Filing of Commencement of Business – Form INC-20A in India (2025 Guide)

The Most Important Filing Every Newly Incorporated Company Must Complete

By Prashant Kumar

Introduction: The Legal Activation of Your Company

Incorporation gives your business a legal identity, but it does not automatically permit you to start operations.
Under Section 10A of the Companies Act, 2013, every company having share capital must file Form INC-20A (Declaration of Commencement of Business) within 180 days of incorporation.

Until this form is approved by the Ministry of Corporate Affairs (MCA), the company remains “inactive” — unable to start business, borrow money, or file other e-forms.

“Think of Form INC-20A as the ignition key — without it, your company stays parked, no matter how perfect the incorporation was.” — Prashant Kumar

What is Form INC-20A and Why is it Mandatory?

Form INC-20A is a declaration filed within 180 days of incorporation confirming that shareholders have paid their share capital. It activates the company’s legal right to commence business under Section 10A of the Companies Act, 2013, and is mandatory for all companies with share capital.

This filing confirms that the company’s subscribers have deposited their agreed share capital, and the company is financially ready to begin operations. It helps MCA verify genuine incorporations and prevent shell entities from existing only on paper.

Legal Framework – Section 10A of the Companies Act, 2013

Section 10A clearly states:

“A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having share capital shall not commence any business or exercise any borrowing powers unless a declaration is filed by a director within 180 days of incorporation that every subscriber to the memorandum has paid the value of shares agreed to be taken.”

Failure to comply empowers the Registrar to initiate strike-off proceedings under Section 248(1)(d) — treating the company as inactive.

Documents Required for Filing Form INC-20A

To file the form on the MCA V3 portal, the following attachments are mandatory:

1. Bank Statement — showing receipt of share capital from all subscribers.
2. Declaration by a Director — digitally signed using DSC.
3. Verification of Registered Office — if not already filed in Form INC-22.
4. Board Resolution — authorising a director to file the declaration.

If a Company Secretary in practice verifies the filing, attach their certification. This adds regulatory credibility and reduces the risk of rejection.

Step-by-Step Filing Process

1. Hold the First Board Meeting – Authorise a director to digitally sign and submit Form INC-20A.
2. Prepare the Attachments – Ensure the bank statement shows the exact capital deposits.
3. File Form INC-20A – Log in to the MCA V3 portal → Select e-Forms → Upload INC-20A → Pay prescribed fees.
4. Receive MCA Acknowledgment – Once verified, MCA issues a digital certificate confirming commencement of business.

Timelines and Restrictions Before Filing

The Form must be filed within 180 days of incorporation.
Until approval:

• The company cannot commence business,
• cannot borrow or raise funds, and
• cannot file any other e-forms, except for Form ADT-1 (Auditor Appointment).

This effectively means your company’s MCA account stays locked until INC-20A is completed.

“INC-20A is not just a compliance filing; it’s the gatekeeper that unlocks your company’s ability to function.” — Prashant Kumar

Penalties for Non-Compliance

Once flagged as “inactive,” the company cannot file other forms or apply for loans until rectified.

Common Practical Issues and Insights

1️⃣ Delay in Bank Account Opening

If at least two directors are not in India, banks cannot complete KYC, delaying capital deposits.
See our detailed article: Opening of Bank Account & Capital Infusion After Company Incorporation in India (2025 Guide)

2️⃣ Incorrect Proof of Capital

Attach an actual bank statement — not a screenshot. The ROC verifies the credited amounts.

3️⃣ Partial or Mismatched Deposits

Ensure deposits exactly match the subscribed share capital. Even ₹1 deviation may invite MCA scrutiny.

4️⃣ Non-Filing Within 180 Days

Delays beyond 180 days require compounding or penalty payments. Inactive companies may face strike-off notices.

5️⃣ Filing Without Professional Review

Always have a Company Secretary in practice verify the filing. Their digital certification strengthens compliance defensibility and ensures alignment between incorporation data and bank records.

“Most Form INC-20A rejections happen not for lack of intent — but for lack of precision.” — Prashant Kumar

Best Practices for Smooth Filing

• Deposit capital immediately after incorporation.
• Maintain clear narration in transactions (e.g., ‘Share Application Money’).
• Keep all subscribers’ KYC and PAN copies ready.
• File through a verified professional account on MCA V3.
• Download and archive MCA approval acknowledgment securely.

Summary: From Incorporation to Activation

Filing Form INC-20A marks the transition from “Incorporated” to “Active.”
Without it, your company exists only on paper — unable to trade, hire, or raise funds.

In 2025, MCA’s V3 system automatically detects inconsistencies between incorporation, share capital, and financial filings.
A single missed step can trigger “inactive” status or strike-off proceedings under Section 248.

“Compliance isn’t bureaucracy — it’s proof your company truly exists. File INC-20A on time; it’s your business’s first act of responsibility.” — Prashant Kumar

For More Clarity, See Our Related Articles

• Post-Incorporation Compliance Checklist for Indian Companies (2025 Guide)
  Covers all post-registration filings from bank account opening to annual returns.
• Opening of Bank Account & Capital Infusion After Company Incorporation in India
  Step-by-step process and documentation to ensure smooth INC-20A filing.
• Appointment of First Auditor – Form ADT-1 Explained
  Understand how to appoint your first statutory auditor within 30 days of incorporation.

Together, these articles form the Post-Incorporation Compliance Series by Pratham Legal — your structured roadmap from incorporation to operational compliance.

About the Author

Prashant Kumar is a Company Secretary, Published Author, and Partner at Pratham Legal, a full-service Indian law firm advising on corporate, regulatory, and transactional matters.

He has led compliance and governance functions for Woodland, IndoBevs, and Deesan Group, and advised GMR Group, Medanta Hospitals, Ahuja Group, Mantri Group, Isprava, and The Ashoka Hotels.

Prashant helps businesses build credible, compliant, and sustainable governance systems, aligning legal discipline with business growth.
📧 prashant@prathamlegal.com | 📞 +91 98210 08011