What is the minimum capital for a Private Limited company?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-08-18 · ~8 min read

⚡ Quick answer

There is no minimum paid-up capital requirement for a Private Limited company in India. The Companies (Amendment) Act 2015 removed the old ₹1 lakh rule, so you can legally incorporate with as little as ₹1 of paid-up capital. In practice, most founders set ₹1 lakh authorised capital and contribute a smaller paid-up amount (often ₹10,000–₹1,00,000) to keep stamp duty low while looking credible to banks and investors.

One of the biggest myths about starting a company in India is that you need a large sum of money sitting in the bank. You don't. The law abolished the minimum-capital rule years ago. This short guide clears up the confusion between 'authorised' and 'paid-up' capital, explains exactly how little you actually need, and gives practical advice on what amount to choose when you incorporate.

1The rule: no minimum capital

Before 2015, a Private Limited company needed at least ₹1 lakh of paid-up capital. The Companies (Amendment) Act 2015 scrapped that requirement entirely. Today you can incorporate a Private Limited with any amount — even ₹1.

This change was made specifically to make it easier for first-time founders and small businesses to formalise without locking up money.

2Authorised vs paid-up capital — know the difference

These two terms confuse almost everyone, but the distinction is simple:

Authorised capital: the maximum value of shares your company is allowed to issue. It's a ceiling, not money you must bring in.
Paid-up capital: the amount shareholders actually invest by buying shares. This is the real money that goes into the company.

⚠️ ImportantYou can set a low authorised capital (e.g. ₹1 lakh) and an even lower paid-up amount, then raise the authorised limit later when you bring in investors. Stamp duty at incorporation depends partly on the authorised capital and your state.

3What founders actually choose

While ₹1 is legal, in practice most early-stage companies set:

Authorised capital: ₹1 lakh (the common default; cheap on stamp duty)
Paid-up capital: ₹10,000 to ₹1,00,000, depending on how much working money you want inside the company from day one

💡 ExampleTwo founders incorporate a startup with ₹1 lakh authorised capital and ₹50,000 paid-up (₹25,000 each). That ₹50,000 goes into the company's bank account as its starting funds. When they later raise a seed round, they increase the authorised capital and issue new shares to the investor.

4Why some paid-up capital still helps

Even though ₹1 is allowed, having some real paid-up capital is practical:

You need funds in the company account to pay early expenses
Banks and investors take a company with genuine capital more seriously
It must be deposited before you file INC-20A (declaration of commencement of business), which is mandatory within 180 days

5What actually costs money when incorporating

Because there is no statutory minimum paid-up capital, the figure you choose is a commercial decision rather than a legal threshold. What matters in practice is that the authorised capital is high enough for the shares you intend to issue, and that the paid-up amount is genuinely brought into the company's bank account after incorporation.

The real costs sit elsewhere, and they are worth budgeting for before choosing a capital figure, because a needlessly high authorised capital raises the stamp duty payable at incorporation without giving the company anything in return.

Digital Signature Certificates for each proposed director, which are required to sign the incorporation forms.
Director Identification Numbers, allotted through the incorporation application itself for new directors.
Name reservation through the RUN or SPICe+ route on the MCA portal.
Stamp duty on the incorporation documents, which varies by state and rises with the authorised capital.
Professional fees for drafting the memorandum and articles of association.
Ongoing annual compliance — AOC-4 and MGT-7 filings, statutory audit and income-tax return — which continues whether or not the company trades.

💡 ExampleA two-director startup incorporates with ₹1 lakh authorised capital and ₹10,000 paid-up. That is entirely lawful, since no minimum applies. Choosing ₹10 lakh authorised capital instead, with no intention of issuing those shares, would only increase the stamp duty payable at incorporation.

⚠️ ImportantPaid-up capital must actually be deposited into the company bank account and reported. Declaring a paid-up figure that was never brought in creates a compliance problem later, particularly at the first statutory audit.

6Authorised, issued, subscribed and paid-up capital

Four different capital figures appear in company documents and they are routinely confused, which is what causes people to over-specify at incorporation and pay more stamp duty than necessary.

Authorised capital is the ceiling set by the memorandum of association — the maximum the company may ever issue without formally increasing it. It is not money the company holds; it is only a limit. Increasing it later requires a shareholder resolution and a filing with the Registrar, along with the associated fee, which is why some founders set it higher than needed at the start. That reasoning is usually mistaken, because stamp duty at incorporation scales with authorised capital in most states, so the founder pays now for headroom that may never be used.

Issued capital is the portion of the authorised capital the company has actually offered to shareholders. Subscribed capital is the portion of that which shareholders have agreed to take up. Paid-up capital is the amount they have actually paid in. For a small private company these last three are usually identical, but they diverge where shares are issued partly paid.

The practical consequence is that a company can be incorporated with, say, ₹1,00,000 authorised capital and ₹10,000 paid-up, and be entirely compliant. The paid-up amount must genuinely be deposited into the company's bank account after incorporation and will be examined at the first statutory audit. Declaring a paid-up figure that was never brought in creates a discrepancy between the filed documents and the books that is awkward to explain later.

Capital also affects perception rather than legality. Banks, landlords and some counterparties look at paid-up capital as a rough proxy for substance, and government tenders occasionally specify a minimum. Those are commercial reasons to choose a higher figure, not legal ones, and they should be weighed against the stamp duty and the obligation to actually fund the amount.

Authorised capital is a ceiling in the memorandum, not money held by the company.
Issued capital is what has been offered; subscribed is what shareholders agreed to take.
Paid-up capital is what was actually paid in, and it must reach the company bank account.
Stamp duty at incorporation rises with authorised capital in most states.
Increasing authorised capital later needs a shareholder resolution and a Registrar filing.

💡 ExampleTwo founders incorporate with ₹1,00,000 authorised capital, issue 1,000 shares of ₹10 each, subscribe to all of them and pay ₹10,000 in full. Authorised is ₹1,00,000, issued and subscribed are ₹10,000, and paid-up is ₹10,000. Nothing about this requires a minimum, because the Companies (Amendment) Act 2015 removed the earlier ₹1 lakh minimum paid-up requirement for private companies.

Key takeaways

There is no minimum paid-up capital for a Private Limited company — the ₹1 lakh rule was removed in 2015.
You can legally incorporate with as little as ₹1.
Authorised capital is the ceiling on shares; paid-up is the money actually invested.
Most founders use ₹1 lakh authorised and ₹10,000–₹1,00,000 paid-up.
Paid-up capital must be deposited before filing INC-20A within 180 days of incorporation.

Frequently asked questions

Can I start a company with no money?

Legally yes — there's no minimum capital. But you'll need some paid-up capital for a bank account and early expenses, and to file INC-20A. ₹10,000–₹1,00,000 is common for early-stage startups.

Does higher authorised capital cost more?

Yes — stamp duty and MCA fees at incorporation depend partly on the authorised capital and your state. Keeping authorised capital modest (e.g. ₹1 lakh) keeps incorporation cheaper; you can raise it later.

Is the minimum capital different for an OPC or LLP?

No minimum capital applies to an OPC or an LLP either. An LLP contributes capital as agreed in its LLP agreement, with no statutory minimum.

What is INC-20A?

It's the declaration of commencement of business that a company must file within 180 days of incorporation, confirming that shareholders have paid in their subscribed capital. The company can't start operations or borrow until it's filed.

Was there ever a minimum paid-up capital for a private limited company?

Yes. The Companies Act 2013 originally prescribed a minimum paid-up capital of ₹1 lakh for private companies, but that requirement was removed by the Companies (Amendment) Act 2015. There is now no statutory minimum, and a company can be incorporated with a nominal paid-up amount.

How much authorised capital should I actually choose?

Enough to cover the shares you realistically expect to issue in the near term, and no more. Stamp duty at incorporation rises with authorised capital in most states, so setting it far above your needs costs money immediately for headroom you may never use. Increasing it later is a routine shareholder resolution plus a filing with the Registrar.

Can I increase the paid-up capital after incorporation?

Yes. Issuing further shares to existing or new shareholders increases paid-up capital, subject to staying within the authorised limit and following the procedure for allotment, including filing the return of allotment with the Registrar. If the increase would exceed the authorised capital, that ceiling must be raised first by shareholder resolution.