Commencement of Business (INC 20A) Filing
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What is Commencement of Business Certificate and form INC 20A?
The recently rolled out and most examined among the corporate is Form INC-20A. Those Companies registered in India after the commencement of the Companies (Amendment) Ordinance, 2018, and having share capital is required to obtain the commencement of business certificate before commencing any business or exercising any borrowing powers. One can say that the Ministry has reintroduced the concept of Commencement of Business Certificate via Form INC-20A on MCA.
Form INC 20 A(Commencement of Business Certificate):
Form 20A is a declaration that needs to be filed by the directors of the company at the time of the commencement of the business. It should be verified by a Chartered Accountant (CA) or Company Secretary (CS) or a Cost Accountant in practice.
On the 2nd of November, 2018 the Companies (Amendment) Ordinance 2018 was introduced, hence any company incorporated after this date will be required to file Form INC-20A. within 180 days from the date of incorporation of the company.
Government Fees for Form INC 20 A (Commencement of Business Certificate)
| Nominal Share Capital | Applicable Fees in (Rs.) |
| Where share capital is less than 1,00,000 | 200 |
| 1,00,000 or above but not exceeding 4,99,999 | 300 |
| 5,00,000 or above but not exceeding 24,99,999 | 400 |
| 25,00,000 or above but not exceeding 99,99,999 | 500 |
| 1,00,00,000 or above | 600 |
Form INC 20 A late filing fees (Commencement of Business Certificate):
| Period of delay | late fees |
| Up to 30 days | 2 times of normal fees |
| More than 30 days and up to 60 days | 4 times of normal fees |
| More than 60 days and up to 90 days | 6 times of normal fees |
| More than 90 days and up to 180 days | 10 times of normal fees |
| More than 180 days | 12 times of normal fees |
Penalty for Form INC 20 A for Commencement of Business:
- The company will be liable to pay Rs. 50,000 penalty for not filing the Form INC 20A
- Every officer who is in default is liable to pay Rs. 1000/- per day of default up to a maximum of Rs. 1,00,000/-
- Registrar may initiate action for the removal of the name of Company / Strike off the company name
The consequences of non-filing of Form-INC-20A may create a hindrance for companies to start their business and also while borrowing money. The company would be liable to a penalty for late filing the Form INC-20A if it exceeds 180 days from the date of incorporation.
Benefits of filing Form 20A:
Fundraising: On filing the E-Form INC-20A within 180 days, the company will then be eligible to exercise the borrowing powers. Non-filing of which may stop the company from borrowing the money.
No penalties: If the company files the form INC-20A within 180 days, the company can be safeguarded from incurring heavy penalties i.e, Rs. 50,000/- for company and directors Rs.1000 per day of default up to a maximum of Rs.1 lakh.
Builds Credibility: All the pieces of information relating to the company are made available in a public database. This feature makes it easy to authenticate the existence of the business that ultimately helps in improving business credibility
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FAQs On E-Form INC-20A
Is it mandatory to file Form 20A?
Yes, it is mandatory to obtain a certificate of Commencement of Business by filing form 20A.
Who shall file ‘Form 20A’?
All the companies incorporated on or after 02/11/2018 and having a share capital to file form 20A.
Who shall not file ‘Form 20A’?
Companies incorporated before 02/11/2018 Companies incorporated on or after 02/11/2018 not having a share capital
What is the due date of filing?
The due date for the first time filing of ‘Form 20A’ is within 180 days from the Incorporation Date.
Which details required to be furnished in ‘Form 20A’?
A declaration that all the subscriber to the MOA has paid the total value of the shares agreed to be taken by him.
What are the attachments to the form 20A?
Subscribers proof of payment for the value of shares. We can attach the Bank Account statement of the Company having all credit entries for receipt of subscription money received from all subscribers to MOA.
What if the Bank Statement is not available?
Valid payment proof like NEFT / IMPS receipts.
What is the Penalty if not Filed the form?
The company is liable to pay Rs. 50,000 every officer who is in default liable to pay Rs. 1000/- per day of default up to a maximum of Rs. 1,00,000/-
What is the Consequence if the form is not Filed within time?
Registrar may initiate action for the removal of the name of Company Company cannot borrow money Company cannot start the business.
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