Discover the calculation process for increasing authorized share capital, MOA fees, and stamp duty, using a practical example. Navigate the process with confidence.
Increasing the authorized share capital of a company is a crucial step in its growth journey. However, amidst the paperwork and regulatory requirements, understanding how to calculate the associated fees manually can be perplexing. In this guide, we will break down the process step by step, demystifying the calculation of fees for increasing authorized share capital.
Understanding the Fee Structure
Before we dive into the calculations, let’s grasp the fee structure provided by the Ministry of Corporate Affairs (MCA). The fees for Memorandum of Association (MOA) and stamp duty are determined based on the range of the authorized share capital increase. Here’s a snapshot of the fee structure:
For Companies Other Than OPC and Small Companies:
| Authorized Share Capital Range | Fixed Fee | Variable Fee for Every 10,000 or Part Thereof |
| Up to 1,00,000 | 5,000 | N/A |
| More than 1,00,000 up to 5,00,000 | 5,000 | 400 |
| More than 5,00,000 up to 10,00,000 | 21,000 | 300 |
| More than 10,00,000 up to 50,00,000 | 36,000 | 300 |
| More than 50,00,000 upto 1,00,00,000 | 1,56,000 | 100 |
| More than 1,00,00,000 | 2,06,000 | 75 |
For OPC (One Person Company) and Small Companies:
| Authorized Share Capital Range | Fixed Fee | Variable Fee for Every 10,000 or Part Thereof |
| Up to 1,00,000 | 2,000 | N/A |
| More than 1,00,000 | 2,000 + 200 | N/A |
| More than 50,00,000 upto 1,00,00,000 | 1,56,000 | 100 |
| More than 1,00,00,000 | 2,06,000 | 75 |
Now that we have a clear fee structure in place, let’s proceed with a practical example to illustrate the manual calculation process.
Example Scenario: Increasing Authorized Share Capital
Consider XYZ Private Limited, a small company based in Maharashtra. Currently, XYZ’s authorized share capital is Rs. 50 lakhs, and they wish to increase it to Rs. 70 lakhs. Let’s calculate the associated fees step by step.
Step 1: Determine the Range
Since the authorized share capital is being increased to Rs. 70 lakhs, it falls within the range of “More than 50,00,000.”
Step 2: Calculate Fixed Fee
For this range, the fixed fee is Rs. 1,56,000.
Step 3: Calculate Variable Fee
The variable fee is based on the difference between the existing and revised capital. In this, case, the increase is Rs. 20,00,000.
Variable Fee = (Increase in Capital / 10,000) * Fee per 10,000 Variable Fee = (20,00,000 / 10,000) * 100 Variable Fee = Rs. 20,000
Step 4: Deduct Existing MOA Payment
To calculate the MOA payment, we need to consider the block of “More than 10,00,000 and up to 50,00,000.”
MOA Payment = Fixed Fee + (Increase in Capital / 10,000) * Fee per 10,000 MOA Payment = 2,000 + (40,00,000 / 10,000) * 200 MOA Payment = Rs. 82,000
Step 5: Calculate Final MOA Fee
Final MOA Fee = Fixed Fee + Variable Fee – Existing MOA Payment Final MOA Fee = 1,56,000 + 20,000 – 82,000 Final MOA Fee = Rs. 94,000
Stamp Duty Calculation (as per Maharashtra State)
For companies other than Section 8 companies, the stamp duty is Rs. 1,000 for every Rs. 5 lakhs of the increase in authorized share capital or part thereof, with a maximum limit of Rs. 50 lakhs.
In this case, the increase is Rs. 20,00,000.
Stamp Duty = (Increase in Capital / 5,00,000) * Rs. 1,000 Stamp Duty = (20,00,000 / 5,00,000) * 1,000 Stamp Duty = Rs. 4,000
Total Fees
Now, let’s sum up the fees:
- MOA Fee: Rs. 94,000
- Stamp Duty: Rs. 4,000
Total Fees: Rs. 98,000
Conclusion
Calculating fees for increasing authorized share capital manually may seem daunting initially. However, by breaking down the process into clear steps and using practical examples, the intricacies become more manageable. Understanding the fee structure and following a systematic approach is key to navigating this crucial aspect of corporate compliance with confidence.
By mastering these calculations, companies can ensure they adhere to regulatory requirements and smoothly execute changes in their authorized share capital. And remember, expert assistance from reliable service providers can further simplify the process, ensuring compliance and peace of mind.
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FAQs (Frequently Asked Questions)
1. Are the fee structures the same for all states in India?
No, stamp duty rates may vary from state to state. It's essential to check the specific rates applicable to your state.
Can I pay these fees online through the MCA portal?
Yes, the Ministry of Corporate Affairs (MCA) provides online payment options for these fees, making the process convenient and efficient.
Is there a time limit for paying these fees after increasing the authorized share capital?
Yes, it's advisable to pay the fees promptly to complete the necessary documentation and comply with regulatory timelines. Delays may result in penalties or non-compliance issues.
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