔️ It has only one shareholder after conversion.
✔️ It does not exceed ₹2 crore turnover.
✔️ It files Form INC-6 for conversion.
A Private Limited Company with more than one shareholder cannot convert into an OPC.
Under What Circumstances Must an OPC Convert into a Private or Public Limited Company?
An OPC must convert into a Private or Public Limited Company if:
✔️ Turnover exceeds ₹2 crore for three consecutive financial years.
✔️ Paid-up capital crosses ₹50 lakh.
The company must file Form INC-5 within 6 months of crossing these limits.
What are the Compliance Requirements After Converting an OPC into a Private or Public Limited Company?
After conversion, the company must:
✔️ Amend its MoA & AoA to reflect the new structure.
✔️ Appoint at least 2 directors (for a Pvt Ltd) or 3 directors (for a Public Ltd).
✔️ Issue new share capital structure (if applicable).
✔️ Update the Registrar of Companies (ROC) and obtain a fresh Certificate of Incorporation.
What are the Naming Guidelines for an OPC?
The company name must:
✔️ End with “(OPC) Private Limited”.
✔️ Not contain offensive or trademarked words.
✔️ Follow MCA guidelines for unique and legal names.
✔️ Get approval from the Registrar of Companies (ROC) before incorporation.
What Secretarial Compliance is Applicable for an OPC?
Mandatory Secretarial Compliance for OPCs:
✔️ Annual Filing (MGT-7A & AOC-4) with ROC.
✔️ Board Meetings (only if more than one director).
✔️ Income Tax Return (ITR-6).
✔️ GST filings (if applicable).
✔️ Statutory audit if turnover exceeds ₹50 lakh.
Can I Convert My Proprietorship Business to an OPC? Can I Retain the Same Brand Name?
Yes, a Proprietorship can be converted into an OPC, provided:
✔️ The owner is an Indian resident and citizen.
✔️ The business has a valid PAN, GST, and trade license.
✔️ The owner files Form INC-6 for conversion.
Yes, the existing brand name can be retained, but it must:
✔️ Be available for registration under MCA.
✔️ Follow the OPC naming guidelines.
Can I Nominate My Friend or Family Member?
Yes, you can nominate a friend or a family member as the nominee. However, the nominee must be an Indian resident and citizen.
What is the Difference Between an OPC and a Proprietorship? Which is Recommended?
| Feature | OPC (One Person Company) | Sole Proprietorship |
| Legal Entity | Separate legal entity | No separate legal entity |
| Liability | Limited liability | Unlimited liability |
| Ownership | Single owner with nominee | Single owner |
| Taxation | 25% corporate tax | Individual tax slab |
| Funding | Easier to raise funds | Difficult to raise funds |
| Scalability | Mandatory conversion after ₹2 crore turnover | No restrictions |
Recommended: If you plan to grow and seek investment, OPC is better. If you want fewer legal formalities, sole proprietorship is simpler.
Can I Sell My OPC to Another Person?
Yes, an OPC can be sold or transferred to another person.
Process to transfer OPC ownership:
✔️ Update shareholding details.
✔️ Change the nominee details using Form INC-4.
✔️ File Form DIR-12 to change directorship.
✔️ Inform the ROC about the transfer.
Once transferred, the new owner controls the OPC!
Can I Purchase an Already Established OPC from Another Person?
Yes, an OPC can be transferred or sold to another individual.
The ownership transfer process involves:
✔️ Transferring all shares to the new owner.
✔️ Updating the nominee details using Form INC-4.
✔️ Changing the directorship using Form DIR-12.
✔️ Informing the Registrar of Companies (ROC) about the transfer.
Note: The new owner must be an Indian citizen and resident of India.
I am a 15-Year-Old Student. Can I Start My Own OPC in Software Development?
No, you cannot start an OPC at 15 years old.
- As per Companies Act, 2013, only individuals above 18 years of age can register an OPC.
- You must be an Indian resident and citizen.
Once you turn 18, you can register an OPC and later convert it into a Private Limited Company or LLP once the business grows.
Tip: You can partner with a parent/guardian and later take full control when you turn 18.
If I Am a Director, Can I Appoint Another Partner as a Sleeping Partner in OPC?
No, OPCs cannot have sleeping partners.
- An OPC must have only one owner/shareholder.
- However, you can hire employees or appoint multiple directors for management.
If you need a partner, you should convert the OPC into a Private Limited Company or LLP.
If My OPC Makes a Loss, Do I Still Need to File Statutory Returns with the ROC?
Yes, even if your OPC is in loss, you must file statutory returns.
- Annual compliance is mandatory, regardless of profit or loss.
- Failing to file can result in penalties from ₹100 per day.
Required Filings Even in Loss:
✔️ MGT-7A (Annual Return Filing) – Within 60 days of the financial year-end.
✔️ AOC-4 (Financial Statement Filing) – Within 180 days of the financial year-end.
✔️ Income Tax Return (ITR-6) – By 31st October (if audit required).
Do I Need to Apply for a Shop Act Establishment License Once My OPC is Registered?
Yes, you need a Shop & Establishment License if:
✔️ Your OPC has a physical office or commercial premises.
✔️ You hire employees in your business.
Exceptions: If your OPC is home-based and has no employees, you may not need the license in some states.
What is the Statutory Return Filing Frequency for OPCs? Is It Annual?
Yes, OPCs have an annual filing requirement.
Annual Compliance Requirements:
✔️ MGT-7A (Annual Return) – Within 60 days from the financial year-end.
✔️ AOC-4 (Financial Statements) – Within 180 days from the financial year-end.
✔️ Income Tax Return (ITR-6) – By 31st October (if audit required).
✔️ GST Returns (if applicable) – Monthly or quarterly depending on turnover.
Late filing penalties: ₹100 per day until compliance is met.
What Are the Different Taxes an OPC Has to Pay?
An OPC in India must pay the following taxes:
✔️ Corporate Tax – 25% of net profit (plus cess & surcharges).
✔️ GST (if applicable) – 18% standard GST (compulsory if turnover exceeds ₹40 lakh).
✔️ TDS (Tax Deducted at Source) – If applicable based on payments made to vendors or employees.
✔️ Professional Tax – Applicable in certain states.
Additional Taxes:
- Minimum Alternate Tax (MAT): 15% of book profits, if applicable.
- Dividend Distribution Tax (DDT): Not applicable after the 2020 amendment.
Do I Need to Apply for IEC (Import Export Code) for Exporting Software Once the OPC is Registered?
Yes, an OPC needs an IEC (Import Export Code) for software exports.
✔️ IEC is issued by the Directorate General of Foreign Trade (DGFT).
✔️ Mandatory for exporting IT/software services.
✔️ No renewal is required – it is a lifetime registration.
How to Apply for IEC?
✔️ Visit the DGFT website and submit an online application with PAN, Aadhaar, and bank details.
✔️ Pay the nominal fee and get IEC within 24-48 hours.
IEC is essential for receiving international payments in compliance with RBI and FEMA regulations.
Can an OPC Become a Member of Another Private Limited Company?
Yes, an OPC can invest in and become a shareholder of another Private Limited Company. However, an OPC cannot incorporate another OPC or be a member of multiple OPCs.
Tip: If you plan to expand investments, converting into a Private Limited Company may provide more flexibility.
Can a Member of an OPC Incorporate a Company Outside India?
Yes, an OPC member can start a company outside India.
- There are no restrictions under Indian law for OPC members to incorporate foreign businesses.
- However, the foreign country’s business laws and regulations must be followed.
Important:
- If the foreign company requires multiple shareholders, the OPC structure may not be suitable.
- In such cases, the OPC owner can register as an individual entrepreneur abroad.
Conclusion
A One Person Company (OPC) is an ideal business structure for solo entrepreneurs who want the benefits of a corporate entity without the complexity of a Private Limited Company. It provides limited liability, perpetual succession, legal recognition, and tax benefits, making it a better alternative to sole proprietorships.
However, OPCs come with certain limitations, such as the single-shareholder restriction and the requirement to convert into a Private Limited Company if turnover exceeds ₹2 crores. Entrepreneurs must carefully evaluate their growth plans, funding needs, and compliance requirements before choosing an OPC.
For those looking for scalability, external funding, or co-founders, a Private Limited Company might be a better choice. However, for individuals seeking ease of management, limited liability, and legal protection, OPC is the best option.
To ensure a smooth registration process and hassle-free compliance, it is advisable to consult legal and financial experts.
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