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 2026-07-28 · ~3 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

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.