Shifting Registered Office from Delhi to Gurgaon (ROC Delhi → ROC Haryana)

 By CA Surekha S Ahuja

Shifting a company’s registered office from Delhi to Gurgaon involves a change in Registrar of Companies (ROC) jurisdiction, governed by Section 12(5) of the Companies Act, 2013 read with Rule 28 of the Companies (Incorporation) Rules, 2014.

This guide assumes a pure registered office relocation, where:

• Business operations are already or continue to be carried out from Gurgaon, and

• Only statutory records and legal domicile move.

Accordingly, employee retrenchment affidavits are not required.

Indicative timeline: 60–90 days
Indicative cost: ₹25,000–50,000 (government & incidental costs; professional fees extra)

Legal Framework & Interpretation

Section 12(5) – Companies Act, 2013

Mandates prior approval of the Regional Director (RD) where the registered office is shifted outside the existing State/Union Territory or ROC jurisdiction.

Rule 28 – Companies (Incorporation) Rules, 2014

Prescribes:

• Filing of Form INC-23

• Service of notices on ROCs and State authorities

• Newspaper advertisement (INC-26)

• RD hearing and approval

Important Clarification

• Delhi (UT) and Haryana are distinct jurisdictions → RD approval is mandatory.

• State name in MOA does not change, but Clause II (Registered Office Clause) must be altered through a special resolution.

Step-by-Step Professional Roadmap

Step 1: Board Meeting (Day 1–3)

Purpose

• Approve proposal for shifting registered office

• Fix date of Extraordinary General Meeting (EGM)

• Authorise directors/CS for filings

Documents

• Certified Board Resolution

• Draft EGM Notice and Explanatory Statement (reason for shift + new address)

Cost

• ₹500–1,000 (notary / DSC incidental)

Step 2: EGM & MGT-14 Filing (Day 22–30)

Purpose

• Pass Special Resolution, expressly stating “subject to approval of RD”

• File Form MGT-14 within 30 days

Documents

• Certified Special Resolution

• EGM Minutes

• Note: MOA is not filed at this stage (only Clause II is proposed to be altered)

Cost

• MGT-14 filing fee: ₹600 (share capital < ₹1 crore)

• Drafting / preparation: ₹2,000–5,000

Step 3: Proofs & Affidavits (Day 31–45)

Purpose

• Establish bona fide registered office in Gurgaon

• Confirm creditor protection and absence of default

Documents

• Owner’s NOC

• Lease/Rent Agreement (minimum 1 year)

• Utility Bill (not older than 2 months)

• Ownership deed (if applicable)

• Creditor & Debenture Holder List (not older than 30 days)

• Affidavit from Directors/CS (₹100 stamp):

  • No defaults

  • Creditors’ interests not prejudiced

• Company affidavit verifying application

Cost

• ₹600–1,000 (stamp papers & notarisation)

Step 4: Filing of INC-23 with RD-North (Day 46–60)

Purpose

• Seek formal approval for inter-jurisdictional shift

Key Compliance

• File INC-23 within 60 days of special resolution

• Serve copies to:

  • ROC Delhi

  • ROC Haryana

  • Chief Secretary, Government of Haryana (at least 14 days prior)

Attachments (15+ mandatory)

• Board & Special Resolutions

• MGT-14 challan

• MOA/AOA (relevant extracts)

• Premises proofs & NOC

• Creditor list & affidavits

• Company affidavit

• Optional: SR-1 / No-litigation declaration

Cost

• INC-23 filing fee: ₹5,000

• Stamp duty: ₹500–1,000

• Professional handling: ₹10,000–20,000

Step 5: INC-26 Public Notices (Day 61–75)

Purpose

• Provide opportunity for objections, if any

Requirement

• One English + one vernacular newspaper:

  • English: Times of India

  • Vernacular: Dainik Bhaskar

• Editions covering Delhi/Gurgaon

• Publication at least 14 days before RD hearing

• RPAD notices to all creditors

Documents

• Two newspaper clippings

• RPAD dispatch proofs & affidavit

Cost

• ₹5,500–11,000

Step 6: RD Hearing & Order (Day 76 onwards)

Process

• Hearing before Regional Director, Northern Region (Delhi)

• Physical or virtual appearance

• If no objections, order typically issued within 15–60 days

Cost

• ₹2,000–5,000 (travel / incidental)

Step 7: Post-Approval Filings (Approval + 1 to 30 Days)

Mandatory Filings

• INC-28: RD order with ROC Delhi & ROC Haryana

• INC-22: New registered office address with ROC Haryana

Documents

• Certified RD order

• Gurgaon address proofs

Cost

• ₹400–1,200 (government fees)

Step 8: Statutory & Regulatory Updates

To be completed within 30 days:

• Income Tax (PAN data / Form 49A, if required)

• GST registration amendment

• Bank KYC & statutory records

• Reflect new address in AOC-4 & MGT-7

• Verify MCA master data post-approval

Cost

• ₹500–2,000 (administrative)

Cost & Timeline Summary

Step	Day Range	Cost (₹)	Cumulative (₹)
Board Meeting	1–3	500–1,000	500–1,000
EGM & MGT-14	22–30	2,600–5,600	3,100–6,600
Proofs & Affidavits	31–45	600–1,000	3,700–7,600
INC-23	46–60	15,500–26,000	19,200–33,600
INC-26 Notices	61–75	5,500–11,000	24,700–44,600
RD Hearing	76+	2,000–5,000	26,700–49,600
Post-Filings	+1–30	400–1,200	27,100–50,800
Final Updates	+1–30	500–2,000	27,600–52,800

Practical Insights & Risk Notes

Key Cost Drivers

• Professional handling of INC-23

• Newspaper advertisements

Common Risks

• Incomplete or outdated creditor lists

• Defective affidavits

• Missed service on State authorities

Strategic Advantages

• No disruption of operations

• No employee retrenchment documentation

• Limited MOA alteration (Clause II only)

Conclusion

A Delhi-to-Gurgaon registered office shift, when executed with proper sequencing and documentation, is a procedural—not disruptive—exercise. With disciplined compliance under Section 12(5) and Rule 28, companies can complete the transition smoothly within 60–90 days, maintaining business continuity and regulatory certainty.

Binny Bansal ITAT Ruling: Exit Date Now Determines Lifetime NRI Residency

By CA Surekha S Ahuja

Sec.6(1)(c) Interpretation, Strategic Implications for NRIs, Founders, and ESOP Holders

Introduction

The ITAT Bengaluru ruling in Binny Bansal vs DCIT (IT(IT)A No.571/Bang/2023, decided 9 January 2026) has fundamentally reshaped NRI tax planning in India.

Key outcome: The date of departure for employment abroad now dictates permanent residency status for all subsequent years, irrespective of the number of days spent abroad in future.

This is a decided case, not hypothetical, and is critical for:

• Salaried employees working overseas

• Founders and start-up executives

• ESOP beneficiaries

Statutory Framework

Section 6(1) – Resident Determination

A person is a resident if any of the following conditions apply:

1. 6(1)(a): Stayed in India ≥182 days in the FY; or

2. 6(1)(c): Stayed ≥60 days in the FY and ≥365 days cumulatively in the preceding 4 years.

Explanation 1(b) – Employment Abroad Relief

For an Indian citizen “being outside India, coming on a visit”, Section 6(1)(c)’s 60-day threshold is replaced by 182 days, allowing longer visits without triggering residency.

Conventional understanding: NRIs could visit India up to 181 days/year without losing NRI status.

Facts of the Case

• Exit year (FY 2019-20 in Bansal’s case): Binny Bansal spent >182 days in India before moving to Singapore → Resident under 6(1)(a).

• Subsequent years: Returned for 60–181 days → Did not qualify for Explanation 1(b) substitution.

• DTAA Relief (India–Singapore): Denied, as domestic law governs residency first.

ITAT Holding: Explanation 1(b) applies only to those who were non-resident at the start of the year.

Result: Post-October 1 departures face a permanent 60-day residency trap, applicable indefinitely.

Key Legal Interpretation

1. Exit-Year Residency is Decisive

   • Leaving on or after 2 October with ≥182 days in India → Resident for that FY.

   • Pre-October exits can qualify as non-resident immediately.

2. Explanation 1(b) Cannot Apply Post-October

   • Post-October exits lose the 182-day substitution permanently.

3. Section 6(1)(c) Governs Future Visits

   • Any visit ≥60 days in a year triggers resident status.

   • 365-day rolling rule ensures repeated taxation across years.

4. DTAA Relief is Secondary

   • Domestic law determines residency first; DTAA tie-breakers cannot override.

5. RNOR Status Offers Limited Relief

   • Post-exit RNOR (2–3 years) may reduce Indian taxation on foreign salary, but does not revive Explanation 1(b) for future visits.

Illustrative Examples – Salaried Employees vs Founders/ESOP Holders

Profile	Exit Date	Days in India (Exit FY)	FY Exit Status	Subsequent Visit (days)	Status	Tax Impact
Salaried Employee	25 Sept 2025	180	Non-Resident	90	Non-Resident	Foreign salary exempt; India salary taxed normally
Salaried Employee	7 Oct 2025	200	Resident	90	Resident	Foreign salary fully taxable; India salary taxed; cap visits <60 days/year
Founder / ESOP	25 Sept 2025	180	Non-Resident	120	Non-Resident	ESOP exercises exempt; foreign income exempt
Founder / ESOP	7 Oct 2025	200	Resident	120	Resident	ESOP vesting & foreign salary fully taxable; must cap India stays <60 days/year

Observation: Even a single post-October 1 exit can permanently subject global income, ESOP gains, and salary to Indian taxation.

Practical Advisory – Managing Exit & Visits

1. Exit Timing is Critical

   • Leave before 2 October → secure Non-Resident status; future visits up to 181 days allowed.

   • Leave on/after 2 October → permanent 60-day visit cap; future global income exposed.

2. Track Cumulative Days

   • Post-October exits must maintain ≤59 days/year in India.

   • Monitor 4-year rolling total to avoid Section 6(1)(c) trigger.

3. Salary and ESOP Planning

   • Post-October exits: ESOP exercises & vesting, foreign salary, and other global income are fully taxable.

   • Pre-October exits: ESOPs & foreign salary generally remain exempt.

4. DTAA & RNOR Strategy

   • DTAA cannot override domestic residency rules.

   • RNOR status can reduce taxation but does not restore 182-day substitution.

5. High Court Appeal Considerations

   • Restrictive interpretation of “being outside India” could be challenged.

   • Permanent forfeiture of Explanation 1(b) may be argued as overreach.

Assessment Year Exposure

Exit Type	Exit FY Status	Subsequent FY Risk	Future Years
Pre-October Exit	Non-Resident	Low	Visits up to 181 days/year; NRI benefits continue
Post-October Exit	Resident	High	Any visit ≥60 days triggers Resident; global income taxed indefinitely

Bottom line: FY of departure sets the stage for all future assessment years, making timing more important than total days.

Conclusion – Exit Date Rules the Game

The Binny Bansal ruling is a structural shift in NRI tax planning:

• Pre-October exits: Safe NRI path; 182-day visit flexibility; ESOP/salary benefits preserved.

• Post-October exits: Lifetime 60-day cap; global income fully taxable; ESOPs & foreign salary exposed.

Actionable:

• Plan exit date carefully.

• Monitor future visits & rolling presence.

• Structure salary, ESOP, and foreign income to mitigate permanent Indian tax liability.

Ignoring this ruling could permanently subject your worldwide income to Indian taxation—even with minimal visits.

 

 

5 Major GST Changes Live from January 1, 2026 + Complete January Compliance Calendar with MCA Extension

 By CA Surekha S Ahuja

January 2026 marks a decisive shift in India’s compliance ecosystem. Multiple GST enforcement measures have gone live simultaneously, portal-level controls have replaced discretionary flexibility, and the Ministry of Corporate Affairs has granted what is widely viewed as a final extension for annual filings.

This is no longer a routine compliance cycle. It is a system-driven enforcement phase where mismatches, delays, or assumptions result in instant financial and operational consequences.

This professionally curated guide is designed for Chartered Accountants, CFOs, founders, and compliance leaders, covering:

• The 5 most critical GST changes effective from 1 January 2026

• A complete and consolidated January 2026 compliance calendar

• The practical impact of the MCA extension and last-mile action points

Five Major GST Changes Effective from 1 January 2026

These are not draft proposals or future amendments. Each change discussed below is live on the GST portal and operationally enforced.

GSTR-3B Auto-Blocking under Rule 88C – The Single Biggest Risk

What has fundamentally changed

The GST system now performs real-time cross-validation between:

• Output tax liability reported in GSTR-1, and

• Tax actually discharged through GSTR-3B

Where the variance exceeds system thresholds, the portal automatically issues Form DRC-01B.

Failure to respond or pay results in the automatic invocation of Rule 59(6), leading to:

• Blocking of subsequent GSTR-1 filings

• Inability to file GSTR-3B

• Disruption of outward supply reporting and ITC flow

Why this change is transformational

• Blocking is system-driven, not officer-driven

• Post-filing explanations have minimal utility

• Cash flow, compliance rating, and buyer confidence are immediately impacted

Immediate professional action

Before filing GSTR-1 due on 11 January:

• Reconcile sales registers with GST liability line by line

• Validate amendments, credit notes, debit notes, and advances

• Ensure absolute parity between books and portal data

This is no longer a compliance formality — it is a risk-control exercise.

Automatic Late Fee Computation for GSTR-9 and GSTR-9C

What has changed

For annual returns not filed by 31 December 2025, the GST portal now:

• Automatically computes late fees (₹200 per day or turnover-based caps)

• Prevents filing unless the late fee is paid upfront

The earlier strategy of filing first and contesting penalties later is no longer available.

Mandatory Biometric Aadhaar Authentication for High-Risk GST Registrations

What has changed

For registrations flagged as high-risk:

• Physical biometric authentication is compulsory

• Verification must be completed at designated GST Suvidha Kendras

• OTP-based Aadhaar authentication is not permitted as an alternative

Business and advisory impact

• New GST registrations may face 15–30 day delays

• Startup and fund-raise timelines require recalibration

• Vendor onboarding and invoicing schedules are affected

Advisory note

GST registration timelines must now be factored into commercial contracts, go-live dates, and investor commitments.

Sin Goods Rate Changes – Notification No. 19/2025

What is changing

For specified goods such as tobacco, pan masala, and allied products:

• Rate revisions have been notified

• HSN-level scrutiny has intensified

• System validations will tighten ahead of February 2026 implementation

Immediate actions required

• Update HSN masters and ERP mappings

• Re-evaluate pricing and margin structures

• Prepare for heightened departmental audits

Shift to Purely System-Led GST Enforcement

The most understated yet profound change

GST administration has now decisively moved to:

• Auto-intimations

• Auto-penalties

• Auto-blocking of returns

Officer discretion has largely been replaced by portal logic and data analytics.

Compliance errors now trigger consequences instantly, predictably, and without negotiation.

January 2026 – Master Compliance Calendar

Due Date	Form / Compliance	Applicability
11 Jan	GSTR-1	Monthly filers (Turnover > ₹5 Cr)
13 Jan	GSTR-1 (IFF)	QRMP Scheme (Optional)
15 Jan	Form 27EQ	TCS Return – Q3 (Oct–Dec 2025)
15 Jan	PF / ESI	December 2025 Payments
18 Jan	CMP-08	Composition Dealers – Q4
20 Jan	GSTR-3B	Monthly filers
22 / 24 Jan	GSTR-3B	Quarterly filers (Staggered)
30 Jan	Forms 26QB / 26QC	Property / Rent TDS
31 Jan	TDS Returns	Q3 – Forms 26Q / 24Q
31 Jan	AOC-4 & MGT-7 / 7A	FY 2024–25 (MCA Extension)

MCA Extension – Final Opportunity till 31 January 2026

What has been extended

• AOC-4 – Filing of financial statements

• MGT-7 / MGT-7A – Annual return

Extension status

• Second extension formally notified

• No additional fees till 31 January 2026

• V3 portal functionality has stabilised

Recommended action

• Clear all pending ROC filings well before the deadline

• Avoid last-day congestion and technical failures

TCS Return – Form 27EQ (Due 15 January 2026)

Applicable under Section 206C(1H) for the quarter ended December 2025.

Why this quarter demands precision

• Festive season turnover spikes

• Threshold breaches under 206C(1H)

• Direct impact on buyers’ Form 26AS and ITC reconciliation

Professional checklist

• Reconcile collections with ledger data

• Validate buyer PAN details

• Prevent downstream ITC disputes and notices

Pre-Budget 2026 Perspective (1 February 2026)

The upcoming Union Budget is expected to emphasise:

• Tax certainty and litigation reduction

• Green energy and ESG-linked incentives

• Initial frameworks for AI and digital economy taxation

Early compliance discipline ensures smoother absorption of budget-driven changes.

Three Immediate Actions Before the Next Working Week

1. File GSTR-1 by 11 January to avoid Rule 88C auto-blocking

2. Check the GST portal for DRC-01B intimations without delay

3. Complete all ROC annual filings by 31 January

Residential Status, TRC Eligibility and DTAA Direction

 A Unified Statutory Decision Framework under the Income-tax Act, 1961

By CA Surekha S Ahuja

Questions around residential status, ₹15 lakh triggers, deemed residency, and Tax Residency Certificate (TRC) often arise because these provisions are read in isolation.
The Act, however, operates as a sequenced legal mechanism.

Residency determines TRC eligibility.
Direction of DTAA relief determines TRC relevance.

This framework integrates Section 6, Section 90 / 90A, Rule 21AB, and judicially accepted principles into a single decision path.

Residential Status — The Only Legal Starting Point

Residential status must be determined exclusively under Section 6, without reference to DTAA, tax rates, or TDS.

Compact Residency Decision Matrix

Trigger Condition	Statutory Result
Physical stay in India 182 days or more	Resident
Indian citizen / PIO visiting India for 120–181 days and Indian income > ₹15 lakh	Resident
Indian citizen with Indian income > ₹15 lakh and not liable to tax in any other country	Deemed Resident u/s 6(1A)
Indian income > ₹15 lakh without satisfying 182 / 120 days or deemed residency	Non-Resident

Key Legal Clarification
The ₹15 lakh threshold does not independently confer residency.
It only activates the 120-day rule or deemed residency.
Absent these statutory gateways, residential status does not change, regardless of tax paid or income quantum.

Consequence of Residency — TRC Eligibility

TRC is governed by Rule 21AB and is not discretionary.

Residential Status	Indian TRC Eligibility
Resident	Eligible
Deemed Resident	Eligible
Non-Resident	Not eligible

An Indian TRC merely certifies fiscal residence in India for a specified period.
It does not adjudicate taxability, PE, source rules, or DTAA articles.

DTAA Relief — Direction Matters More Than Residency

After residency is determined, the direction in which treaty relief is claimed becomes decisive.

DTAA Direction & TRC Relevance Flow

DTAA relief claimed outside India

• Claimant must be resident / deemed resident of India

• Application through Form 10FA

• Issuance of Indian TRC (Form 10FB)

• TRC used only in the foreign jurisdiction

DTAA relief claimed in India

• Claimant must be a non-resident

• Indian TRC is neither relevant nor permissible

• Foreign TRC (and Form 10F, where applicable) is mandatory

Indian TRC cannot be issued merely because:

• income arises in India,

• tax is deducted in India, or

• DTAA benefit is sought within India.

Deemed Residency — Its Limited but Critical Role

Section 6(1A) creates residency only to prevent stateless taxation.

A deemed resident:

• is treated as resident for TRC and DTAA outward claims,

• is not automatically RNOR or ROR — that classification follows separately,

• cannot use Indian TRC to claim treaty relief inside India.

Deemed residency expands India’s right to tax, but does not rewrite treaty mechanics.

Final Integrated Legal Position

The law follows a strict statutory order:

Residency under Section 6 → TRC eligibility → Direction of DTAA relief

Any analysis that:

• begins with DTAA,

• relies solely on ₹15 lakh income,

• or treats TRC as evidence of taxability,

is legally unsound.

The correct compliance lens is always:

1. Am I resident under Section 6?

2. Where is treaty relief being claimed — inside or outside India?

Once these two questions are answered, TRC relevance resolves itself automatically.

LLP Agreement, Stamp Duty & Bank Onboarding

Making Your LLP Operationally and Legally Ready

By CA Surekha S. Ahuja

Introduction: Formation Is Only the First Step

In Part I, we explored why MCA approval does not mean your LLP is fully functional.
Structure, sequencing, DIN planning, and FEMA compliance lay the foundation.

Part II is about making the LLP legally and operationally ready — ensuring the entity you’ve incorporated can actually operate, onboard a bank, accept capital (including NRI funds), and avoid compliance pitfalls.

Drafting the LLP Agreement: The Heart of Your LLP

The LLP Agreement is more than a formality; it governs relationships, profit-sharing, and compliance responsibilities. For LLPs with three or more partners — particularly where an NRI is involved — clarity is essential.

Key aspects to cover:

• Decision-making: Define whether decisions require a simple majority, 2/3 majority, or unanimity.

• Profit-sharing: Clearly specify percentages (equal, capital-based, or hybrid).

• Designated Partners: Identify who is responsible for regulatory compliance.

• Admission and Exit: Specify the process for adding or removing partners.

• Capital Contribution & FEMA Compliance: Especially important for NRIs to avoid regulatory exposure.

• Dispute Resolution: Include arbitration, mediation, or court provisions.

Skipping any of these leaves the LLP vulnerable to disputes, audit queries, or bank delays.

Stamp Duty Compliance: Delhi Example

Stamp duty ensures that the LLP Agreement is legally enforceable. While it is a small step, incorrect handling can invalidate the agreement for banks or regulatory authorities.

Delhi Stamp Duty (for three partners):

• Rate: 1% of total capital contribution

• Maximum cap: ₹5,000

• Payment: Via SHCIL e-Stamping or nearest center

Example Calculation:

• Partner A: ₹50,000

• Partner B: ₹50,000

• Partner C: ₹50,000

• Total capital: ₹1,50,000 → 1% stamp duty = ₹1,500

Execution steps:

1. Use Article Code 46 (LLP Agreement)

2. List LLP as first party, “Partner A & Others” as second party

3. Print first page of agreement on e-stamp paper

4. Signatures: All partners + two witnesses

5. Notarization: Recommended for Delhi

Other cities for context:

• Mumbai: 1% of capital (max ₹15,000)

• Bangalore: Slab-based, ~₹2,000 for >₹1 lakh

• Chennai: Flat ₹300

Timing matters — execute stamped LLP Agreement before bank submission.

Bank Onboarding: Ensuring Smooth Acceptance

Banks often reject LLP accounts because critical compliance steps are missing. For a smooth process:

• LLP Agreement executed and stamped

• Certificate of Incorporation, PAN, TAN, DINs of designated partners

• Proof of registered office (utility bill + NOC)

• Capital deposited via proper banking channels

• NRI partners: Confirm FEMA compliance

A missing document, even if minor, can stall opening of current accounts or international remittances.

Post-Formation Filings

After execution, the LLP must ensure:

• Form 3: Filing of LLP Agreement

• Form 4: Appointment of partner(s) added post-incorporation

• Form LLP(I) & LLP(II): Required when NRI capital is introduced

Timely compliance avoids penalties, notices, or audit challenges.

Indicative Cost Framework (Delhi, Three Partners, Total Capital ₹1.5L)

Item	Estimated Cost	Notes
DSC (3 Partners)	₹4,500 – ₹6,000	Market rate
Name Reservation	₹200	MCA fee
Form FiLLiP	₹500	MCA fee
Stamp Duty	₹1,500	1% of ₹1.5L, Delhi
Form 3 Filing	₹50	MCA fee
Form 4 Filing	₹50	If 3rd partner added later
Professional Fees	₹5,000 – ₹15,000	CA/CS fees
Total Estimate	₹12,000 – ₹23,000	Inclusive of basic professional support; costs may vary by state, capital, or professional

This is an indicative estimate. Professional fees and stamp duty may vary depending on location, capital, and service provider.

From Legal Existence to Operational Reality

Formation creates the LLP on paper.
True operational readiness comes only when:

• LLP Agreement is drafted, stamped, and executed

• Banks accept the entity for account opening and transactions

• Post-formation filings are completed

• FEMA compliance (if any NRI capital) is ensured

Skipping these steps leaves the LLP existing only in records, not in practice.

A compliant LLP from day one saves years of regulatory challenges, bank delays, and partner disputes.

LLP Formation with Multiple Partners and NRI Participation

Why Structure, Sequencing and Regulatory Discipline Matter More Than Speed

By CA Surekha S. Ahuja

Introduction: Why Most LLPs Become Problematic Before They Even Start

The Limited Liability Partnership has earned a reputation for being the “simplest” business structure in India. That reputation is misleading.

On the MCA V3 portal, LLP incorporation can be completed in a few clicks. In practice, however, most LLPs that face banking rejections, FEMA violations, partner disputes, or audit exposure were structurally compromised at the formation stage itself.

This article is written for promoters and professionals who want their LLP to survive not only MCA scrutiny, but also bank due diligence, FEMA reporting, and long-term operational reality — particularly where there are three or more partners or a non-resident partner involved.

LLP Formation Is Not a Filing Event — It Is a Legal Architecture

An LLP is not governed by a single law or regulator. Even before the business begins operations, it sits at the intersection of multiple legal regimes — the LLP Act, income-tax law, FEMA (where applicable), and state stamp legislation.

The most common mistake promoters make is assuming that MCA approval is the end of formation. It is not. MCA approval merely creates the LLP as a legal entity. It does not make the LLP compliant, operable, or bank-ready.

Every shortcut taken at this stage resurfaces later — usually when it is costlier and harder to fix.

The Thresholds That Quietly Change Compliance Obligations

Certain thresholds under the LLP framework operate silently but decisively.

Once the capital contribution crosses ₹25 lakh, or turnover exceeds ₹40 lakh, audit becomes mandatory. There is no discretion involved. Similarly, the introduction of even a single rupee of non-resident capital immediately pulls the LLP into the FEMA framework, irrespective of turnover or scale.

Equally important is the often-ignored trigger of any change in profit-sharing or partner composition, which compulsorily requires amendment of the LLP Agreement and filing with the MCA. Many LLPs continue operating for years without updating these changes, creating documentary contradictions that surface during audits or disputes.

The Three-Partner LLP Problem: Understanding the DIN Constraint

One of the least understood aspects of LLP formation under MCA V3 is the limitation built into Form FiLLiP.

The system allows DIN allotment for only two Designated Partners at the time of incorporation. This means that where three individuals — all new to the MCA ecosystem — intend to form an LLP together, it is not legally or technically possible to obtain three DINs in a single incorporation filing.

This is not a drafting issue. It is a system constraint.

In practice, this leads to two workable structures. The first, and most common, is to incorporate the LLP with two partners and induct the third partner immediately after incorporation. The second is where one of the proposed partners already holds a valid DIN from a prior company or LLP, allowing all three to be reflected at incorporation.

Attempts to bypass this through standalone DIN applications for a “proposed LLP” are theoretically discussed but practically discouraged by the portal. Experienced practitioners avoid this route.

How LLP Formation Actually Unfolds Under MCA V3

From a procedural standpoint, LLP formation still follows three broad steps — digital signatures, name reservation, and incorporation.

Digital signatures are mandatory for all Designated Partners, including NRIs. The system permits overseas applicants using passport-based identification and foreign address proofs, provided documentation is consistent.

Name reservation through RUN-LLP is straightforward, but promoters should remember that approval of name does not validate the structure, capital, or partner arrangement.

Form FiLLiP is where the LLP legally comes into existence. It captures registered office details, partner particulars, DIN allotment (limited to two), and an indicative capital structure. Once approved, the Certificate of Incorporation, PAN, TAN, and DINs are generated.

At this point, the LLP exists in law — but it is still incomplete in substance.

NRI as Partner: FEMA Compliance Starts Earlier Than Most Assume

Where an NRI is a partner, the LLP is permitted only under the automatic route and only in sectors without FDI-linked performance conditions. These are not post-facto checks; they must be evaluated before incorporation.

Capital contribution by an NRI must come strictly through permitted banking channels — either via inward remittance or through NRE/FCNR accounts. Routing funds through resident accounts, adjusting capital through journal entries, or introducing cash immediately renders the structure FEMA non-compliant.

What is often missed is the timing. FEMA reporting obligations arise the moment the LLP accepts non-resident capital, not when the bank raises a query or the auditor flags it. Forms LLP(I) and LLP(II) are statutory requirements, not procedural conveniences.

What Incorporation Achieves — and What It Does Not

Incorporation achieves legal recognition. It does not achieve operational legitimacy.

At the end of the FiLLiP process, the LLP still lacks:

• a legally executed LLP Agreement,

• stamp duty compliance,

• FEMA closure (where applicable),

• and bank onboarding readiness.

Treating these as “post-formation formalities” is the single biggest reason LLPs struggle later.

Closing Note

An LLP that is hurried into existence often spends years correcting foundational errors.
An LLP that is structured deliberately rarely needs correction at all.

This first part has focused on structure, thresholds, DIN constraints, and FEMA discipline at the formation stage.

The second part will address what truly completes the LLP — the LLP Agreement, stamp duty sequencing, bank onboarding, and post-formation compliance discipline.

The 2026 Fortress: Why Indian Family Businesses Must Rethink “Safety” in a Fractured World

By CA Surekha S Ahuja 

Introduction: When “Global” Stops Being Safe

The era of frictionless globalization has quietly—but decisively—ended.

As we enter 2026, global growth projections hover around a modest 3.1%, yet this number conceals a far more complex truth: capital, supply chains, currencies, and even sovereign stability are now being reshaped not by economic cycles alone, but by geopolitical fracture, militarized trade, and asymmetric risk.

For Indian family businesses, this marks a structural inflection point.

Boardroom discussions can no longer remain confined to EBITDA, valuation multiples, or expansion geography. Today, geopolitics has become a balance-sheet variable. Missile ranges in the Middle East, sanctions regimes in Eurasia, and tariff walls in the Atlantic now directly influence input costs, forex exposure, capital allocation, and—most critically—legacy preservation.

The “war economy” is no longer a distant macro headline. It is a silent partner in every serious business decision.

Geopolitical Reality of 2026: Three Fronts, One Balance Sheet

To understand why Indian family businesses must now think in terms of fortresses rather than footprints, we must recognize the three risk vectors shaping 2026.

The Energy Trigger: Oil as a Geopolitical Weapon

Escalating tensions in the Middle East—particularly around Iran and the Strait of Hormuz—have reintroduced oil as a geopolitical choke point. A credible spike toward USD 100 per barrel is no longer alarmist; it is mathematically plausible.

For Indian businesses, this is not merely a fuel cost issue. It is:

• A logistics inflation shock

• A raw-material cost escalator

• A margin compression event

• A downstream consumer demand disruptor

Energy volatility now transmits instantly across manufacturing, transportation, FMCG, and export pricing. In such an environment, cost predictability itself becomes a strategic advantage.

The Eurasian Deadlock: Volatility Without Resolution

The Russia-Ukraine conflict has transitioned into a prolonged war of attrition, increasingly targeting critical infrastructure and commodity corridors.

Its consequences for Indian family enterprises are indirect yet severe:

• Persistent volatility in fertilizers, metals, and energy derivatives

• Pricing instability in construction, infrastructure, and agri-business

• Disrupted long-term procurement contracts

The key risk here is not shortage—but unforecastable pricing, which erodes planning discipline and working-capital efficiency.

The South Asia Risk Premium: Capital Has a Memory

Closer home, renewed friction on India’s borders introduces a subtler but powerful variable: sovereign risk perception.

Foreign institutional capital is hypersensitive to regional instability. Even limited escalation can trigger:

• Sudden capital outflows

• Rupee depreciation

• Equity market volatility

• Higher cost of external commercial borrowing

Family businesses must recognize that currency risk is no longer cyclical—it is geopolitical.

Strategic Shift I: The “Homecoming” of Capital

For over a decade, sophisticated family capital pursued global diversification—London real estate, US equities, offshore structures. That logic is now being reversed.

2026 marks the rise of strategic repatriation.

With Europe facing stagnation and proximity to conflict, and the US struggling with structurally sticky inflation (3–4%), India increasingly represents a relative safe haven—not because it is risk-free, but because its risks are domestic, democratic, and governable.

The Rise of “Reverse Flipping”

This is no longer limited to startups. Family offices are reassessing offshore allocations with a sharper lens:

• Why accept 1–2% real yields in fragile geographies

• When Indian private credit, infrastructure, and operating businesses offer double-digit risk-adjusted returns

• Backed by demographic growth and political continuity

The Repatriation Matrix: A Disciplined Approach

1. Vulnerable Real Estate Holdings
Low-yield properties in Eastern Europe or geopolitically sensitive regions now carry hidden costs—insurance premiums, exit illiquidity, and physical risk. In many cases, liquidation and repatriation under the automatic route is a capital preservation move, not a retreat.

2. Strategic Offshore Assets
Capital invested in strategic technology, intellectual property, or “India+1” manufacturing hubs (Vietnam, Mexico) should be retained. These assets function as trade-barrier hedges, not speculative bets.

3. Idle Dollar Liquidity
The US dollar remains a hedge against INR volatility. Operational liquidity may be maintained in safe jurisdictions (e.g., Singapore), but passive capital must be redeployed into India’s growth engines rather than lying fallow abroad.

Strategic Shift II: Regulatory Agility — The FEMA Opportunity

Regulation is often seen as constraint. In 2026, it is also an instrument of risk management.

Recognizing global volatility, the RBI introduced a crucial amendment in 2025 allowing exporters to retain foreign currency proceeds in IFSC (GIFT City) accounts for up to 90 days (earlier: 30 days).

Why This Matters

This is not a procedural tweak—it is a forex strategy tool.

Instead of mechanically converting every export dollar into INR, businesses can now:

• Match export inflows against import outflows

• Reduce conversion costs and timing risk

• Hedge naturally against short-term currency shocks

In a world where the rupee reacts instantly to geopolitical headlines, cash-flow-aligned forex management becomes a competitive edge.

Strategic Shift III: Supply Chain Sovereignty

In 2026, diversification no longer means buying global indices.
It means owning control over your supply chain.

If a business relies on a single critical input from a conflict-prone region, it is effectively shorting its own continuity.

The New Imperative: Shadow Supply Chains

Forward-thinking family enterprises are reallocating capital to:

• Build backup vendor ecosystems

• Invest in domestic MSMEs

• Establish alternate sourcing in Mexico, Vietnam, or India

This is not inefficiency. It is strategic redundancy.

Western buyers are increasingly mandating “friend-shoring”—requiring 50% or more value addition outside adversarial jurisdictions. Compliance with this is no longer optional; it is a market-access prerequisite.

The Family Behind the Business: Personal Wealth Fortification

A fortress business without a fortified family balance sheet is incomplete.

For business families, personal wealth strategy in 2026 must be conservative, liquid, and intentionally asymmetric.

Core Principles

Liquidity Supremacy
Maintain at least 12 months of lifestyle liquidity, independent of business working capital. In crises, cash disappears first where it is assumed to be “available”.

The Barbell Portfolio

• 10–15% in Gold as a hedge against conflict and currency debasement

• Defensive equities (pharma, FMCG) that preserve value in slowdowns

Interest-Rate Discipline
In a world of uneven rate movements, fixed-rate liabilities offer certainty. Floating-rate optimism is a dangerous gamble in an inflation-anchored war economy.

Conclusion: Safety Is No Longer Global — It Is Strategic

In 2026, the greatest risk facing Indian family businesses is not geopolitics.
It is inertia.

The world has structurally changed. Capital flows are reversing. Supply chains are being weaponized. Regulation is evolving into strategy. Safety is no longer found by being everywhere—but by being deliberate, liquid, and anchored.

The fortress of wealth today is built not on unchecked expansion, but on strategic consolidation, intelligent repatriation, and sovereign-aligned resilience.

Stay liquid. Stay hedged. Stay adaptive.

And for the first time in many years, when family businesses ask where safety truly lies—the answer, quite simply, may be:

Home.