Doing Business in India 2009 and Other Subnational and Regional Doing Business Studies Can Be Downloaded at No Charge At

COMPARING REGULATION IN 17 CITIES AND 181 ECONOMIES

COMPARING REGULATION IN 17 CITIES AND 181 ECONOMIES A publication of the World Bank and the International Finance Corporation Bank and the International Finance World A publication of the ©2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected]

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Doing Business in India 2009 is the first taxes, trading across borders, enforcing About Doing Business and country-specific subnational report of contracts, and closing a business. These subnational Doing Business in India 1 the Doing Business series that measures indicators have been selected because they Overview 7 business regulations and their enforce- cover areas of local jurisdiction and prac- Starting a business 14 ment across India. It builds on ben- tice. Data in Doing Business in India 2009 Dealing with construction permits 19 chmarks previously published in the are current as of February 2009. regional Doing Business in South Asia The indicators are used to analyze Registering property 24 2005–7 series. Doing Business in India economic outcomes and identify what re- Paying taxes 28 2009 covers 10 out of the 12 previously forms have worked, where, and why. Other Trading across borders 31 measured cities, and documents their areas that significantly affect business— Enforcing contracts 35 progress. It adds 7 new locations, expan- such as a country’s proximity to mar- Closing a business 40 ding the study to 17 locations. kets, the quality of infrastructure services The Indian cities and states covered (other than services related to the trad- Data notes 42 in Doing Business in India 2009 were se- ing across borders indicator), the security lected together with the Indian Ministry of property from theft and looting, the City tables 51 of Commerce and Industry. They are: transparency of government procurement, Doing Business indicators 57 Ahmedabad (Gujarat), Bengaluru (Kar- macroeconomic conditions, or the un- List of procedures 63 nataka), Bhubaneshwar (Orissa), Chennai derlying strength of institutions—are not Starting a business (Tamil Nadu), Guwahati (Assam), Gurgaon directly studied by Doing Business. Dealing with construction permits (Haryana), Hyderabad (Andhra Pradesh), This report was requested by the Gov- Registering property Indore (Madhya Pradesh), Jaipur (Rajast- ernment of India. It was prepared by the Acknowledgments 134 han), Kochi (Kerala), Kolkata (West Bengal), World Bank Group with the support of Ludhiana (Punjab), Mumbai (Maharashtra), the Department of Industrial Policy and New Delhi (Delhi), Noida (Uttar Pradesh), Promotion of the Indian Ministry of Com- Patna (Bihar), and Ranchi (Jharkhand). merce and Industry. Comparisons with the rest of the world are based on the indicators in Doing Business 2009. The indicators inDoing Business in India 2009 are also comparable with the data in other subnational and regional Doing Business reports. Doing Business investigates the regulations that enhance business activity and those that constrain it. Doing Business in India 2009 presents quantitative indicators to mea sure the regulations affecting 7 stages in the life of a business: starting a business, dealing with construction permits, registering property, paying

1 About Doing was no one group of indicators available subnational studies in Mexico, in Brazil, internationally to monitor these micro- China, Colombia, India, Nigeria, Phil- Business and economic factors and analyze their im- ippines, Pakistan, the Russian Federa- portance. The first efforts to compile such tion, and others. Doing Business has also Doing Business a group of indicators date from the 1980s, begun a program on small islands that and were based primarily on opinion are independent states. in India surveys in academic or business circles. The Doing Business in India is an ex- These surveys are useful indicators of tension of the Doing Business project be- economic and political conditions, but yond Mumbai. By adopting the method- the fact that they are based on percep- ology of the Doing Business report, Doing tions, and that they provide only partial Business in India allows for comparisons information on poorer countries, limits of specific Indian cities’ performances their usefulness as an analytical tool. in terms of business regulations and en- The Doing Business project began forcement, and between these and 181 seven years ago, and aspires to go further economies around the world. National than these initial surveys. The project and international comparisons encour- In 1664, William Petty, advisor to King focuses on small- and mid-sized busi- age competition between cities and align Charles II of England, compiled the nesses in each economy, and analyzes the incentives of public servants toward first national accounts in history. These the regulations that govern each cycle of the reform and implementation of best consisted of only four entries. Expenses that economy’s existence. Doing Business national and international practices. were listed as “food, lodging, clothes, and the standard cost model, developed Doing Business in India 2009 is the and other necessaries,” calculated at 40 and applied initially by Netherlands, are first subnational report on this country million pounds. National revenues were today the only standardized tools that but a number of Indian cities have been divided into three sources: 8 million analyze the full range of jurisdictions to previously covered by regional Doing Busi- pounds from land, 7 million pounds quantify the impact of government legis- ness in South Asia 2005-7 series. In 2005 from other personal estates, and 25 mil- lation on business activity. and 2006, quantitative indicators were lion pounds from labor income. The firstDoing Business report, pub- compiled regarding regulations on busi- In subsequent centuries, estimates lished in 2003, covered five groups of ness activity and their enforcement in 9 on national income, spending, and the indicators in 133 economies. Doing Busi- Indian cities and states. The third report, inflow and outflow of capital became ness 2009 covers 10 groups of indicators Doing Business in South Asia 2007, ex- more abundant, although a system- in 181 economies. The project has ben- tended the coverage to 12 Indian cities and atic framework for measuring national efited from feedback from governments, states. Doing Business in India 2009 covers accounts was not developed until the academics, practicing professional ex- 10 out of 12 previously measured cities1 1940s, under the direction of British perts, and qualified reviewers. The initial and documents their progress. It adds 7 economist John Maynard Keynes. As this goal remains: to provide an objective new locations and measures the impact of methodology became an international basis for understanding and improving recent reforms on the indicators. standard, it became possible to compare the regulatory environment and a guide the economic positions of different coun- for improving performance in the sphere ASPECTS COVERED BY tries. Today, macroeconomic indicators of business. DOING BUSINESS IN INDIA of national accounts are standardized in In the Doing Business report, each all countries. economy is represented by its largest Doing Business in India provides a quan- Governments committed to the eco- business city—Mumbai, for India, for ex- titative measure of the national, state and nomic welfare of their countries and to ample, or Mexico City, for Mexico. Busi- municipal regulations involved in start- providing opportunities to their citizens ness regulation and their enforcement, ing up a business, dealing with construc- today do not limit themselves to the particularly in federal states and large tion permits, registering property, paying macroeconomic sphere, however. They economies, present marked differences taxes, trading across borders, enforc- also devote themselves to the laws, regu- within a single country. In recogniz- ing contracts and closing a business—as lations, and institutional provisions that ing the interest of governments in these they apply to domestic small- and mid- model day-to-day economic activity. variations, the Doing Business report has sized enterprises. Until quite recently, however, there complemented its global indicators with A fundamental premise of Doing 2 DOING BUSINESS IN INDIA 2009

Business is that economic activity re- LIMITED IN SCOPE to be carefully defined. Where relevant, quires good rules. These include rules r Doing Business in India focuses on the standardized case assumes a lim- that establish and clarify property rights seven areas, with the specific aim of ited-liability company. This choice is in and reduce the costs of resolving dis- measuring the regulations and red part empirical: private, limited-liability putes, rules that increase the predictabil- tape that influence the life cycle of a companies are the most prevalent busi- ity of economic interactions, and rules small or mid-sized domestic company ness form in most economies around the that protect contractual partners against at the local level. Accordingly: Doing world. The choice also reflects one focus abuse. The objective is: regulations de- Business in India does not measure of Doing Business: expanding opportu- signed to be efficient, to be accessible all 10 indicators covered in the gen- nities for entrepreneurship. Investors to all who need to use them, and to be eral Doing Business report. The report are encouraged to undertake a business simple in their implementation. Accord- covers those seven areas of business when potential losses are limited to their ingly, some Doing Business indicators regulation that are the provenance of capital participation. assign a higher score for more rigorous municipal or state governments and regulation, for example in contract en- where local differences exist. FOCUSED ON THE FORMAL SECTOR forcement. Others give a higher score r Doing Business in India does not mea- In defining the indicators,Doing Business for introducing simplified procedures for sure all aspects of the business envi- in India assumes that entrepreneurs are implementing existing regulation, such ronment that matter to companies familiar with all regulations that apply to as completing business start-up formali- or investors, nor all of the factors them and comply with them. In practice, ties at a single service window. that affect competitiveness. It does entrepreneurs may spend considerable Doing Business in India encom- not, for example, measure security, time finding out where to go and what passes two types of data. The first come macroeconomic stability, corruption, documents to submit or they may avoid from a review of laws and regulations. labor skills, the underlying strength legally required procedures altogether— The second are time and motion indi- of institutions or the quality of infra- not registering for social security, for cators that measure levels of efficiency structure. Nor does it focus on regula- example. in completing legal requisites (such as tions specific to foreign investment. When regulation is particularly bur- granting legal identity to a business). r Doing Business in India does not cover densome, levels of informality are higher. Within the time and motion indicators, all regulations, or all regulatory goals, Informality has its cost: firms in the in- cost estimates are recorded from offi- in any city or state. As economies formal sector typically grow more slowly, cial fee schedules where applicable. In and technology advance, more areas of have poorer access to credit, and employ this area, Doing Business has built on economic activity are being regulated. fewer workers, and these workers re- Hernando de Soto’s pioneering work in main outside the protections of labor law. applying the time and motion approach BASED ON STANDARDIZED CASES Doing Business in India studies one set of first used by Frederick Taylor to revolu- The indicators analyzed inDoing Busi- factors that helps explain the prevalence tionize the production of the Model T ness in India are based on standardized of informality and give policy makers a Ford. De Soto used the approach in the case scenarios with specific assumptions, better understanding of potential areas 1980s to illustrate the obstacles to setting such as that the business is located in of reform. Gaining a fuller understand- up a garment factory on the outskirts of certain cities in one of the 17 states of ing of the broader business environment, Lima, Peru. India. Economic indicators commonly and a broader perspective on policy chal- make limiting assumptions of this kind. lenges, requires combining insights from ASPECTS NOT COVERED BY Inflation statistics, for example, are often Doing Business in India with data from DOING BUSINESS IN INDIA based on prices of consumer goods in a other sources, such as the World Bank few urban areas. Such assumptions allow Enterprise Surveys. Published by the It is important to know the scope and global coverage and enhance compara- World Bank in 2009, the India’s Invest- limitations of Doing Business in India in bility, but they inevitably come at the ment Climate Assessment study analyzes order to correctly interpret the results of expense of generality. the factors that influence decisions by this report. In areas where regulation is com- firms on how to invest based on face-to- plex and highly differentiated, the stan- face surveys of owners and managers of dardized case used to construct each firms, combined with extensive dataset Doing Business in India indicator needs analysis and secondary data.2 ABOUT DOING BUSINESS AND DOING BUSINESS IN INDIA 3

WHY THIS FOCUS? Small- and mid-sized enterprises preting these measures for each city and are key drivers of competition, growth, in determining a reasonable and politi- Doing Business in India functions as a and job creation, particularly in develop- cally feasible path for reform. kind of cholesterol test of the regulatory ing countries. Still, in these economies Reviewing the Doing Business rank- environment for domestic businesses. A up to 80% of economic activity is con- ings in isolation may yield unexpected cholesterol test does not tell us every- ducted in the informal sector. Firms may results. Some cities may rank high on thing about the state of our health, but be reluctant to enter the formal sector some indicators, while others that have it can tell us when to change behaviors because of excessive bureaucracy and grown rapidly or attracted a great deal of in ways that will improve not only our regulation. investment may rank lower than others cholesterol rating but also our overall Where regulation is burdensome that appear to be less dynamic. health. and competition limited, success tends to Even so, a higher ranking in Doing One way to test whether Doing Busi- depend more on contacts than on what Business in India tends to be associated ness is truly representative of the broader the entrepreneur can actually do. In con- with better results over time. Economies business environment and of competi- trast, where regulation is transparent and that rank among the top 20 in Doing tiveness is to look at correlations between efficient, it becomes easier for entrepre- Business are those with high per-capita the Doing Business rankings and other neurs, regardless of their connections, income and productivity and efficient major economic benchmarks. The group to operate within the rule of law and to regulations. of indicators closest to Doing Business benefit from the opportunities and pro- For governments committed to in the areas it analyzes are the product tections that the law provides. reform, improving the performance of market regulation indicators from the Doing Business thus considers good their indicators matters more than their Organization for Economic Cooperation rules as key to social inclusion. It also absolute ranking. As economies develop, and Development (OECD). The correla- provides a basis for studying the effects they strengthen and add to regulations tion with these is 0.80. The World Eco- of regulations and their application. For to protect investor and property rights. nomic Forum’s Global Competitiveness example, Doing Business 2004 found that Meanwhile, their governments seek out Index and IMD’s World Competitiveness the speed of tools available for contract more efficient ways to implement exist- Yearbook are broader in scope, but they enforcement was associated with percep- ing regulations and eliminate outdated are also closely correlated with Doing tions of greater judicial fairness, suggest- ones. One finding ofDoing Business is Business (0.80 and 0.76, respectively). ing that, in fact, justice delayed is justice that dynamic and growing economies These data suggest that where countries denied. Other examples specific to India are constantly reforming and updating enjoy peace and macroeconomic stabil- are provided in the chapters that follow. their regulations and the ways they are ity, domestic business regulation makes applied, while many poor countries still a sizeable difference in economic com- DOING BUSINESS IN INDIA AS A work with regulatory systems dating petitiveness. COMPARATIVE EXERCISE back to the 18th century. A larger question is whether the areas addressed in Doing Business can Because it brings together some key di- DOING BUSINESS: truly influence development and reduce mensions of regulatory regimes, Doing A USER’S GUIDE poverty. The World Bank study Voices Business in India can be useful for com- of the Poor asked 60,000 poor people parative purposes. Any such comparison Quantitative data and benchmarking can around the world how they thought they (of individuals, companies, or states) is be useful in stimulating debate about might escape poverty. The answer was necessarily partial: it is valid and use- policy, both by exposing potential chal- unanimous: both women and men pin ful if it helps to ground a judgment in lenges and by identifying areas of op- their hopes on income from their own specific values, less so if it substitutes for portunity where better practices might businesses or wages earned from a job. judgment. be introduced. These data also provide Enabling growth, and ensuring that the Doing Business in India provides a basis for analyzing how different pol- disadvantaged can participate in its ben- two perspectives on the data it compiles: icy approaches—and different policy efits, requires an environment in which it presents “absolute” indicators for each reforms—contribute to desired results entrepreneurs with initiative and good city and for each of the seven areas such as competitiveness, growth, and ideas can start a business regardless of studied, and it also provides rankings greater employment and income. their gender or ethnic origin and where of cities, both by indicator and overall. Six years of Doing Business data companies can invest, creating more jobs. Careful judgment is required in inter- have fueled a growing body of research 4 DOING BUSINESS IN INDIA 2009 on how performance on Doing Busi- Over the past six years there have METHODOLOGY AND DATA ness indicators—and reforms relevant been many government initiatives to to those indicators—relate to desired reform the regulatory environment for Doing Business in India covers 17 loca- social and economic results. Some 325 domestic businesses. Most reforms relat- tions, including Mumbai. The data are articles have been published in academic ing to Doing Business topics were part drawn from federal, state, and municipal journals, and about 742 working papers of broader programs of reform aimed laws and regulations, as well as on ad- are available through Google Scholar. at enhancing economic competitiveness. ministrative requirements (for a detailed Among the findings: The same can be said at the subnational explanation of the methodology used r -PXFS CBSSJFST UP CVTJOFTT TUBSUVQ level. Nine of the twelve states covered in in Doing Business in India 2009, See are associated with a smaller informal the first Doing Business in Mexico report the data notes section at the end of this sector. introduced reforms in at least one of report). r -PXFS DPTUT PG FOUSZ DBO FODPVSBHF the indicators. Doing Business in Mexico entrepreneurship and reduce corrup- 2009 shows that the momentum of re- INFORMATION SOURCES tion. form has continued: 28 states introduced Most of the indicators are based on laws r 4JNQMFS TUBSUVQ QSPDFEVSFT DBO reforms in 2007–2008. and regulations. In addition, most of the translate into greater employment op- Doing Business in Mexico has fa- cost indicators are backed by official fee portunities. cilitated this change. First, it has con- schedules. Doing Business contributors tributed to a diagnosis of the efficiency both fill out written surveys and provide HOW DO GOVERNMENTS USE of business regulation in specific cities in references to the relevant laws, regula- DOING BUSINESS? Mexico that can be compared with other tions, and fee schedules, aiding data cities in the country and other economies checking and quality assurance. A common first reaction is to doubt around the world. Second, it has served For some indicators part of the cost the quality and relevance of the Doing as an instrument of institutional reform, component (in cities where fee schedules Business data. Yet the skepticism typi- because the measures presented reveal are lacking) and the time component are cally results in a deeper debate over the where bottlenecks are and where the best based on actual practice rather than the relevance of the data to the economy and practices are in commercial procedures text of the law itself. This introduces a about areas where reform might make across the country. Finally, each succes- degree of subjectivity. As a result, the sense. sive edition of Doing Business in Mexico Doing Business approach has been to Most reformers start out by seeking has served as a tool for monitoring and work with legal advisors or professionals new paradigms, and Doing Business is a evaluating reforms, creating incentives who regularly handle the transactions useful tool in this regard. For example, for public servants to continue improv- involved. Following the standard meth- Saudi Arabia used the corporate laws of ing regulations, even across changes in odological approach for time and motion France as a model for revising its own. public administration. studies, Doing Business in India breaks Many economies in Africa look to Mauri- In structuring their reform pro- down each process or transaction, such tius—the region’s strongest reformer ac- grams, governments use multiple data as starting and legally operating a busi- cording to Doing Business indicators—as sources and indicators. Reformers also ness, into separate steps to ensure a bet- a source of good practices for reform. In respond to many stakeholders and inter- ter estimate of time. The time estimate the words of Egypt’s Minister of Invest- est groups, all of whom bring important for each step is given by practitioners ment, Dr. Mahmoud Mohieldin: issues and concerns into the reform de- with significant and routine experience bate. World Bank Group support for these in the transaction: corporate lawyers, at- What I like about Doing Business … is reform processes is designed to encour- torneys, judges, architects, etc. that it creates a forum for exchanging age critical use of the data, sharpening TheDoing Business approach to data knowledge. It’s no exaggeration to say that judgment and avoiding a narrow focus on collection is different from that of opinion we checked the top ten in every indicator improving Doing Business rankings. surveys, which record one-time percep- and we just asked them, “How did you do tions and experiences of businesses. A it?” If there is any advantage to starting corporate lawyer registering 100 to 150 late in anything, it’s that you can learn businesses a year will be more familiar from others. with the process than an entrepreneur, who may go through the process only ABOUT DOING BUSINESS AND DOING BUSINESS IN INDIA 5 once or twice. A judge ruling on dozens series. of bankruptcy cases a year will have more Another methodological improve- insight into the process than an indi- ment reflected inDoing Business in India vidual company’s experience of it. 2009 is that it measures the cost of procedures in proportion to Gross National In- DEVELOPMENT OF THE METHODOLOGY come (GNI) per capita rather than Gross The methodology for calculating each Domestic Product (GDP) per capita in indicator is transparent, objective, and the state. The reason for this change has easily comparable. Renowned experts in to do with practical issues and compa- the academic sphere collaborate in the rability with the rest of the cities mea- development of the indicators, ensuring sured in the global Doing Business report. academic rigor. The background studies First, certain developing countries do not underlying the indicators have been pub- have GDP measurements available but lished in leading economic journals. do measure GNI, so it is better to use Doing Business uses a system of sim- the indicator available in more countries ple averages for weighting indicators and around the world. Second, international calculating rankings. Other approaches comparisons between cities turned out to were studied, including those using be inconsistent, because the subnational principal components and unobserved and global reports were using different components. The principal components denominators to measure procedural and unobserved components approaches costs. were found to yield results nearly identi- All the methodological changes are cal to those of simple averaging. The explained in the Data Notes section of tests show that each set of indicators this report and on the Doing Business in provides new information. The simple India 2009 web page (www.doingbusi- averaging approach is therefore solid for ness.org/subnational). The web site also such tests. provides data time series for each indicator and city. The web site also makes IMPROVEMENTS TO THE available all original data sets used for METHODOLOGY AND DATA REVISIONS background papers. A transparent com- plaint procedure allows anyone to chal- The methodology has been steadily im- lenge the data. If errors are confirmed proved over the years. Changes have after a data-verification process, they are been made mainly in response to sug- corrected as promptly as possible. gestions from economies in the global Doing Business sample. In accordance with the Doing Business methodology, these changes have been incorporated 1. Two cities, Chandigarh and Lucknow, covered by the regional Doing Business into the Doing Business in India 2009 in South Asia series, are not measured in and Doing Business in South Asia 2005-7 this report. Chandigarh is a joint administrative capital of two states, Punjab and Haryana, which are now both included with their largest business cities. Noida replaces Lucknow in Uttar Pradesh. 2. Ferrari, Aurora and Inderbir Singh Dhin- gra. 2009. India’s Investment Climate. Voices of the Poor. Washington, D.C.: The World Bank. 6 DOING BUSINESS IN INDIA 2009 7 Overview

Long before India existed as a country, failed to create enough jobs. A study by small- to medium-sized domestic firm. the Indian subcontinent was regarded as the Indian Ministry of Statistics shows Mumbai represents the country in the a source of innumerable riches and trad- that out of a total workforce of 397 mil- global Doing Business report, which com- ing opportunities by the world’s most lion, only 28 million workers are em- pares regulatory practices in 181 econo- powerful empires. Riding the monsoon ployed in the organized2 sector.3 Further- mies. However, in large federal countries winds, Roman ships would bring back more, an uneven pace of local growth like India, local business regulations and from Tamil kingdoms and the main ports leads to increasing inequalities between their enforcement differ across locations. of Barygaza, Muziris, and Korkai gold, states. Promotion of inclusive growth is Doing Business in India 2009 expands 7 silver, red coral, and fine embroideries. one of India’s key development objectives of the 10 Doing Business topics (starting a Other trading nations—the Chinese, the stated in the 11th Five Year Plan.4 business, dealing with construction per- Egyptians, the Carthaginians—estab- To help local entrepreneurs unleash mits, registering property, paying taxes, lished settlements on the subcontinent, their potential, national, state, and mu- trading across borders, enforcing con- followed in the 15th century by the Eu- nicipal govern ments5 need to create a tracts, and closing a business) beyond ropeans, who had benefited from the regulatory environment that encourages Mumbai to another 16 locations across opening of a sea route via the Cape of firms to formally start up and grow. The India. These indicators have been se- Good Hope. World Bank’s 2009 India’s Investment Cli- lected because they reveal differences in Foreign trade proved a mixed bless- mate: Voices of the Poor study identifies national, state, and municipal regulatory ing for India’s economy in later centuries. red tape as a key constraint to improved policies and practices.8 The fall of the Moghuls and the rise of productivity.6 The National Manufactur- Doing Business in India 2009 ranks European chartered companies all but ing Competitiveness Council of India also the 17 benchmarked cities based on their obliterated India’s great merchants. After emphasizes regulatory reform: “Govern- performance on each of the seven top- India’s independence in 1947 a complex ment has a major role to play in provid- ics. The results are presented here (table system of business regulations and high ing the right market framework and 1.1). Doing Business is easier in Ludhiana import tariffs—widely known as the “Li- regulatory environment as these provide (Punjab), Hyderabad (Andhra Pradesh), cense Raj”—contributed to locking India invaluable impetus to the competitive- and Bhubaneshwar (Orissa). It is more into a “Hindu rate of growth” far below ness…The framework should ensure fair difficult in Kochi (Kerala), and Kolkata India’s recognized potential. competition, better access to markets, (West Bengal). Today, India owes much of its eco- trade negotiations that ensure a level Mumbai, representing India in the nomic success to the liberalization re- playing field for domestic manufacturers, global Doing Business report, does not forms initiated in 1991. The reforms review of existing regulations and reduce rank highest among the benchmarked contributed to lifting the average gross the burden of paper work and inspector cities on the 7 topics measured. While it domestic product growth rate to 8.5% raj in respect of existing laws.”7 is quickest to start a business or export in 2005–8 and 300 million people out of Doing Business studies business a container there, Mumbai lags behind extreme poverty.1 Still, recent growth has reg ulations from the perspective of a other cities in the time required to en- 8 DOING BUSINESS IN INDIA 2009

TABLE 1.1 tional e-government initiative, called Doing Business in India: Where is it easiest? MCA-21, introduced in 2006, which laid 1 Ludhiana, Punjab (easiest) 10 Mumbai, Maharashtra the groundwork for electronic business 2 Hyderabad, Andhra Pradesh 11 Indore, Madhya Pradesh registration. As part of this program, the 3 Bhubaneshwar, Orissa 12 Noida, Uttar Pradesh national government began computer- 4 Gurgaon, Haryana 13 Bengaluru, Karnataka izing company registration offices across 5 Ahmedabad, Gujarat 14 Patna, Bihar India and introduced an electronic filing system for company name approval and 6 New Delhi, Delhi 15 Chennai, Tamil Nadu registration. As a result of these reforms, 7 Jaipur, Rajasthan 16 Kochi, Kerala the registration time has been reduced. 8 Guwahati, Assam 17 Kolkata, West Bengal Company name approval now takes 2 9 Ranchi, Jharkhand days in all cities, down from 4 to 6 days Note: The ease of doing business is calculated as the ranking on the simple average of city percentile rankings on each of the 7 9 topics covered. The ranking on each topic is the simple average of the percentile rankings on its component indicators. in 2006. The time to obtain the certifi- Source: Doing Business database. cate of incorporation also dropped. The certificate is now available online in 2 to force a contract, the ease to obtain a con- lute ranking—that is the most important. 3 days, as opposed to the 9 to 10 days it struction permit, the time to transfer a The pace of reform is picking up.Doing took in 2006. But the reform is not com- property title, the cost to start a business, Business 2009 identified 239 reforms that plete—the applicant must still wait to or the total tax burden on businesses. make it easier to do business in 113 coun- receive a physical copy of the certificate Still, Mumbai’s ranking has improved tries. Other large emerging economies by mail before starting activities. in relation to other cities since the last like Egypt, China, and Indonesia were Well aware that an affordable and Doing Business in South Asia. Hyderabad among the reformers. With this competi- efficient immovable property registration remains at the top of the ranking while tion, complacency is not an option. system reduces informality, the Minis- other large business centers such as Ben- try of Urban Development launched the galuru and Chennai dropped. Their rank- CITIES ARE REFORMING— Jawaharlal Nehru National Urban Re- ing changed partly because the number WHAT GETS MEASURED GETS DONE newal Mission (JNNURM) in December of benchmarked cities increased from 12 2005. It inspired important stamp duty to 17, and some of the added cities have Since 2004, India has introduced 7 major reductions, making it cheaper to register competitive regulatory frameworks. The business-environment reforms in busi- property. The program also introduced lower ranking may also reflect delays and ness entry, registering property, getting land-record computerization programs higher fees due to demand for business credit, paying taxes, and trading across across the country. services in fast-growing cities. On the borders, becoming the regional top re- The national government initiated other hand, Bhubaneshwar and Jaipur former as reported in Doing Business several programs to increase the effi- are examples of lower-income cities that 2009 (table 1.2). ciency of central and local tax systems. In make it easier to do business by increas- Trade is the area where India has 2005, it started implementing a uniform ing efficiency and the use of technology, reformed the most. India was the top VAT rate in all states, eliminating some while maintaining low costs. reformer on the trading across borders Doing Business rankings do not indicator in Doing Business 2008 and TABLE 1.2 tell the whole story about an economy’s continued reforming in Doing Business Top regional Doing Business reformers business environment. The indicators do 2009. The implementation of ICEGATE since 2004 not account for all factors important (Indian Customs and Excise Gateway)— China for Doing Business—for example, mac- an electronic data interchange (EDI) sys- East Asia and the Pacific Colombia roeconomic conditions, infrastructure, tem—at the country’s major entry points Latin America and Caribbean workforce skills, or security. But im- has significantly facilitated trading. The Egypt Middle East and North Africa provements in an economy’s ranking do system enables shipping lines to submit Georgia indicate that the government is creating their cargo manifests electronically, ini- Eastern Europe and Central Asia INDIA a regulatory environment that is more tiating the clearance process even before South Asia conducive to business. the ship docks. Mauritius For governments committed to re- Another important milestone was Sub-Saharan Africa form, it is the pace of reforms—not abso- the Ministry of Corporate Affairs’ na- Source: Doing Business database. OVERVIEW 9 of the cascading effects caused by local of starting a business, dealing with con- war and Hyderabad introduced single- taxes. By 2008, all Indian states adopted struction permits, and registering prop- access points for value added tax and the VAT system. In 2007, the central erty. As a result, the average time to start professional tax registrations and Patna sales-tax rate was decreased from 4% up a company dropped from 54 to 35 and Ranchi reduced the stamp duty on to 3%. days, similar to Thailand. The time to incorporation documents. India’s legal and regulatory frame- obtain a building permit dropped by 25 Local governments also reformed work in the areas of enforcing contracts days on average in the 10 cities. Four out their processes for dealing with construc- and bankruptcy has advanced in the last of seven locations measured for the first tion permits. Among the most important two decades. In 2008, the Supreme Court time by this report reformed their local initiatives, the Municipal Corporations allowed for electronic case filing.10 E- regulations and practices in the 3 areas, of Ahmedabad and Chennai simplified filing systems are being planned for the bringing the total number of reforming building-permit applications by allowing various state High Courts in the near fu- cities to 14 out of 17 (table 1.3). online building-plan submission. Ben- ture and eventually in the District Courts In the area of starting a business, 7 galuru, Gurgaon, and Hyderabad intro- as well.11 “Indiancourts”12 is a new web- out of the 10 states benchmarked in 2006 duced an effective single-window system site that provides a single-point access introduced administrative, legal, and for building-permit applications. The to information related to the Supreme technological reforms in addition to the Bhubaneshwar Development Authority Court and all 21 High Courts. Litigants national reforms affecting all states. En- adopted a Geo-Information System that can verify case-status, and browse judg- trepreneurs in New Delhi and Ahmeda- provides information on each revenue ments, rules, and judges of each court. bad can now pay the stamp duty on plot along with master-plan provisions The national government intro- company documents electronically and such as land-use zones, roads, drains, duced Debt Recovery Tribunals (DRTs) apply online for the value-added tax reg- and open spaces. Over the last few years, to speed up the resolution of debt recov- istration certificate and amendments to 11 out of the 17 cities revised their build- ery claims due to banks and financial the registration certificate. Bhubanesh- ing bylaws and development rules and institutions in 1993. The Securitization and Reconstruction of Financial Assets TABLE 1.3 Local level reforms in 14 out of 17 Indian cities in 2006–9 and Enforcement of Security Interest Dealing with (SARFAESI) Act was enacted in 2002 Starting a Registering construction and amended in 2004, with a view to business property permits making adequate provisions for the re- Ahmedabad, Gujarat covery of loans and to enforce security Bengaluru, Karnataka* interests without the intervention of the Bhubaneshwar, Orissa* court—or at least with minimum inter- Chennai, Tamil Nadu* vention. These positive changes in the Gurgaon, Haryana law have only taken full effect in practice in the past couple of years. Until re- Guwahati, Assam cently, the validity of the SARFAESI Act Hyderabad, Andhra Pradesh* and before that the validity of the DRTs Indore, Madhya Pradesh were held up in court challenges, but Jaipur, Rajasthan* now both acts are used by creditors. As a Kochi, Kerala result, the DRTs of Mumbai have started Kolkata, West Bengal* working faster and more DRT judges Ludhiana, Punjab were assigned recently. In Mumbai, debt Mumbai, Maharashtra* enforcement through DRTs takes now New Delhi, Delhi* on average 7 years. Noida, Uttar Pradesh Reforms at state and municipal levels have accelerated, too. There has been Patna, Bihar* significant progress—9 of the 10 cities Ranchi, Jharkhand* benchmarked in Doing Business in South Note: The reforms took place between April 2006 and February 2009. * Locations measured by Doing Business in South Asia 2007. Asia 2007 and again in 2009 introduced Source: Doing Business database. local reforms in at least one of the areas 10 DOING BUSINESS IN INDIA 2009 made them and the application forms days longer through the port of Kochi. Kolkata, and Bhubaneshwar, entrepre- available online. Twelve cities have im- These examples show large varia- neurs spend less than 40% of income proved their efficiency of handling ap- tions in the way local government regula- per capita to open a business; for those plications through ongoing computeriza- tions enhance or restrain business activ- in Bengaluru and Mumbai, the cost is tion and additional zonal offices, such as ity across India. The economic reforms almost double due to local government the new civic centers in Ahmedabad. of the 1990s have given the states greater fees and taxes. Registration for value- Gurgaon, India’s top performer for autonomy, especially in land and licens- added tax costs the equivalent of 12% registering property, increased the speed ing matters. While local governments income per capita in Mumbai, but is of property transfers by developing cus- share the same basic legal framework, free in Jaipur and Ahmedabad. Similarly, tomized software and training registry they also interpret and implement na- entrepreneurs pay 15% of income per employees. Bengaluru computerized tional regulations differently. Some states capita in Bengaluru to register under the ownership records and property titles have made their processes more efficient Shops and Establishments Act, but pay as part of the Karnataka Valuation and with the help of technology. nothing in Chennai. e-Registration project (KAVERI). Four More reform, at the national, state, states cut their stamp-duty rates. Bhu- and municipal levels is needed to reduce DEALING WITH CONSTRUCTION PERMITS baneshwar, Jaipur, New Delhi, Patna, and the number of procedures as well as the To comply with all the requirements to Bihar further computerized land records, time and cost to do business. Global build a warehouse is not easy or cheap. making it easier for entrepreneurs to competition is becoming increasingly Ahmedabad, Bengaluru, and Chennai search for encumbrances. local in the sense that it is not only coun- have the least procedures—15—while tries that compete with each other, but the process requires 37 steps in Mumbai. WIDE VARIATIONS ACROSS increasingly specific locations—Kolkata Hyderabad is fastest with 80 days and CITIES AND STATES versus Monterrey (Mexico) rather than Kolkata slowest with 258 days. Varia- India versus Mexico. Indian cities and tions are due mainly to the time it If you were a graduate returning to states must expedite their pace of reform takes to obtain pre-construction clear- India from her studies abroad with a to convince investors that it is more ances and zoning permits, the building great idea for a new business, obtaining profitable to invest scarce capital in cit- permit, and the electricity connection. authorization to start your company ies like Hyderabad rather than Cairo or In Kolkata, Guwahati, and Chennai, it would be fastest in Noida, where it Shanghai. takes at least three weeks to obtain the takes 30 days, and least expensive in zoning certificate. In comparison, the Patna, at 38% of income per capita. In STARTING A BUSINESS approved layout can be obtained on Mumbai, it would cost almost twice The number of procedures to formally the spot in Bhubaneshwar. Hyderabad as much. Obtaining all clearances and open a business ranges from 11 to 13, and Bengaluru both process building permits to build a new warehouse and of which 8 are national in nature and permits within the statutory time lim- hook it up to utilities would take about similar in all cities. The high number its of 30 working days, while entrepre- 80 days in Bengaluru and Hyderabad, of procedures is due to requirements neurs in Patna have to wait more than 3 twice as fast as the OECD average of 161 following business incorporation, such months to start construction. Obtaining days. It would take six months longer as multiple tax and social-security reg- the occupancy certificate is fastest in in Kolkata. If you decided to purchase istrations. States like Andhra Pradesh Kochi, where a ‘silence is consent’ rule a property in Jaipur, your new estate and Orissa have simplified the process automatically kicks in after 15 days. In would be registered in 24 days, the for entrepreneurs by consolidating reg- Noida, the entrepreneur will have to same as in Johannesburg, South Africa. istration for both value-added tax and wait 5 weeks longer. Regarding costs, If in Bhubaneshwar, transferring the profession tax at the Commercial Tax construction-related procedures amount property title would take five times lon- Office. The time required to start a busi- on average to 789% of income per capita, ger. Resolving a dispute at the courts is ness also varies among cities due to above the same cost in Brazil and China. generally time-consuming across states, different local practices and different The computerization of the building- but it would be faster in Guwahati at performance levels of the local branches permit processes is most advanced in 20 months compared with 4 years in of national agencies. Starting a business Ahmedabad, Bengaluru, Chennai, and Mumbai. Exporting a container of tex- is fastest in Noida and Mumbai (30 days) Hyderabad, which set an example for tiles would take you on average 17 days and lengthiest in Kochi (41 days). Differ- other cities. through the Nhava Sheva port, but 11 ences in cost are pronounced. In Patna, OVERVIEW 11

REGISTERING PROPERTY vesting in railway and road infrastruc- obligations, she would spend 405 hours The procedures required to register ture, reducing interstate checkpoints, to do the same in Patna. Differences are property are similar across the 17 cit- and improving the Electronic Data In- also evident in the number of payments ies. A potential property buyer must terchange systems are examples of how annually ranging from 59 in Ludhiana, obtain a non-encumbrance certificate India’s position as a regional trade hub Mumbai, Noida, and Bengaluru to 78 from the Subregistrar’s Office, have a can be further advanced. in Hyderabad. The national government lawyer draft a sale’s deed, register the has undertaken several initiatives, most sale’s deed at the Subregistrar’s office, ENFORCING CONTRACTS of which are still ongoing, to harmonize and then officially transfer the property Enforcing contracts is characterized by the tax system across states. The most title at the Circle Revenue Office. How- lengthy proceedings. The time needed recent example is the unification of the ever, the time and money required to to go through trial and judgment is value-added tax (VAT) rate among all complete these procedures vary substan- the most burdensome among the three Indian states. tially across cities. In Gurgaon, it would stages of the commercial dispute— take an entrepreneur 26 days and 7.7% service and filing, trial and judgment, CLOSING A BUSINESS of the property value to transfer prop- and enforcement of judgment. It takes Among the cities benchmarked, Hydera- erty, while the same process would last around two years to resolve a commer- bad has the highest recovery rate in three times longer and cost 15.4% of the cial dispute in Kochi, Bhubaneshwar, insolvency cases at 15.9 cents on the property value in Guwahati. Variations and Hyderabad compared with almost dollar—far lower than Japan’s rate of in time can be explained by different 4 years in Mumbai. Case backlogs and 99.5 cents on the dollar. It takes 7 years degrees of efficiency of the Subregistrar an insufficient number of judges are to close a business and costs 7% of the and Circle Revenue Offices. Offices that reportedly the main source of delays in value of the claim. In Kolkata, a busi- have computerized land records and are most cities. The cost to enforce a contract ness will only recover 9.13 cents on the adequately staffed with qualified person- ranges from 16.9% of the claim value in dollar—it takes almost 11 years and costs nel conduct procedures faster, as the Patna to 32.5% in Bengaluru and 39.5% 10% of the value of the claim. India’s examples of Jaipur and Gurgaon show. in Mumbai. Differences in court fees, legal framework on insolvency and debt Differences in cost stem mostly from dif- legal fees, and the cost of enforcement recovery has been at the core of reform ferences in stamp-duty rates, set by the explain these variations. The national discussions for several years. Some of the states, which account for an average of government introduced case manage- concerns have been addressed through 69% of all costs incurred. Stamp duties ment by allowing for electronic filing of the Recovery of Debts Due to Banks can be as high as 12.5% of the property cases at the Supreme Courts in 2008 and and Financial Institutions Act 1993 and value in Kochi, or as low as 3% in New is planning e-filing systems at the High the SARFAESI Act 2002, amended in Delhi. Courts and District Courts. The national 2004. What is now needed is to build government has also recommended the consensus to further implement reforms TRADING ACROSS BORDERS establishment of commercial divisions in this area and create capacity to deal Importing or exporting has become within the High Courts to speed up en- with insolvency and debt recovery more much easier in the past years. The im- forcement of contracts. efficiently. Bankruptcy laws are national plementation of an electronic data in- but there are local differences in the terchange system, the construction of PAYING TAXES functioning of the tribunals. inland container depots, and various Cities do not differ much in terms of ambitious infrastructure projects have the total tax-burden impact on business, LEARNING FROM EACH OTHER: significantly reduced both the time and which ranges from 66.5% to 70.3% of ADOPTING GOOD LOCAL PRACTICES cost to trade goods. Mumbai’s Jawaharlal commercial profits. The state and local Nehru Port (JNPT) is the busiest port, governments play a major role in tax Publishing comparable data on the ease handling nearly 60% of India’s port traf- administration, although the central gov- of Doing Business inspires governments fic. At the subnational level, it is fastest to ernment collects the largest portion of to act. Comparisons among cities within import and export from Bhubaneshwar taxes. Hence, a high variation in the num- a single economy are even stronger through the port of Vishakapatnam. The ber of payments and the time it takes to drivers of reform. That was the case in port of Chennai is close behind. Despite comply with all taxes across Indian cities. Mexico, where a subnational Doing Busi- substantial achievements, important While a business owner in Jaipur needs ness study covering 12 states was first challenges remain. Improving and in- 233 hours a year to comply with all tax published in 2005. The study inspired 12 DOING BUSINESS IN INDIA 2009 competition to reform, as governors and Indonesia (table 1.4). With these regu- entry: the number of registered Mexican mayors had a difficult time explaining lations in place, Indian entrepreneurs businesses rose by nearly 6%, employ- why it took longer or cost more to do would face a business environment simi- ment increased by 2.6% and prices fell by business in their city compared to their lar to that of Taiwan, China, or Turkey. 1% because of the competition from new neighbors. States that have not been Payoffs from reform can be large.15 entrants.17 Simplified regulations also benchmarked asked to be measured in Higher rankings on the ease of Doing encouraged entrepreneurs to start their subsequent reports. The second round Business are associated with more own business in Egypt.18 expanded the analysis to all states and growth, more jobs, and a smaller share Studies from other countries sug- updated indicators for the first 12 cities, of the economy in the informal sector.16 gest that 85% of reforms occur in the first showing that 9 of the 12 states imple- In Mexico, reforms cut the time to start 15 months of a new administration.19 For mented reforms in at least one of the a business from 58 to 27 days. A recent India, there is no better time to reform areas covered by Doing Business. The study reports a boom in new business than now. third Doing Business in Mexico report, TABLE 1.4 launched in 2008, shows that the impetus Best practices in India compared internationally to refom continues—28 of the 31 states Global ranking introduced a total of 40 reforms.13 (181 economies) Cities in India can learn from each Number of procedures to start a business 137 other and adopt good regulations and New Delhi, Patna (11 procedures) practices that already exist elsewhere. If Days to start a business 104 a hypothetical city called “Indiana” were Mumbai, Noida (30 days) to adopt the best practices found in the Cost to start a business 124 Patna (38.5% of income per capita) benchmarked cities, it would rank 67 out of the 181 economies measured by Doing Number of procedures to deal with construction permits 63 Ahmedabad, Bengaluru, Chennai (15 procedures) Business 2009.14 By reforming in these 7 Days to deal with construction permits 19 areas, India (as represented by Mumbai) Hyderabad (80 days) could improve its ranking by 55 levels, Cost to deal with construction permits 94 placing the country well ahead of China, Patna (204% of income per capita) Brazil, or Russia. This would reduce the Number of procedures to register property 24 time to start a business to the 30 days of Gurgaon, Guwahati, Kochi, Ludhiana (4 procedures) Mumbai and Noida. The cost would be Days to register property 49 38.5% of income per capita as in Patna, Jaipur (24 days) same as the cost in Ecuador. Cutting Cost to register property 104 the time to get construction licenses to Ranchi (5.4% of the property value) build a warehouse to the level of Hydera- Days to enforce a contract 111 bad—80 days—would put India ahead of Guwahati (600 days) Germany. Adopting the time to register Cost to enforce a contract 31 property in Jaipur—24 days—would put Patna (16.9% of the claim value) the hypothetical city Indiana at the 49th Days to export 59 ranking worldwide, the same as South Ahmedabad, Bhubaneshwar, Mumbai (17 days) Africa. The cost of enforcing contract of Days to import 50 16.9% of the claim value, as in Guwahati, Bhubaneshwar (16 days) would be below the OECD average of Total tax rate 162 Noida (66.54 % of the profit) 18.9%. The total tax rate would be reduced to 66.5% as in Noida and similar Tax payments 166 Ludhiana, Noida, Mumbai, Bengaluru (59 payments per year) to France. The import time would drop Recovery rate for closing a business 133 to Bhubaneshwar’s 16 days, the same Hyderabad (15.9 cents on the dollar) as Croatia. The hypothetical city would adopt Hyderabad’s practices for closing Best practices for 7 measured indicators 67 Hypothetical city of “Indiana” a business with a recovery rate of 15.9 cents on the dollar, 2 cents higher than Source: Doing Business database. OVERVIEW 13

elected legislatures and governments 14. This is based on composite numbers patterned on the Westminster model. including indicators not measured in 1. Ferrari, Aurora, and Inderbir Singh Dh- A Municipal Corporation is the local Doing Business in India 2009. For those ingra. 2009. India’s Investment Climate: body that administers a city of popula- indicators the values reported in Doing Voices of the Poor. Washington, D.C.: The tion 200,000 and more. It consists of Business 2009 were used to calculate the World Bank. members elected from the wards of the ranking. city. The Mayor and Deputy Mayor are 2. The terms “formal” and “informal” 15. World Bank. Forthcoming. Colombia: elected by the members among them- Inputs for Sub-Regional Competitive- sectors are not used in the National selves. A Municipal Commissioner, from Accounts Statistics (NAS). The terms ness Policies. Mimeo. Washington, D.C.: the Indian Administrative Service, is ap- World Bank Group. used are “organized” and “unorganized” pointed to head the administrative staff sectors. The organized sector comprises of the Municipal Corporation, imple- 16. Djankov, Simeon, Caralee McLiesh, enterprises for which statistics are avail- ment the decisions of the Corporation, and Rita Ramalho. 2006. “Regulation able from the budget documents and ac- and prepare its annual budget. and Growth.” Economics Letters 92 (3): counting reports. The unorganized sector 395–401. refers to enterprises whose activities or 6. Ferrari, Aurora, and Inderbir Singh Dh- ingra. 2009. 17. Bruhn, Miriam. 2008. “License to Sell: collection of data are not regulated under The Effect of Business Registration any legal provision. 7. http://nmcc.nic.in Reform on Entrepreneurial Activity in 3. The National Sample Survey Organiza- 8. Three of the Doing Business indicators— Mexico.” Policy Research Working Paper tion (NSSO) carried out a sample survey employ ing workers, protecting investors, 4538, Washington, D.C.: World Bank, in 1999–2000, available at http://mospi. and get ting credit—are based solely on The results were obtained after control- nic.in. the provisions contained in national ling for GDP per capita, number of eco- 4. The Planning Commission develops, ex- laws. nomic establishments per capita, fixed ecutes, and monitors five-year plans for 9. World Bank. 2006. Doing Business in assets per capita, and investments per the economy of India. The eleventh plan South Asia 2007. Washington, D.C.: capita in the benchmarked municipali- started in mid-2007. Among other objec- World Bank Group. ties. tives, it aims to create 70 million new 10. World Bank. 2008. Doing Business 2009. 18. World Bank. 2008. Doing Business in work opportunities and reduce educated Washington, D.C.: World Bank Group. Egypt 2008. Washington, D.C.: World unemployment to below 5%. Bank Group. 11. http://www.supremecourtofindia.nic.in/ 5. The Government of the Republic of new_links/speach.htm 19. World Bank. 2007a. Celebrating Reform India, officially referred to as the Union 2007. Washington, D.C: World Bank 12. http://www.indiancourts.nic.in Government, and also as the Central Group and U.S. Agency for International Government, is the governing author- 13. World Bank. 2009. Doing Business in Development. ity of a federal union of 28 states and Mexico 2009. Washington, D.C.: World 7 union territories. All states, and the Bank Group. union territory of Puducherry and the National Capital Territory of Delhi, have 14

TABLE 2.1 Starting a Where is it easier to start a business—and where not? business 1 New Delhi, Delhi (easiest) 10 Chennai, Tamil Nadu 2 Patna, Bihar 10 Kolkata, West Bengal 3 Jaipur, Rajasthan 12 Mumbai, Maharashtra 4 Hyderabad, Andhra Pradesh 13 Guwahati, Assam 5 Bhubaneshwar, Orissa 14 Ahmedabad, Gujarat 6 Noida, Uttar Pradesh 15 Ranchi, Jharkhand 7 Ludhiana, Punjab 16 Kochi, Kerala 8 Indore, Madhya Pradesh 17 Bengaluru, Karnataka 9 Gurgaon, Haryana

Note: The ease of starting a business is a simple average of the city rankings on the number of procedures, the associated time and cost and paid-in minimum capital (%of GNI per capita) required at the start of the business. See the data notes for details. Source: Doing Business database.

Parth has just returned to Mumbai from get access to courts and credit, be able to dens are still high in comparison with his studies abroad. His dream is to set up supply more important customers, and other countries in spite of the recent his own business, but he is afraid of dea- have no fear of harassment from gover- efforts to improve business registration. ling with the bureaucratic proceedings nment inspectors or the police. Second, Starting a business takes on average 12 necessary to formalize the company. formally registered enterprises pay taxes, procedures and 34 days, and costs 47% Little does Parth know that if he decided adding to government revenues.4 of income per capita. Indians spend one to formalize his business today, his first New Zealand is the world’s top per- month more than Australians and pay customer could be walking through the former in this area, with only 1 proce- almost 4 times more than entrepreneurs door in one month. If he wanted to do dure, 1 day, and a cost of 0.4% of income in Pakistan to start a business. The pro- the same when he left for his studies 4 per capita. Entrepreneurs in New Zealand cess takes only 2 procedures fewer than years ago, he would have had to wait have to file all necessary information in China, ranked 167 of 181 economies more than 2 months. only once because receiving agencies are on the number of procedures to start a Business registration is the first con- linked through a unified database. Other business. tact between a new entrepreneur and go- economies in Eastern Europe and North Despite a similar regulatory fra- vernment regulators. In some countries, Africa are not far behind: in Georgia, it mework for business registration across the process is straightforward and affor- takes 3 procedures and 3 days to start a the country, there are differences in time, dable, while in others the process is so business, while in Egypt the same can be cost, and number of procedures, mainly cumbersome that entrepreneurs either done in 7 days. due to practices at the local govern- bribe officials to speed up the process Across India, administrative bur- ment level, different performance of local or simply run their business informally. FIGURE 2.1 When reforms make it easier to legalize Starting a business in Noida—fastest in India together with Mumbai their operations, the informal businesses Time (days) Cumulative cost (% of income per capita) are the first to register.1 Furthermore, the 30 Time 30 days 60 reforms to ease the entry of new firms Cost 52.5% are relatively simple and not too costly 25 National procedure 50 2 to implement. Often they do not require State procedure 20 39.2% 40 major legislative changes. Enticing en- Private sector procedure terprises into the formal economy has 15 30 two benefits. First, formally registered 10 20 businesses grow larger and more pro- Procedure 5 ductive than informal ones. In a recent 5 Get the certificate 10 of incorporation study on informality in São Paulo, Brazil, 0 0 entrepreneurs said they could double 1 12 3 Procedures operations after registering. They would Source: Doing Business database. STARTING A BUSINESS 15

FIGURE 2.2 Time and cost to start a business in India and selected economies

0.4 New Zealand 1 Cost South Africa 6.0 22 (% of income per capita) Mumbai 70.9 30 7.5 24 Time Noida 52.5 30 (days) Jaipur 45.5 31 Indore 43.8 32 New Delhi 41.1 32 S. Asia average 31.9 32.5 Gurgaon 50.7 33 Hyderabad 41.6 33 Ludhiana 48.0 33 Chennai 40.3 34 Ahmedabad 46.3 35 Kolkata 39.6 36 Bhubaneshwar 39.9 37 Patna 38.5 37 Guwahati 40.5 38 Ranchi 51.5 38 Bengaluru 64.7 40 China 8.4 40 Kochi 47.2 41

Source: Doing Business database. branches of national agencies, as well as a business in India. Eight procedures, to register the company for taxes, social variations in local taxes and fees. The out of an average of 12 per city, are re- security, and health care. Some states business-entry process is relatively easy quired by national regulations (figure took steps to expedite the process for in New Delhi and burdensome in Benga- 2.1). These include business incorpora- entrepreneurs. For example, in Kerala it luru (table 2.1). tion, multiple tax registrations as well takes 25 days to obtain the value-added Post-registration requirements are as procedures to register the company tax certificate of registration, while in the main reason behind the high num- for social contributions. Some cities in Madhya Pradesh and Rajasthan, the cer- ber of procedures to open a business in India fare better on the number of pro- tificate is issued within 24 hours of re- India. Currently, an entrepreneur must cedures due to different requirements ceipt of the application. This allows the visit up to 5 different agencies to register at the state and municipal level. In New entrepreneur to focus on the business for fee and tax collections.5 Delhi and Patna, an entrepreneur does while the concerned authority verifies Local requirements account for only not have to register under the Shops and the facts and statements made in the one quarter of the procedures to start Establishment Act nor for profession tax. application. In Hyderabad and Bhubaneshwar, the Although India does not impose a What is measured? registration for both value-added tax paid-in minimum capital requirement,6 Starting a business measures the necessary and profession tax is done jointly at the the official costs to start a business are steps to enable a small or medium enterprise Commercial Tax Office. high, at 47% of income per capita. Costs in general commercial or industrial activities to operate legally in 17 Indian cities— Some procedures can be done ex- are high comparably to global bench- including permits, inscriptions, notifications, peditiously or simultaneously, but due marks—0% of income per capita in Den- and inspections. The time and cost required to the high number of separate regis- mark or 2.6% in Russia—and even in to complete each procedure under normal circumstances are calculated, as well as trations required, the total time to start comparison to the South Asia average the minimum paid-in capital required. It is a business is long. The time to register (31.9%) and East Asia average (32.3%). assumed that information is readily available a business varies from 30 days in Noida Nevertheless, the cost varies greatly to the entrepreneur, that there has been no prior contact with officials, and that all enti- and Mumbai to 41 days in Kochi. But across cities. In Patna, Kolkata, and Bhu- ties involved in the start-up process function even the city with the shortest time to baneshwar, entrepreneurs spend less without corruption. start a business would rank only 104 of than 40% of income per capita to open Note: See the detailed description of the standard case in 181 economies, the same as Kenya. The a business; for those in Mumbai, the the data notes. main sources of delay are procedures cost is almost double (figure 2.2). Costs 16 DOING BUSINESS IN INDIA 2009

TABLE 2.2 SNational level Business start up reforms at the national and local level in 2006–9 Local level

Electronic Electronic application for Use of payment of Reduction of Single access Administrative name approval electronic sig- stamp duty on Online applica- stamp duty on point for VAT reform at the and company natures (online company tion for VAT incorporation and profession profession registration certification) documents registration documents tax registration tax office Ahmedabad, Gujarat SS Bengaluru, Karnataka* SS Bhubaneshwar, Orissa* SS Chennai, Tamil Nadu* SS

Gurgaon, Haryana SS

Guwahati, Assam SS Hyderabad, Andhra Pradesh* SS Indore, Madhya Pradesh SS

Jaipur, Rajasthan* SS

Kochi, Kerala SS

Kolkata, West Bengal* SS

Ludhiana, Punjab SS Mumbai, Maharashtra* SS New Delhi, Delhi SS Noida, Uttar Pradesh SS Patna, Bihar* SS Ranchi, Jharkhand* SS * Locations measured by Doing Business in South Asia 2007. Note: The reforms took place between April 2006 and February 2009. Source: Doing Business database. equal to 35% of income per capita are and company registration. application generated online and copies imposed by national regulations and are As a result of these reforms, along of supporting documentation still have the same in all cities. Local government with reforms enabling the acceptance of to be physically dropped off at the autho- fees and taxes7 drive the variation in digital signatures and payment of fees rized agent’s desk. the cost to start a business across cities. by credit card, the registration time has As part of the Ministry of Corporate They amount to Indian rupees (INR) 280 been reduced. Company name approval Affairs revision of the Companies Act (about US$6) in Patna, but are almost 50 now takes 2 days, down from 4 or 6 1956, a Companies Bill was introduced times more expensive in Mumbai. days in 2006.8 The time it takes to obtain to parliament in October 2008. The bill Between April 2006, when data were the certificate of incorporation was also provides for greater use of e-government collected for the last Doing Business in lowered. The certificate is available on- systems for filing and accessing corporate South Asia report, and April 2009, the na- line, as an e-certificate, 2 or 3 days after data, and more options for entrepreneurs tional government, in collaboration with the application is made, as opposed to 9 to determine the company structure. state governments, has taken steps to or 10 days in 2006. This is good progress. In addition to the national reforms rationalize and simplify business start-up. However, the entrepreneur still has to affecting all states, 6 out of the 10 sta- Among emerging markets, India stands wait additional days until the physical tes benchmarked in 2006 introduced out in its focus on technology. In 2006, the copy of the certificate reaches her by administrative, legal, and technological Ministry of Corporate Affairs introduced mail. There is room for improvement in reforms (table 2.2). A number of tax- the MCA-21 e-government initiative, la- other areas as well. For example, even related services are now offered online. ying the groundwork for electronic regis- if entrepreneurs can now apply for a Entrepreneurs in New Delhi and Ah- tration of new businesses. As part of this permanent account number and tax de- medabad can now pay stamp duty on program, the government started compu- duction and collection account number company documents electronically. The terizing the registrars of companies across (TAN) cards online and thus speed up same service will soon be available in the country and introduced an electronic the process, few applicants use the on- Indore. E-stamping is a fast, convenient, filing system for company name approval line facility. This is mostly because the and transparent way to pay stamp duty. STARTING A BUSINESS 17

Taxpayers in New Delhi, Ahmedabad, entrepreneurs to focus on their business. registrar personnel. Making name re- and Mumbai can apply online for a va- Creating a single-access point for servation instant would further improve lue-added tax registration certificate and social-security registrations would allow the process. Many countries, such as amendments to the registration certifi- employers to simultaneously register Australia and the United Kingdom, have cate. As per amendment to the Gujarat with the Employees’ Provident Fund clear regulation on what names cannot State Tax on Profession, Trades, Calling Organization and the Employees’ State be used and these safeguards are incor- and Employment Act, in effect since Insurance Corporation. Saudi Arabia re- porated in the name reservation appli- April 2008, registration and the power to cently made social-security registration cation. Such an approach could also be levy and collect profession tax have been possible online. introduced in India. transferred from the state to the munici- While entrepreneurs in India can pal authorities. Registration is now being ELIMINATE ANTIQUATED file incorporation forms electronically REQUIREMENTS AND COMMUNICATE done at one of the 35 Civic Centers of REFORMS TO THE PUBLIC and pay registration fees online, docu- the Ahmedabad Municipal Corporation ments are still required to be submitted and the time has been reduced to 3 days. Some requirements are leftovers from a with the registrar of companies in paper There are also plans to make registration bygone era. These should be eliminated. form before the certificate of incorpora- and payment of profession tax available One example is the stamp duty on com- tion is issued. Making the incorporation online in Gujarat. pany documents. The payment of the process fully electronic would reduce the After the gradual adoption in 2005 duty could become part of the registra- time involved and make the work of the of value-added tax to replace the state tion fee. It would be better still if it was registrar much easier. Such reforms can sales tax, the next major decision by State not imposed at all, but rather collected as be inexpensive and are a good start for Finance Ministers was to phase out the part of the income tax. Another example larger and deeper reforms. central sales tax on interstate sale tran- is the company seal, which, in earlier sactions by March 2010. centuries, symbolized the legal identity MAKE BUSINESS START-UP AFFORDABLE of a business and authenticated all its WHAT TO REFORM? contracts. Now most documents are sent In Denmark, entrepreneurs pay nothing electronically. Although India now has to start their business, while in Brazil the CREATE SINGLE-ACCESS POINTS FOR regulations allowing electronic signatu- cost is as low as 8% of income per capita. ALL TAX REGISTRATION AND FOR SOCIAL-SECURITY REQUIREMENTS res, it is still a standard commercial prac- Funds to pay for government services are tice to make a company seal and use it for raised with taxes. In India, new busines- States can follow the example of Andhra subsequent commercial transactions. ses face multiple fees both at the national Pradesh and Orissa and consolidate the Eliminating this procedure should and local level. Unlike in Patna and Ran- registration for the value-added tax and be easy. A government communication chi, where a flat fee of INR 105 (about profession tax at the same office, under campaign could raise awareness and in- US$2) is charged, stamp duty on the the same authority. Or, even better, they form the public that the seal is not legally articles of association in Ahmedabad is could create a single-access point for all required. Most reformers are bad marke- linked to the start-up capital of the com- tax registrations instead of the existing ters. El Salvador first established a one- pany: a duty of INR 2,000 (about US$45) five different agencies for Permanent stop shop in 1999, but local entrepre- is charged for start-up capital between Account Number (PAN), tax deduction neurs thought it was only for foreigners. INR 100,000 and 500,000. Yet no matter and collection account number (TAN), A lesson was learned. The second time what size the company, the service provi- Shops and Establishment Act, profession around, the president himself inaugura- ded is the same. Why charge more? Fur- tax, and value-added tax. The registrar ted the improved one-stop shop and wi- thermore, registration for value-added of companies could take responsibility despread media coverage made sure that tax costs INR 5,100 (about US$115) for registering the new company with everyone knew about the new system. in Mumbai and registration under the the various tax authorities. The registrar Shops and Establishments Act costs INR could circulate the company documents, MAKE ONLINE START-UP FULLY 6,250 (about US$142) in Bengaluru. The FUNCTIONAL preferably electronically, to the various former is free in Jaipur and Ahmedabad, tax authorities. Jordan and Egypt put Although online name submission is while the later is free in Chennai. tax registration into the hands of the available in India, the process still invol- registrar, speeding up the process, which ves manual checking of company name now takes only 1 or 2 days, and allowing availability and appropriateness by the 18 DOING BUSINESS IN INDIA 2009

CREATE A ONE-STOP SHOP FOR ALL company registration is often one piece PRE- AND POST-REGISTRATION REQUIREMENTS of the puzzle and in many countries entrepreneurs still have to visit several The process for starting a legally operatio- other agencies before they can get down nal business in India could become more to business—such as obtaining docu- efficient by creating a one-stop shop for ments and having them notarized, and all registration, tax, and social-security registering for social security and taxes. requirements. Once the entrepreneur obtains the Director Identification Num- ber and Digital Signature Certificate, he would approach the registrar of com- 1. World Bank. 2007. Doing Business 2008. Washington, D.C.: World Bank Group. panies with several name options to be 2. The introduction of a fast-track system approved. The next steps—from stam- to start a business in Portugal cut the ping the memorandum and articles of time by 46 days in 2006. The reform association to tax and social-security was implemented in 5 months and cost US$350,000. World Bank. 2005. Doing registrations—would all be done inter- Business in 2006: Creating Jobs. Washing- nally at the registrar’s office. The entre- ton, D.C.: World Bank Group. preneur would simply fill in all requisite 3. Bertrand, Marianne, Simeon Djankov, forms at the beginning of the process, Sendhil Mullainathan, and Phillip Sch- making only one contact with the regis- nabl. 2006. “Who Runs Informal Busi- nesses in São Paulo?” Harvard University, trar, and would later receive the certifi- Department of Economics, Cambridge, cate of incorporation and confirmation Massachusetts. of registration with the other agencies. 4. Djankov, Simeon, Rafael La Porta, Floren- The registrar would include representa- cio López-de-Silanes, and Andrei Shleifer. 2002. “The Regulation of Entry.” Quarterly tives, with decision-making power, from Journal of Economics 117 (1): 1–37. various agencies (such as the Superinten- 5. Permanent Account Number (PAN), tax dent of Stamps, the tax, social security deduction and collection account number and medical insurance authorities). The (TAN), Shops and Establishment Act, profession tax, and value-added tax (VAT). agencies would have electronic access to 6. The paid-in minimum capital require- their respective databases for even faster ment reflects the amount that the entre- processing. preneur needs to deposit in a bank or Globally, creating one-stop shops with a notary before registration and up to 3 months following incorporation. has been the most common reform in 7. Such as the stamp duty payable on the business start-up. Thirty-nine countries Memorandum and Articles of Association have created or improved a one-stop for company incorporation, registration shop in the past 5 years. And introdu- fees for value-added tax, and the Shops and Establishment Act. cing one-stop shops has had promising 8. World Bank. 2006. Doing Business in results. For example, in Azerbaijan regis- South Asia 2007. Washington, D.C.: World trations grew by 40% between January Bank Group. and May 2008, as compared to the same 9. World Bank. 2009. Doing Business 2009. period in the previous year.9 Often these Washington, D.C.: World Bank Group. reforms do not require major legislative changes. However, creating a one-stop shop is no magic bullet. Reformers run the risk of creating “one-more-stop shops” or “mailboxes” that merely receive applications and forward them to agencies for approval. As Doing Business shows, 19

TABLE 3.1 Dealing with Where is it easy to deal with construction permits—and where not? Cost construction Time (% of income per Rank Procedures (calendar days) capita) permits 1 Bengaluru, Karnataka (easiest) 15 97 1,159 2 Gurgaon, Haryana 19 110 298 3 Chennai, Tamil Nadu 15 143 832 4 Ahmedabad, Gujarat 15 144 746 4 Hyderabad, Andhra Pradesh 16 80 1,314 4 New Delhi, Delhi 19 144 256 7 Ludhiana, Punjab 17 143 623 8 Bhubaneshwar, Orissa 18 149 295 9 Noida, Uttar Pradesh 19 139 696 9 Patna, Bihar 19 185 204 9 Ranchi, Jharkhand 19 170 226 12 Guwahati, Assam 16 179 353 Hema is planning to expand her beauty 13 Indore, Madhya Pradesh 21 163 205 product retail company. She considers 13 Jaipur, Rajasthan 19 151 415 where to build her new storage centers. 15 Kochi, Kerala 22 224 234 Friends have warned her that it can be 16 Kolkata, West Bengal 27 258 2,550 expensive and take months to obtain build- 17 Mumbai, Maharashtra 37 200 2,718

ing permits, clearances, and utility connec- Note: Rankings are the average of the city rankings on the number of procedures and the associated time and cost (% of GNI per capita) required to deal with construction permits. See the data notes for details. tions and she may have to pay “facilitation Source: Doing Business database. fees.” A newspaper article about a number of cities reforming their building-approval process captures her attention. These are It is faster and less costly than in other It is relatively easier to obtain per- the cities where she decides to invest. countries of South Asia, where it takes mits to build a warehouse and connect When it comes to construction per- on average 246 days and costs 2,341% it to utilities in Bengaluru, Gurgaon, and mits, striking the right balance between of income per capita. In fact, the average Chennai, and more difficult in Kolkata too little or too much regulation is chal- city is as efficient as the average OECD and Mumbai (table 3.1). Bengaluru, the lenging. Good regulation protects public economy (162 days). Yet, the process is best-performing city, would rank 72 out safety and brings in revenue, while mak- expensive in India. A number of Indian of 181 economies globally on the ease of ing the process efficient and affordable cities perform well when compared glob- dealing with construction permits, ahead both for those who use it and the author- ally; others do not (figure 3.1). of Brazil and China but behind Thailand

ity that administers it. The objective of FIGURE 3.1 strict building rules is to ensure that Some cities have more efficient construction permits approval process buildings are safe, but where rules are MUMBAI 2,718 too complicated or costly fewer projects MUMBAI 37 CHINA BRAZIL SOUTH ASIA get started and construction may move AVERAGE to the informal sector. CHINA Range In India, with many booming cities in India KOLKATA 258 SOUTH and construction contributing on aver- India17-city ASIA average AVERAGE age 6.3% of the GDP, deciding where 20 BRAZIL OECD 158 OECD to build is an important consideration AHMEDABAD 15 S. ASIA 772 for companies looking to expand their BENGALURU AVERAGE CHINA CHENNAI HYDERABAD 80 operations. Across the 17 benchmarked PATNA 204 cities, obtaining construction-related ap- OECD BRAZIL provals and utility connections requires Procedures Time Cost on average 20 procedures that take 158 (days) (% of income per capita) days and cost 772% of income per capita. Source: Doing Business database. 20 DOING BUSINESS IN INDIA 2009

What is measured? ceipt” as a proof that there are no arrears on property taxes. Second, in 3 cities, Doing Business looks at construction permits as an example of licensing regulations that businesses 1 face. Dealing with construction permits measures the procedures, time, and cost to build a com- they have to have notarized affidavits mercial warehouse; hook it up to basic utilities; and register it. It assumes that the new warehouse attached to the building-permit applica- will be used for storage of nonhazardous goods and is located on a land plot of 929 square meters tion. Third, when building a warehouse (10,000 square feet) in the peri-urban area of the city benchmarked. The warehouse has 2 stories with a total surface of approximately 1,300.6 square meters (14,000 square feet); each floor is 3 larger than 500 square meters, a separate meters (9 feet, 10 inches) high. The recorded procedures include submitting project documents visit to the Fire Service Department is (building plans, site maps); obtaining clearances and permits; receiving inspections; and obtain- required in Chennai, Kochi, Patna, and ing connections from electricity, water, sewerage, and telephone providers. The time and cost to complete each procedure under normal circumstances are calculated. All official fees associated with Ranchi. These procedures are not neces- completing the procedures are included. sary in cities like Gurgaon and Hydera- Note: See the detailed description of the standard case in the data notes section. bad where the municipal building offices operate as a single window, checking the application first and sending the and South Africa. In Ahmedabad, Bengaluru and plans for approval to other authorities There are wide variations in the Chennai, the entrepreneur would have to internally. number of procedures, time, and cost go through 15 procedures, the same as in Several municipalities require en- across locations due to local regulations Japan. The process in Mumbai consists vironmental clearances. For example, and practices. The building procedures of more than 30 steps, similar to Poland a builder in Kolkata has to obtain a are governed at the municipal and state and Ukraine. Obtaining a building per- clearance from the Kolkata Improvement level. In the last few years, 11 of the 17 mit and occupancy/completion certifi- Trust. In Mumbai she has to receive an benchmarked cities have revised their cate is mandatory in all cities, but some inspection from the Tree Authority to building bylaws and development rules cities require additional clearances and ascertain whether any trees are to be cut with the aim of clarifying the building- more steps to connect to utilities, which or planted. Then, the entrepreneur has to approval process. Many of them were also add to the total time and cost. wait for the monthly meeting of the Tree inspired by the regulatory guidelines of At the pre-construction stage, there Committee to issue the certificate, even the nonprescriptive National Building are three types of procedures that are not if there are no trees on the property. And Code of India, published by the Bureau of required in all cities. First, in cities like she also has to obtain the final clearance Indian Standards to ensure basic safety Bengaluru and New Delhi, entrepreneurs from the Tree Authority once construc- standards. Most cities have made build- have to visit the House Tax Department tion is completed. While good living con- ing regulations available online. to obtain an up-to-date “no-due tax re- ditions are important, complying with protective measures should not be ex- FIGURE 3.2 cessively burdensome for entrepreneurs. Building permit approvals and utility connections—the biggest bottlenecks The Bengaluru Municipal Corporation Time (days) 030 60 90 120 150 180 210 240 270 Hyderabad reserves the right to order planting two Bengaluru trees on plots larger than 200 square Gurgaon meters at the time the building-permit Noida is approved—no separate visits to other Chennai offices are necessary. Ludhiana Few inspections take place during Ahmedabad New Delhi construction. Builders have to notify the Bhubaneshwar building department about each stage and Jaipur one inspection typically is made by the Indore responsible authority. In Bengaluru and Ranchi Bhubaneshwar it is mandatory to obtain Guwahati Patna the commencement certificate at the foun- Mumbai dation level to prevent deviations from the Kochi approved project from the outset. “Once Kolkata the foundation is laid, there is little scope Zoning permit Building permit Occupancy Utilities and for changes from the original plan. Devia- approval certificate inspections Source: Doing Business database. tions are the main reason for builders to be DEALING WITH CONSTRUCTION PERMITS 21 denied the final occupancy certificate,” says clearances from the Town Planning and cupy their completed warehouse. Suku, a seasoned town planner. Development Departments can slow The complex process of connecting After terminating construction, en- down the process. In Kolkata and Kochi to utility services adds to the time. Hema trepreneurs have to notify the building it takes more than a month to obtain the will have to take 10 steps on average to and planning authority to receive the zoning certificate. In comparison, Bhu- hook the new warehouse to all utilities. final inspection and occupancy permit in baneshwar has computerized all maps After submitting the application, she will all cities. No-objection certificates from and the approved layout can be obtained have to return to the zonal office to pick various authorities and personal visits to on the spot at the Geo-Information Sys- up a sanction letter after an inspection by their offices are often required. In prac- tem (G.I.S.) counter of the Bhubanesh- each of the utility providers and pay the tice, many builders end up not obtaining war Development Authority, shortening connection fees. In 5 cities she also has the occupancy permit. According to a the pre-construction approval process to hire an independent contractor to in- study by the National Institute of Urban from 50 days to 1 day in the past three spect the cabling and issue the sanction. Affairs, less than 35% of the buildings years. It takes as long as 1.5 months to obtain have adhered to building regulations in Building-plan approval is fastest in an electricity connection in 7 out of the the National Capital Territory of Delhi.2 Bengaluru where entrepreneurs obtain 17 benchmarked cities. The water works Obtaining construction-related ap- their building permits in 25 days, while and sewerage departments are faster to provals and utility connections takes in Patna the same process takes 105 days. provide the connection. from 80 days in Hyderabad to 258 days There are time limits for the issuance of The cost to comply with all the pro- in Kolkata (figure 3.2). Hyderabad would the building permit in all cities bench- cedures required to build a warehouse rank 19 out of 181 economies on the time marked, but Bengaluru and Hyderabad and obtain utility connections is high to deal with construction permits, ahead are the only two cities to enforce them. across India. With an average cost of of Germany. Obtaining the final occupancy/comple- 789% of income per capita, the 17 cities The main source of local differences tion certificate is fastest in Kochi, where rank 157 out of 181 economies. Patna and is the time needed to obtain zoning a ‘silence-is-consent’ rule is enforced Indore with a cost of 205% of income per permits, building permits, and utility after 15 days. In Noida, entrepreneurs capita stand out as cheapest for the build- connections. Pre-construction zoning will have to wait 5 weeks longer to oc- ing company. Kolkata and Mumbai are costly at 2,550% and 2,718% of income TABLE 3.2 Fourteen out of 17 cities reforming construction permit process in 2006-9 per capita, respectively (figure 3.3). The cost variations stem from stag- Computerized Improved Digitalized building-permit handling of gering differences in building-permit and zoning plans process applications electricity connection fees. The building Ahmedabad, Gujarat permit for the warehouse in question Bengaluru, Karnataka* costs less than INR 20,000 (US$ 454) in Bhubaneshwar, Orissa* Ranchi, Kochi, and Gurgaon and over Chennai, Tamil Nadu* INR 700,000 (US$ 15,909) in Mumbai Gurgaon, Haryana and Kolkata. The electricity connection Guwahati, Assam charges are high in many cities. Hyderabad, Andhra Pradesh* Finding out exactly how much is Indore, Madhya Pradesh owed can be a challenge in itself. Multiple Jaipur, Rajasthan* fees apply for different types of buildings, Kochi, Kerala including a zoning and development fee, Kolkata, West Bengal* scrutiny fee to review documents, build- Ludhiana, Punjab ing permit fee, amenity fees, and malba Mumbai, Maharashtra* fees charged to clear construction waste. New Delhi, Delhi* To make life easier for builders, the Noida, Uttar Pradesh Ahmedabad municipal e-governance site Patna, Bihar* allows applicants to calculate building- Ranchi, Jharkhand* permit fees online. Also, 6 cities put fee Note: The reforms took place between April 2006 and February 2009. * Locations measured by Doing Business in South Asia 2007. schedules on their website. Source: Doing Business database. Cities have been reforming their 22 DOING BUSINESS IN INDIA 2009

FIGURE 3.3 time. Having forms online can save busi- Big variation in cost to obtain building permits and utility connections nesses at least one trip to the municipal- Cost (% of income per capita) ity—that can mean a whole afternoon Patna 204.4 not wasted in traffic. Online submissions Indore 205.2 also eliminate interactions and the likeli- Ranchi 226.4 hood of under-the-table payments. Kochi 233.8 New Delhi 256.0 RATIONALIZE AND CONSOLIDATE Bhubaneshwar 294.7 PRE-APPROVAL CLEARANCES Gurgaon 298.0 Guwahati 353.1 Entrepreneurs have to obtain a number Jaipur 414.6 of pre-approval clearances when apply- Ludhiana 622.9 ing for building and occupancy permits Noida 696.1 Ahmedabad 746.1 and utility connections. These require Chennai 831.7 separate visits to various authorities, Bengaluru 1,158.7 including town-planning departments, Hyderabad 1,314.2 sewerage and water works, state elec- Kolkata 2,549.6 tricity distribution companies, pollution Mumbai 2,717.8 boards, and fire services whose employ-

Source: Doing Business database. ees often inspect the site. The involve- ment of various authorities adds to the construction permit processes (table 3.2). the public and private sectors. A recent administrative complexity of the build- Ongoing digitalization, computerization, study in the United States shows that ac- ing-approval process. and increased administrative efficiency celerating permit approvals by 3 months To simplify the application process, have reduced delays in 9 out of 10 loca- could increase local government’s prop- cities should consolidate their clearances. tions measured in 2006, shortening the erty-tax revenue by 16%, and the overall Countries with good practices have first time to approve the building-permit ap- construction spending by 5.7%,3 expand- created a checklist of such diversified plication by 25 days on average. Five out ing the benefits of increased construction requirements and better coordination of 7 newly measured locations reformed, activity to the rest of the economy. among pre-approval authorities. In 2001, too, bringing the total number of reform- the municipal authorities in Riga (Latvia) ers to 14 out of 17. WHAT TO REFORM? created a step-by-step guide with a list Computerization progressed faster of required documents and flowcharts in a number of cities. In Ahmedabad and CONTINUE COMPUTERIZATION OF showing which offices to visit when and CONSTRUCTION-RELATED Chennai, builders can submit their plans APPROVALS AND PERMITS with what documents, and listing the electronically for an automatic scrutiny offices’ addresses, working hours, and against the building rules and zoning The cities in India are at varying stages of contact numbers. This simple reform cut plans. They can track their application computerization of their building-permit 2 months off the process. Following the online in Ahmedabad, Bengaluru, Chen- and utility-connection procedures. It is Latvian example would give applicants nai, and Hyderabad. More reforms of con- possible to submit building plans online in India confidence and trust in the struction-related requirements are neces- in 2 cities, track applications online in building-permit process and empower sary at both municipal and state levels. 4 cities, download applications in 10, them to demand the enforcement of time Making obtaining building permits and gather information online about the limits and official fees. more efficient has several benefits. First, building-permit approval process in 12 As the next step, municipalities can countries with simpler procedures and out of the 17 benchmarked cities. In open single-access points that centralize less costly regimes have larger construc- contrast, utility-service providers still applications and forward them to rele- tion sectors. Second, reducing the cost publish little information about the con- vant authorities as necessary on behalf of and hassle of obtaining construction ap- nection process and some of the munici- the entrepreneur, minimizing the num- provals keeps more construction in the pal websites do not function properly. ber of required visits. Indian cities need formal economy, therefore improving Further improving the online services not look abroad for examples—cities public safety. Finally, simpler and faster related to building permits will save both such as Bengaluru, Chennai, Gurgaon, building-approval processes benefit both businesses’ and government officials’ Hyderabad, and New Delhi have opened DEALING WITH CONSTRUCTION PERMITS 23 single-service windows for clearances. INCREASE ADMINISTRATIVE EFFICIENCY OF PLANNING AND Handling formalities and payments at BUILDING OFFICES a single-service window saves time and discourages corruption. Planning and building offices need to As a final step, single-access points continue adapting their capacity and can be transformed into one-stop shops employee skills to ensure quality of ser- that process applications internally. For vice, shorten waiting times, and enforce the one-stop shops to function property, time limits. Ongoing computerization local building offices should play a key of building approvals requires capacity role in the set up process. It is also advis- building. The officers need to be trained able that the one stop shops focus on a to use new software and other tools. specific phase of the process first, e.g. On-the-job training prevents delays due building permit approval. The challenge to poor institutional capacity to review is convincing such various agencies as building documents or carry out on- the tax authority, tree authority, and sew- site inspections. As the processes are erage department to send representatives changing, re-mapping of staff functions to a centralized location and provide is also necessary for the smooth han- them with decision power. One solution dling of applications. Higher numbers would be to work out a part-time system, of applications may require opening of whereby representatives from the differ- additional offices. Cities like Chennai ent agencies work at the one-stop shop a and Ahmedabad have recently opened few times a week. additional civic and zonal centers to sanction building plans. STREAMLINE THE STRUCTURE OF FEES Some of the most costly procedures related to building permits have fee schedules that are a function of a mix of 1. An affidavit is a formal sworn statement of fact, signed by the declarant (who is variables, such as plot area, built area, called the affiant or deponent) and wit- number of floors, and type of buildings. nessed (as to the veracity of the affiant’s In addition, a number of cities impose signature) by a taker of oaths, such as a notary public or a so called Oath Com- additional fees at the time of building- missioner in India. permit approval, e.g. malba fees in New 2. National Institute of Urban Affairs. 2008. Delhi. The complex fee structure leads Doing Business with City Governments. to broad interpretation and discretion by New Delhi: National Institute of Urban Affairs. the authorities for the calculation of the 3. PricewaterhouseCoopers. 2005. “The final administrative cost. This discretion- Economic Impact of Accelerating Permit- ary calculation system ultimately leads ting Process of Local Development and to longer wait times to obtain approvals Government Revenues.” Report prepared and connections. To improve the trans- for the American Institute of Architects, Washington, D.C. parency of the system and mitigate opportunities for rent seeking, cities should apply fees that are fixed or a function of only one variable, such as the size of construction. The fee schedules should be publicly displayed inside the offices and on billboards outside as well as online so that users can access them. 24

TABLE 4.1 Registering Where is it easier to register property—and where not? property 1 Gurgaon, Haryana (easiest) 10 Indore, Madhya Pradesh 2 Ahmedabad, Gujarat 11 Ludhiana, Punjab 3 Jaipur, Rajasthan 12 Noida, Uttar Pradesh 4 Bengaluru, Karnataka 13 Kolkata, West Bengal 5 Mumbai, Maharashtra 14 Guwahati, Assam 6 Ranchi, Jharkhand 15 Patna, Bihar 7 Kochi, Kerala 16 Chennai, Tamil Nadu 7 New Delhi, Delhi 17 Bhubaneshwar, Orissa 9 Hyderabad, Andhra Pradesh Note: The ease of registering property is a simple average of the city rankings on the number of procedures, the associated time and cost to register property. See the data notes for details. Source: Doing Business database.

The importance of registering property perors’ wealth for generations to come. tax revenues. was recognized early on in India. In Registering property is in the interest Akshay, the owner of an auto parts the 16th century, the Moghul emperor of both the state and the property owner. company, is thinking of buying a pro- Jaladdin Muhammad Akbar introduced With a formal title, entrepreneurs have an perty to accommodate his flourishing the country’s first land-registration sys- incentive to invest in their property, and business. In an average Indian city, he tem: a detailed cadastre of land parcels can use their immovable asset to obtain would have to spend 55 days and 10.6% with an assessment of their value. Taxes credit and expand. A recent study shows of the property value, and complete could then be levied based on the land that in West Bengal the reinforcement of 5 procedures to register the property value rather than on harvest. By streng- property rights through Operation Barga1 under his name. The process is easier thening the rights of plot owners, Akbar’s increased the average productivity of rice than in Bangladesh, where he would initiative stimulated agricultural inves- fields by 20%.2 Property registration also have to spend 245 days and 10.4% of the tments, boosted farmers’ productivity, benefits governments, as more property property value, but more burdensome and formed the basis of the Moghul em- registered translates into more property- than in China and Brazil (figure 4.1). In

FIGURE 4.1 Time and cost to register property in India and selected economies

Saudi Arabia 0 2 Cost Jaipur 9.9 24 (% of the property value) Gurgaon 7.7 26 Kochi 15.5 27 7.5 24 Time (days) Bengaluru 9.2 28 China 0 29 Hyderabad 10.5 37 Noida 25.4 37 Indore 10.7 39 Ahmedabad 7.0 42 Brazil 0 42 Mumbai 7.4 44 Chennai 10.1 48 New Delhi 7.5 55 Ranchi 5.4 56 Ludhiana 10.6 67 Guwahati 15.4 84 Patna 12.4 87 Kolkata 7.9 107 Bhubaneshwar 7.5 126

Source: Doing Business database. REGISTERING PROPERTY 25

the Subregistrar’s Office—where Akshay FIGURE 4.2 What is measured? Transferring a property title is slow must verify that the property is free of Registering property records the sequence Share of total time to complete a property transfer of procedures, time, and costs necessary to dispute and later on register the sale 17-city average (%) transfer a property title from one business deed—and the Circle Revenue Office to another, when a company purchases land Other in charge of transferring the property Final sale deed and a building. All procedures are recorded 5.0 title. The time spent in these two offices 6.3 until the buyer can house his business in Encumberance the property, sell the property to another Title accounts on average for 89% of the total 11.9 transfer company, or use the property as collateral to time spent on registering property across obtain a loan. It is assumed that the property 64.2 is registered and free of title dispute. all cities, and nearly 2/3 of the total time Registration 12.6 Note: See the detailed description of the standard case in the is spent on the transfer (figure 4.2). In data notes section. Kochi, an entrepreneur spends 3 days to search for an encumbrance, 1 day to Saudi Arabia, it would take Akshay only register the sale deed, and 20 days to Source: Doing Business database. 2 days and 2 procedures to register his transfer the property title. In Kolkata, the property, at no cost at all. same procedures take 18, 7, and 78 days, real-estate transactions skyrocketed, Registering property is not as cum- respectively. Two factors explain these while the personnel in charge of proces- bersome everywhere. Although all states differences in time: computerization and sing applications remained unchanged. require the same main steps—searching the efficiency of local staff. In contrast, cities like Jaipur managed for encumbrances, drafting a sale deed, Where land records have been com- to reduce the time to register a sale deed registering the deed at the Subregistrar’s puterized, it is easier for Akshay to search from 17 days in 2006 to 2 days in 2009, office, and transferring the property title for encumbrances, for the Subregistrar’s by increasing the number of Subregistrar at the Circle Revenue Office—time and Office to register the sale deed, and for offices from 2 to 8 (figure 4.3). Proper cost differ from city to city. In Gurgaon, the transfer office to check the validity of training and transparency also matters, it takes only 26 days and 7.7% of the the application. If the registration system as Noida exemplifies. Transferring a title property value to register property, easier is unified across offices, as in Jaipur, the there takes only 9 days. than in Guwahati, where it takes 84 days entrepreneur can search for an encum- As most of his savings went into and 15.4% of the property value to do so. brance and register the sale deed in any the purchase, Akshay also needs his new Well-performing cities like Gurgaon, Jai- Subregistrar’s Office, regardless of the property to be registered at low cost. In pur, and New Delhi provide good exam- office’s jurisdiction. India, however, that will hardly be the ples from which other cities can learn Digitalizing records, however, is not case. Registering property costs 10.6% (table 4.1). If all cities were to adopt enough to reduce time. Only offices that FIGURE 4.3 India’s best property-registration practi- complement technological improvements Registering property in Jaipur— ces, India’s global ranking would improve with staff training and performance ma- big improvements since 2006 make it by 35 ranks to 70 out of 181 economies, nagement reap the fruits of their efforts. the fastest in India on the ease of registering property, over- Gurgaon, India’s top performer for regis- Time (days) Better 2006 taking Hong Kong and Kuwait. tering property, is a case in point. The computerization 50 28 days What explains local differences in Haryana Urban Development Authority cut to 15 time? Consider the example of Akshay, (HUDA), in charge of title transfer, hired our auto parts manufacturer. He needs a consulting company to develop custo- 40 to register his new property as fast as mized software and train one employee possible. Each month spent dealing with from each unit. HUDA now requires all 30 an administrative issue is a month lost its employees to be proficient in the new More subregistrar in terms of potential revenues. How long computer system. As a result, HUDA 2009 20 offices Akshay will wait depends on where his offices take only 15 days to transfer a 17 days cut to 2 business is located. If in Jaipur, his new property title. 5 days cut to 2 building will be registered and ready to Properly staffed offices handle 10 house his business in 24 days, five times Akshay’s application faster. A major rea- faster than in Bhubaneshwar (126 days). son for delays at the Subregistrar and 0 Variations in time come mainly from transfer offices is lack of staff. This is 15 the performance of two local offices: especially the case in big cities, where Procedures Source: Doing Business database. 26 DOING BUSINESS IN INDIA 2009

FIGURE 4.4 be as high as 12.5% of the property is important. When property-transfer Stamp duty is the biggest cost value (Kochi) or as low as 3% (New costs were as high as 13% in 2005, many Share of total cost to complete a property transfer 17-city average (%) Delhi) and 4% (Ranchi). Stamp duties property owners resorted to strategies account on average for 69% of all costs to avoid property taxes, such as eva- Other incurred (figure 4.4). Deed-registration ding registration or using long-term lea- Legal fees 6.6 costs, charged by subregistrar offices in ses, transfers under court decrees, and 9.0 most cities, also vary significantly, from cooperative housing.3 To tackle these Stamp Registration 15.5 68.9 duty 1% of the property value in Ahmedabad issues, the Ministry of Urban Develo- to 8.5% in Guwahati. pment launched the Jawaharlal Nehru Entrepreneurs often hire lawyers, National Urban Renewal Mission (JN- whose fees also explain the differences NURM), a nationwide program aimed in cost between cities. Lawyer’s fees can at streamlining property registration. Source: Doing Business database. indeed be as high as INR 30,500 in Delhi Under JNNURM, a series of reforms (US$ 693) or as low as INR 7,500 (US$ is underway. Several states cut their of the property value, compared to 0.2% 170.5) in Patna. Variations are driven stamp-duty rate, such as Delhi (from in Russia and 2.8% in Singapore. Some by the size of the city and demand for 8% to 6% for men, and 6% to 4% for cities are cheaper than others. In Ranchi, real-estate lawyers, but the cost to the women), Gujarat (reduced to 4.9% in Akshay will spend 5.4% of the property entrepreneur also depends on how many 2006), Orissa (from 11% to 5% in 2008), value, more than in Mexico (4.8%) but procedures he needs to hire a lawyer for. and Uttar Pradesh (reduced to 5% in almost three times less than in Kochi In cities where the procedures are sim- 2005). Five cities—Bhubaneshwar, Jai- (15.5%) and five times less than in ple, computerized, transparent and local pur, New Delhi, Patna, and Bihar—have Noida (25.4%). officials are held accountable, entrepre- further computerized their land records, Much of the cost variations can be neurs do not hire lawyers as often. making it easier for entrepreneurs to explained by differences in stamp-duty The central and state authorities are search for encumbrances and register rates, registration costs for the final sale well aware that a straightforward and their sale deeds (table 4.2). deed, and lawyers’ fees. Stamp duty can efficient property-registration system WHAT TO REFORM? TABLE 4.2 Cities and states reformed procedures and cost to register property in 2006-9 REDUCE STAMP DUTY FOR PROPERTY Improved land Reduced Improved REGISTRATION OR REPLACE IT WITH A Reduced record administrative administrative FIXED FEE stamp duty computerization fees efficiency Ahmedabad, Gujarat High stamp duties create an incentive Bengaluru, Karnataka* for entrepreneurs to undervalue their Bhubaneshwar, Orissa* property or evade registration altoge- Chennai, Tamil Nadu* ther. Reducing stamp duties or replacing Gurgaon, Haryana them with a fixed fee would encourage Guwahati, Assam entrepreneurs to formally register their Hyderabad, Andhra Pradesh* property. The rise in registrations could Indore, Madhya Pradesh offset, if not exceed, the financial loss Jaipur, Rajasthan* caused by the tax cut. In July 2004, after Kochi, Kerala reducing the stamp duty from 10% to Kolkata, West Bengal* 5%, the state of Maharashtra saw its Ludhiana, Punjab stamp-duty revenues jump by 20%.4 Mu- Mumbai, Maharashtra* nicipalities could also eliminate surchar- New Delhi, Delhi* ges and registration fees. They impose Noida, Uttar Pradesh an additional burden on entrepreneurs Patna, Bihar* wishing to register. Ranchi, Jharkhand* Egypt successfully implemented a Note: The reforms took place between April 2006 and February 2009. reduction in property-registration fees. *Locations measured by Doing Business in South Asia 2007. Source: Doing Business database. In 2006, registering a property in Cairo REGISTERING PROPERTY 27 cost 5.9% of the property value. Ninety by better enforcement and sanctions, if percent of properties were either not deadlines are not respected. registered or undervalued.5 The Egyp- Increasing the number of offices— 1. A land-reform movement initiated by the Government of West Bengal, which aimed tian government reduced registration especially in cities where the real-estate at formally recording the names of share- fees from 3% of the property value to a market is buoyant—and fast-track pro- croppers. low fixed fee and abolished other fees. cedures could improve efficiency. For a 2. Banerjee Abhijit, Paul Gertler, and Mai- It cost merely 1% of the property value higher fee, entrepreneurs would have tresh Ghatak. 2002. “Empowerment and Efficiency: Tenancy Reform in West Ben- to transfer property in 2008. The reform the option of having their application gal.” Journal of Political Economy, 103 (5): paid off: property registrations, and con- processed more quickly. Cases would be 903–37. comitant revenues, rose in the 6 months prioritized based on a set of transparent 3. Penelope Fidas. 2008. Doing Business following the reform.6 criteria. This system is already offered in in Madagascar: Proposal to Reduce the a number of cities across the world, such Property Transfer Tax. Washington, D.C.: World Bank Group. IMPROVE THE EFFICIENCY OF THE as Buenos Aires (Argentina), Ulan Bator SUBREGISTRAR AND TRANSFER 4. World Bank. 2005. Doing Business in OFFICES (Mongolia), and Kiev (Ukraine). 2006: Creating Jobs. Washington, D.C.: World Bank Group. Improving the efficiency of these two ELIMINATE OR CONSOLIDATE 5. Overseas Private Investment Corporation. PROCEDURES offices would dramatically reduce re- 2005. “Egypt: Overview of the Housing Sector.” Office of Economic Development, gistration time in all 17 cities. It would All cities require the same main procedu- Washington D.C., Issues Paper 1, July. also reduce costs by encouraging en- res to register property: check for encum- 6. World Bank. 2007. Doing Business in trepreneurs to conduct the procedures brances, draft a sale deed, register the sale Egypt 2008. Washington, D.C.: World themselves, not via lawyers. deed, and transfer the property title. Still, Bank Group. To do so, local government could entrepreneurs in every city must undergo 7. After acquiring a stamp-paper license from the Government of India, Karim further computerize land records and one or two additional procedures, such Telgi started printing fake stamp papers. train personnel to use the new system. as checking for secondary non-encum- Using more than 300 agents, he then Such reforms have already taken place brance claims, obtaining a tax clearance, sold the fakes to bulk purchasers, such as banks, insurance companies, and share- in a number of states under different or paying stamp duty separately. brokerage firms. On June 28, 2007, Karim names, such as the Property Registration These procedures could be elimina- Telgi was sentenced to 13 years in prison Information System Module (PRISM) ted or consolidated with other procedu- and ordered to pay a fine of US$20 million. initiated in 1997 in Punjab, the Compu- res conducted at the office of the subre- ter-Aided Administration of Registra- gistrar. Secondary encumbrance claims tion Department (CARD) program in should be checked along with primary Hyderabad, or the Karnataka Valuation ones, tax clearance should be an integral and e-Registration (KAVERI) initiative part of the verification process preceding in Bengaluru, set out in 2002. registration of the final sale deed, and Local governments could also im- franking services should be offered at prove the transparency of the process, the office of the subregistrar, so as to by explaining the different steps on their spare entrepreneurs the inconvenience of website, and publishing fee schedules. buying stamp paper separately. The workflow at the offices could be im- Since the Telgi stamp-paper scam in proved to avoid queues and bottlenecks. 2003,7 most cities already offer franking In addition, local governments could services. New Delhi even introduced an introduce statutory limits capping the e-stamping facility that allows entrepre- time taken by the offices to register the neurs to pay the stamp duty online by deed and transfer the property title. So credit card. However, many businesses far, Kolkata, New Delhi, and Gurgaon still resort to traditional stamp-paper– have drafted citizen charters that set based methods, because they are not clear time objectives for title transfer, but aware such facilities exist. Publicizing the time taken in practice still far exceeds franking services would allow reforms to these objectives. To truly reduce time, a truly impact the number of procedures citizen charter needs to be accompanied and time required for registration. 28

TABLE 5.1 Paying taxes Where is it easy to pay taxes—and where not?

1 Ludhiana, Punjab (easiest) 10 Indore, Madhya Pradesh 2 Jaipur, Rajasthan 11 Ahmedabad, Gujarat 2 Noida, Uttar Pradesh 12 Bengaluru, Karnataka 4 Mumbai, Maharashtra 13 Hyderabad, Andhra Pradesh 4 Ranchi, Jharkhand 14 Kochi, Kerala 6 Guwahati, Assam 15 Patna, Bihar 7 Gurgaon, Haryana 16 Kolkata, West Bengal 7 New Delhi, Delhi 17 Chennai, Tamil Nadu 9 Bhubaneshwar, Orissa Note: Rankings are the average of the city rankings on the number of payments, time and total tax rate. See the data notes for details. Source: Doing Business database.

Decentralization, demographics, and ris- to comply with tax requirements in Lu- state and municipal business taxes are ing living standards are putting pressure dhiana, Jaipur, and Noida than in Patna, levied at the local level. Even when sev- on local governments to provide a wide Kolkata, and Chennai (table 5.1). Why eral municipalities share the same local range of public services and develop such differences? tax rate, the number of payments may infrastructure. Taxes constitute a vital Some cities require fewer annual differ. In Bhubaneshwar, the state em- source of revenue to finance the schools, payments than others. Due to the local ployee tax is paid only once a year. In hospitals, and roads necessary for citi- fiscal structure and tax requirements, several other cities, it is paid monthly. zens and businesses to thrive. the number of yearly payments varies It is faster to prepare and file returns As necessary as taxes are, paying from 59 in Ludhiana, Noida, Bengaluru, and to pay taxes in some cities than in them is stressful for entrepreneurs around and Mumbai to 76 in Kochi and 78 in others. An entrepreneur in Jaipur would the world. Sameer, the owner of a sari Hyderabad (figure 5.1). Most taxes are complete all fiscal requirements in 233 manufacturing company, is no exception. central, but the state value added tax hours, faster than in Kolkata (303 hours) His country, India, ranked 169 out of 181 (VAT), the vehicle tax, the infrastructure and Patna (405 hours). Many factors can economies on the ease of paying taxes in development tax, and in some instances explain variations in time—the trans- Doing Business 2009. This year, he will spend on average 278 hours and 68.4% FIGURE 5.1 of his company’s profits on 65 different Indian businesses make numerous tax payments payments to comply with all tax require- Payments (number per year) 59 ments. In Hong Kong, Sameer would have Bangaluru Ludhiana 59 to spend only 80 hours on 4 yearly pay- Mumbai 59 ments, amounting to 24.2% of his profits. Noida 59 Paying taxes in India’s neighboring Jaipur 60 countries would be easier for Sameer. Al- New Delhi 60 though it takes less time in India to pre- Gurgaon 62 Guwahati 62 pare, file, and pay taxes than the region’s Bhubaneshwar 63 1 average of 336 hours, South Asia’s aver- Ranchi 63 age number of yearly payments (37) and Indore 64 burden on company’s commercial profits Patna 64 (44.4%) remain significantly below those Chennai 68 Kolkata 68 of India. Ahmedabad 75 The good news, for Sameer and Kochi 76 other entrepreneurs, is that tax require- Hyderabad 78 ments are not equally burdensome in CHINA BRAZIL SOUTH ASIA all Indian cities. It is easier for taxpayers 9 11 AVERAGE Source: Doing Business database. 37 PAYING TAXES 29

What is measured? mostly because of different rates in property, environmental, vehicle, profession, Paying taxes records all taxes and mandatory contributions that a medium-sized company must pay in the 17 cities in fiscal year 2007, as well as measures of the administrative burden of paying and municipal business taxes. taxes and contributions. In doing so, Doing Business goes beyond the traditional definition of a The national government initiated tax: as defined for the purposes of government national accounts, taxes include only compulsory, several programs to increase the effi- unrequited payments to general government. Doing Business differs from this definition because it measures charges that affect business accounts, not government accounts. The main differences ciency of the central and local tax sys- are in labor contributions and value added tax. Doing Business measures government-mandated tems. In 2005, it started implementing contributions paid by the employer to a requited private pension fund or workers’ insurance fund. It a uniform VAT rate among all Indian excludes value-added taxes from the total tax rate because they do not affect the accounting profits of the business—that is, they are not reflected in the income statement. Any reforms that took place states, eliminating some of the cascad- in fiscal year 2008 and affect the case measured byDoing Business will be reflected inDoing Business ing effects caused by local taxes before. 2010. By 2008, all Indian states had adopted Note: See the detailed description of the standard case in the data notes section. the VAT system. In 2007, the central sales-tax rate was decreased from 4% to parency and efficiency of tax adminis- in all cities. In Noida, Sameer would 3%. This served as a significant relief on tration, the availability of accounting have to spend the equivalent of 66.5% Indian businesses, since the central sales software, the English literacy of accoun- of his commercial profits to pay all taxes tax constitutes a large portion of the total tants (as most accounting software is in and labor contributions, compared with tax rate (see figure 5.3). The central sales English), the reach and sophistication of 70.3% in Bengaluru. As labor taxes and tax rate was further decreased from 3% the local banking system, and the num- the central sales tax remain relatively to 2% in June, 2008. The lowered tax ber of forms to be filled out. The major stable across the 17 benchmarked cit- rates borne in fiscal year 2008 will be bottlenecks in most cities are created by ies, variations in the effective corporate reflected in the forthcomingDoing Busi- VAT, central sales tax, and labor taxes, income-tax rate and state/municipal tax ness 2010 report. which require frequent payments and rates account for the local discrepancies By 2010, the central government numerous forms. The processing time (figure 5.2). The statutory base corpo- plans to introduce a uniform goods and for the corporate income tax has been rate income-tax rate is the same across services tax (GST), in order to bring the significantly improved since the national the country at 30%. However, due to two systems of indirect taxes in India— government introduced mandatory elec- differences in deductions, the effective one administered by the states, the other tronic filing and online payment of the profit tax rate as a portion of commercial by the central government—under the corporate income tax. profits varies from 21.6% to 24.1%. Dif- same umbrella. The Indian government The tax burden is not equally heavy ferences in local taxes are considerable also charged a group of experts, the Kelkar Task Force, with the establishment FIGURE 5.2 of a list of recommendations to improve Local taxes vary from 7.1% in Bengaluru to 0.8% in Noida India’s tax system. On top of the Kelkar Profit tax Local taxes Task Force’s agenda were administrative Bengaluru reforms and computerization, paving the Chennai Indore way for a series of efficiency-improving Kolkata initiatives. Two examples are the tax Ahmedabad information network and the online tax Patna accounting system, which simplified pro- New Delhi cedures and reduced the number of nec- Kochi Mumbai essary income-tax forms from 7 to 3. The Hyderabad Ministry of Finance also allows for the Guwahati electronic filing of corporate income tax. Bhubaneshwar In 2008, more than 2.5 million corporate Ludhiana income-tax returns were filed online, a Jaipur 2 Ranchi 249% increase compared to 2007. Gurgaon Noida 10 20 30 Tax rate (% of commercial profit) Source: Doing Business database. 30 DOING BUSINESS IN INDIA 2009

FIGURE 5.3 what is already in the government’s enues get eroded by tax evasion. A recent Reforming—and lowering—taxes reform agenda. First, the government study evaluated the cost of compliance % of commercial profit 82.2 should further harmonize the classifi- in India at between 6 and 15% of corpo- cation of goods and the sales tax/VAT rate tax collections.4 Fiscal complexity structure across all states. Second, the also favors corruption and rent-seeking Before reform 29.0 central sales tax—which was to have behavior. been replaced by the VAT—has not been Most of the online tax filing and

After reform 23.0 68.4 phased out yet. In September 2007, the payment platforms have been launched central and state governments agreed by the central government. Examples on 3 successive reductions before a final include the central VAT and the corpo- abolishment of the central sales tax by rate income tax. State authorities should March 31, 2010. In the meantime, entre- follow suit. To simplify the administra- Central Average preneurs are required to pay central sales tive burden, the central and state gov- sales tax total tax rate tax, central VAT, and state VAT. Having ernments could expand the successful Source: Doing Business database. different taxes levied on the same tax experience of the online tax accounting WHAT TO REFORM? base, administered by different agencies, system to all taxes paid by businesses. adds a significant compliance burden When businesses can enter tax informa- CONSOLIDATE THE VAT SYSTEM AND on companies that must pay monthly tion, perform calculations, and pay with PHASE OUT THE CENTRAL SALES TAX sales taxes both to local and central tax one click, it reduces both compliance To replace the cascading sales tax, a authorities. As a result, companies have time and the number of payments. If value added tax (VAT) was introduced to abide by different laws. On average, India were to introduce electronic filing in 21 states on April 1st, 2005, a cru- countries that have more than one law and payment systems for social security cial reform considering that sales taxes per tax also require 20% more time to and state employee’s insurance contribu- represented at the time more than 60% pay taxes than countries that do not tions, the country’s average number of of state tax revenues.3 The principles of (figure 5.4). These taxes could be consoli- payments would drop from 65 to 43. regional autonomy were respected, as dated into one and the revenues would Such a system would also benefit the states retained the authority to set their then be distributed to different govern- government: a computerized tax system own VAT rates. ment agencies. minimizes mistakes, diminishes admin- Currently, the Indian government is istration costs, facilitates refunds, and fleshing out a proposal to merge the cen- PROMOTE THE USE OF ONLINE TAX enables data collection on taxpayers to FILING AND PAYMENT tral VAT on goods and services with the ensure better tax compliance. state VAT in the form of a goods and ser- A complex tax administration is costly, vices tax. In addition, the plan includes both for entrepreneurs who spend time phasing out the central sales tax. dealing with paperwork and tax officials, Our recommendation reiterates and for the government, whose fiscal rev- 1. Average calculations including Afghani- stan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka. FIGURE 5.4 2. Website of India’s Income Tax Depart- More complexity, more time paying taxes ment: https://incometaxindiaefiling.gov. Time to comply with tax regulations (hours per year) in/portal/index.do. 3. Rao, Govinda M., and Rao Kavita R. 2005. Law is 397 Many laws 396 ambiguous per tax Mandatory 385 Trends and Issues in Tax Policy and Re- forms for record keeping form in India. India Policy Forum 2006, 1 tax, 328 Washington, D.C.: Brookings Institution. Law is 309 1 law clear Discretionary 282 forms for 4. Das-Gupta, Arindam. 2002. The Income record keeping Tax Compliance Cost of Corporations in India, 2000–2001. NIPFP Working Paper 8. New Delhi: National Institute of Public Finance and Policy.

Ambiguity Redundancy Rigidity Source: Doing Business database. 31

Trading across TABLE 6.1 Where is it easy to export and import—and where not? borders 1 Bhubaneshwar, Orissa (easiest) 10 Patna, Bihar 2 Chennai, Tamil Nadu 11 Indore, Madhya Pradesh 3 Ahmedabad, Gujarat 12 Ludhiana, Punjab 3 Mumbai, Maharashtra 13 Hyderabad, Andhra Pradesh 5 Kochi, Kerala 14 Jaipur, Rajasthan 6 Kolkata, West Bengal 14 New Delhi, Delhi 7 Guwahati, Assam 16 Noida, Uttar Pradesh 8 Ranchi, Jharkhand 17 Gurgaon, Haryana 9 Bengaluru, Karnataka Note: Rankings are the average of the city rankings on the number of documents, time and cost required to export and import. See the data notes for details. Source: Doing Business database.

Madan owns a small textile business in There are many successful entrepre- To produce his precious garments, Guwahati. His garments, famous for their neurs like Madan who would be more Madan needs to import silk from Thai- fine embroidery, are increasingly sought encouraged to expand their activities land. He needs to receive all material on after by international clients. He would abroad if they had to spend less time time and at a low cost to stay competi- like to expand his business and sell his and money on paperwork, clearance tive. In Guwahati, importing a container products abroad, but he is afraid to make procedures, port activities, and inland of textiles requires an average of 9 docu- the leap because of the time and cost it transportation. Exporting a container of ments and 28 days with an average cost takes to export. His cargo must be trans- textiles from Guwahati through the port of US$ 794. In Denmark, the same pro- ported to the nearest seaport, crossing of Kolkata requires on average 8 docu- cess requires 3 documents and takes 5 numerous checkpoints, which may delay ments, 22 days, and costs US$ 713. In days to complete at a cost of US$ 681. the shipment. Once at the port, the cargo Singapore, the best performer in 2009, it The more time-consuming the ex- may be delayed further because of con- would take Madan only 4 documents, 5 port or import process, the less likely it gestion and administrative procedures, days, and US$ 456 to complete all export is that a trader will be able to reach in- adding to the cost and uncertainty. requirements. ternational markets in a timely fashion.

FIGURE 6.1 Time to export and import in India

Time to export (days) Time to import (days) Ahmedabad 17 Bhubaneshwar 16 Bhubaneshwar 17 Ahmedabad 18 Mumbai 17 Chennai 19 Patna 19 Kochi 21 Kolkata 20 Mumbai 21 Indore 21 Jaipur 22 Ludhiana 21 Hyderabad 23 Ranchi 21 Bengaluru 25 Guwahati 22 Ludhiana 25 Jaipur 22 Noida 27 Bengaluru 25 Gurgaon 28 Chennai 25 Guwahati 28 Gurgaon 25 New Delhi 28 New Delhi 25 Kolkata 31 Noida 25 Patna 32 Hyderabad 26 Indore 35 Kochi 28 Ranchi 36

Source: Doing Business database. 32 DOING BUSINESS IN INDIA 2009

What is measured? time in different stages sheds light on fees charged at Chennai port. The port the main bottlenecks of the process (fig- charges and terminal handling fees are Trading across borders measures all procedural requirements, including the number ure 6.2). Exporters in both inland and even lower in Kochi, which has both the of necessary documents and the associated coastal cities spend more than half of lowest overall export costs (INR 19,014 – time and cost (excluding trade tariffs) for ex- their time complying with documenta- US$ 432) and import costs (INR 21,120 porting and importing a standardized cargo of goods by ocean transport. For exporting tion requirements. Customs clearance – US$ 480). goods, procedures range from packaging of and port activities account for the sec- Importing and exporting goods to/ the goods at the factory to their departure ond-largest fraction of total export time. from Noida, Gurgaon, and New Delhi is from the port of exit. For importing goods, procedures range from the vessel’s arrival at Inland transportation accounts for only associated with higher costs (figure 6.3). the port of entry to the cargo’s delivery at the 16% of the export time for inland cit- More than 50% of these costs stem from factory warehouse. Payment is made by a ies (12% for coastal cities). It illustrates inland transportation, reflecting the big letter of credit. that improvements in the trade logistics distance of these cities to the Nhava Note: See the detailed description of the standard case in the data notes section. chain have the biggest potential impact Sheva port, which is most commonly on the overall time to trade. used. Trading across borders is most This affects his ability to expand busi- Inland transportation, an impor- expensive in Jaipur, where it costs INR nesses and create jobs. A recent study of tant component of trading, is one of the 56,723 (US$ 1,289) to export and INR 126 economies calculates the loss from sources of variation in total time and cost 60,900 (US$ 1,384) to import a container export delays at around 1% of trade for among the Indian cities. The time it takes through the port of Mundra. In addition each extra day. For perishable agricul- to transport cargo to the seaport can be to elevated inland transportation costs, tural products the cost is nearly 3% of the reduced through improvements in the traders face higher port charges and ter- volume of trade for each day’s delay.1 rail and road infrastructure. However, a minal handling fees at Mundra port. The administrative requirements, substantial portion of inland transport India was the top reformer globally time, and cost to import and export delays also stems from numerous inter- on the trading across borders indicator goods vary among the 17 measured In- state tax checkpoints as well as adminis- in Doing Business 2008 and continued dian cities. The export process takes on trative and informal ones. Streamlining reforming in Doing Business 2009. The average 22 days, whereas for import it or eliminating those checkpoints would implementation of ICEGATE (Indian takes 26. It is fastest to import and export cost less than investing in infrastructure Customs and Excise Gateway)—an elec- from Bhubaneshwar through the port and still reduce transportation time. tronic data interchange (EDI) system—at of Vishakapatnam—17 days to export Chennai is among the cheapest In- the country’s major entry points has sig- and 16 days to import. The coastal city dian cities with which to trade. For ex- nificantly facilitated trading. The system of Chennai is close behind with 25 days ample, businesses pay INR 56,723 (US$ enables shipping lines to submit their to export and 19 days to import. Export- 1,289) to export a 20-foot container from cargo manifests electronically, initiating ing a 20-foot container takes the longest Jaipur, compared to only INR 23,800 the clearance process even before the from Kochi—28 days. Importing is very (US$ 541) in Chennai. This cost advan- ship docks. In addition to simplified time-consuming in Ranchi at 36 days tage is in part explained by lower inland and streamlined filing and payment pro- (figure 6.1).2 transportation costs, but also by moder- cesses, the EDI system has also reduced A breakdown of the total export ate port charges and terminal handling opportunities for facilitation payments. These reforms helped cut delays for trad- FIGURE 6.2 Exporters spend most time on paperwork ers in Mumbai by 10 days since their implementation (figure 6.4). Share of total export time Share of total export time Inland city average (%) Coastal city average (%) To speed up and facilitate trade in Ports & Documents Ports & Documents inland cities, India created Inland Con- terminal preparation terminal preparation tainer Depots (ICDs) across the coun- handling handling 14.5 19.6 try. These ‘dry ports’ offer handling, Inland Inland storage, and customs-clearance services, transportation transportation and handling 15.6 53.9 and handling 12.1 51.4 enabling traders to complete all required clearances and inspections in their re- 16.0 16.8 spective cities as opposed to at the port Customs clearance Customs clearance and technical control and technical control of entry/exit. This relieves traders from the burden of setting up and maintain- Source: Doing Business database. TRADING ACROSS BORDERS 33

FIGURE 6.3 Cost to export and import in India

Cost to export (US$ per container) Cost to import (US$ per container) Kochi 432 Kochi 480 Chennai 541 Chennai 593 Kolkata 644 Kolkata 710 Ranchi 678 Ranchi 717 Guwahati 713 Guwahati 794 Bengaluru 783 Bhubaneshwar 833 Bhubaneshwar 834 Mumbai 960 Indore 912 Ahmedabad 978 Patna 941 Indore 981 Mumbai 945 Patna 985 Ahmedabad 946 Bengaluru 1,024 Hyderabad 1,012 Hyderabad 1,084 Gurgaon 1,077 Ludhiana 1,154 New Delhi 1,077 New Delhi 1,158 Noida 1,077 Gurgaon 1,184 Ludhiana 1,105 Noida 1,187 Jaipur 1,289 Jaipur 1,384

Source: Doing Business database. IMPROVE THE ELECTRONIC DATA ing an office or agent in the seaport, vately managed terminals, the produc- INTERCHANGE SYSTEM saving time and costs. tivity and service quality in India’s main The introduction of EDI has improved A good illustration of the benefits of ports has improved. These changes have trading across borders to a large extent, ICDs is the example of Guwahati. Entre- contributed to the rapid growth of India’s but more can be done to achieve full preneurs like Madan can have their con- main gateway, Nhava Sheva near Mum- implementation and improve its func- tainers cleared and sealed in the Amin- bai, both in terms of the overall trade tionality. Customs at some of the ICDs gaon Concor ICD before it is loaded onto volume, but also in terms of increas- are still not geared to accept certain the train to Kolkata port. It relieves them ing numbers of direct container services documents through EDI. In some places, of the burden of clearing their contain- rather than feeder services. A similar frequent system outages force traders to ers in Kolkata, and allows them to by- development can be witnessed in other revert to physical submission of docu- pass the numerous official and unofficial privately managed terminals at other ments, which delays the process at the checkpoints that exporters face when ports, such as Chennai or Mundra. traders’ expense. transporting their cargo by road. In some cities, however, the ICDs’ infrastructure WHAT TO REFORM? INCREASE CONTAINER CAPACITY AT PORTS AND ICDS and logistics are deficient, hence increasing the time needed to trade. REDUCE AND STREAMLINE Many ports and ICDs continue to suffer DOCUMENTATION REQUIREMENTS Thanks to the emergence of pri- from congestion, leading to delays. In Indian traders continue to spend most of some cases, the congestion is caused by FIGURE 6.4 Mumbai cut export time by 10 days their time complying with burdensome limited storage areas, which should be Time (days) paperwork. It currently takes 8 separate expanded. But congested storage space Ports & terminal documents to export, and 9 to import. is sometimes also caused by long stor- 6 handling Customs With an electronic customs declaration age times of traders. This problem can 6 clearance form already available, Indian cities be addressed with an effective storage- 3 and technical control could simply consolidate other informa- management system, introducing and 4 2 Inland tion onto the form, in line with systems enforcing time limits and raising fees for 4 transportation and handling in Hong Kong or Germany. longer storage at ports and ICDs. Cargo 11 8 Documents should be held at ports and ICDs for as preparation short a time as possible; in order to avoid Before reform After reform delays, these should not be used as inter- (2006) (2009) mediate storage areas. Source: Doing Business database. 34 DOING BUSINESS IN INDIA 2009

REDUCE AND STREAMLINE INLAND CHECKPOINTS Cargo is often delayed because of numer- 1. Djankov, Simeon, Caroline Freund, and Cong Pham. November 2008. “Trading on ous official and unofficial checkpoints Time”. Review of Economics and Statistics. on the principal trade routes, in par- 2. Exports and imports are measured ticular between state borders and district through the ports of Chennai, Kochi, Kol- boundaries.3 Official checkpoints are op- kata, Nhava Sheva, Mundra and Vishaka- patnam. erated by various ministries (e.g. finance, 3. This problem has been acknowledged in transport, and forestry) and are aimed the report of the Planning Commission’s at collecting taxes, monitoring goods in Working Group Report on Shipping and transit across states, checking licenses, Inland Water Transport for the 11th Five etc. There is little coordination between Year Plan, p. 10: “Truck delays at checkpoints have been estimated to cost the the agencies involved. In most cases, each economy anywhere between INR 9 billion operates its own post. The delays at each and INR 23 billion a year in lost truck op- post are generally short, but can extend erating hours. The estimate does not include ‘Facilitation Payments’ made at the to several hours in some regions, adding checkpoints to circumvent various regula- time and unpredictability to road trans- tions, and these have been estimated to port. The total number of checkpoints range between INR 9 and INR 72 billion.” should be reduced and streamlined to the greatest extent possible.

CONTINUE INVESTMENTS IN ROAD AND RAIL INFRASTRUCTURE

An important obstacle to trade is poor road conditions and limited rail capacity. The largest part of inland transportation occurs via road, accounting for approximately 70% of all traffic. The government has acknowledged the importance of better road infrastructure and launched the ambitious National Highways Develop- ment Project in 1998 in order to improve and extend India’s highway network. The first stages of the project are almost completed, but closer monitoring and tracking efforts could help accelerate its successful completion. While the government has attached great importance to roads and highways, it attached less value to rail transport and infrastructure. Many traders prefer rail transport because of its reliability, but complain about limited capacity. One of the major problems is the ageing track infrastructure, which is increasingly used to its full capacity. The planned construction of dedicated freight corridors will increase freight capacity and service quality for traders. These ambitious projects, however, will take several years to complete. 35

Enforcing TABLE 7.1 Where is it easy to enforce a contract-and where not? contracts 1 Hyderabad, Andhra Pradesh (easiest) 10 Indore, Madhya Pradesh 2 Guwahati, Assam 11 Ranchi, Jharkhand 2 Patna, Bihar 12 New Delhi, Delhi 4 Ludhiana, Punjab 13 Kolkata, West Bengal 5 Bhubaneshwar, Orissa 14 Gurgaon, Haryana 6 Kochi, Kerala 15 Bengaluru, Karnataka 7 Chennai, Tamil Nadu 16 Ahmedabad, Gujarat 7 Jaipur, Rajasthan 17 Mumbai, Maharashtra 7 Noida, Uttar Pradesh Note: Rankings are the average of the city rankings on the procedures, time and cost to resolve a commercial dispute through the courts. See Data Notes for details. Source: Doing Business database.

“I don’t go to court when a buyer refuses Middle East and North Africa and 425 and Bhubaneshwar (723 days), while in to pay me—even though I know that days in Eastern Europe and Central Asia. Ahmedabad (1,295 days) and Mumbai justice should be on my side. It’s time- In India, across the 17 cities, it takes on (1,420 days) it takes longer—almost four consuming and costly to get my money average 961 days to enforce a contract, years (figure 7.1). One reason it takes a back. That’s why I only sell equipment faster than elsewhere in South Asia, but long time to go through the courts across to old clients or people I know,” sighs slower than in Brazil (616 days), Indo- all states in India is the limited number Dipak, an electric appliance supplier in nesia (570 days), and Hong Kong, China of judges and the high incidence of un- India. Where contract enforcement is (211 days)—the global leader on the filled vacancies, which creates backlogs efficient, businesses are more likely to ease of enforcing contracts. Overall court of pending cases. India’s population-to- engage new customers. Where contract costs and attorney fees across India add judge ratio is approximately 14 judges enforcement through the court system up to an average 26.6 % of the value of per million people. In comparison, the is more onerous, businesses prefer to the claim, similar to the South Asia ave- ratio of judges per million people is 51 get involved with only a small group of rage of 27.2% and much below the East judges in the UK, 58 judges in Australia, clients who know each other from pre- Asia and Pacific average of 48.4% of the 75 in Canada, and 107 in the US. Nearly vious dealings—limiting opportunities value of the claim. 4,000 cases are being handled per judge.2 for businesses to grow and prosper. Within India, it is easier to enforce a Even if the disposal rate at the courts Courts serve business best when contract in Hyderabad, Patna, and Guwa- increases, as seen in Ahmedabad and they are fast, affordable, and fair. World- hati and more difficult in Ahmedabad across other courts in India in the past wide, only 35% of businesses covered and Mumbai. The ease of enforcing con- few years, there are still a lot of pending by the World Bank Enterprise Surveys tracts reflects the differences in time and cases and newly filed cases, adding to believe that the courts in their country cost to resolve disputes in the local courts the total time it takes for a case to be are fair, impartial, and uncorrupt. Bur- and reflects the differences in volume resolved. Indian courts are increasingly densome procedures, delays, and total and backlog of court cases across cities taking steps to appoint more judges. costs are deterrents, whereas efficient in India (table 7.1). The top-performing courts support entrepreneurship and de- city on the ease of enforcing contracts What is measured? velopment. Studies find that when con- would rank 105 out of 181 economies. Enforcing contracts tracks the efficiency of tracts can be enforced quickly and chea- This means enforcing a commercial dis- the judicial system in resolving a commercial ply, small businesses get better financial pute in 600 days, as in Guwahati, and dispute, following the step-by-step evolution 1 of a commercial sale dispute before local terms on loans. paying 16.9 % of the value of the claim, courts. It studies the time, cost, and number Resolving commercial disputes as in Patna. of procedures from the moment the plaintiff through the courts is more time consu- The shortest time needed to enforce files a lawsuit through trial and judgment ming in South Asia than in any other a contract, from the filing of the case until until the actual payment through a public sale of the defendant’s movable goods. region. The process takes 1,053 days on the enforcement of the judgment, is in Note: See the detailed description of the standard case in the average compared with 689 days in the Guwahati (600 days), Kochi (705 days), data notes section. 36 DOING BUSINESS IN INDIA 2009

For example, the High Court in Ranchi cost after attorney fees, which represent 2009 in the ten indicators covered, only increased the number of judges in 2008 on average 16% of the value of the claim. 12 were related to enforcing contracts. and 2009 by an additional 5.3 Although court rules also provide for Judicial reform requires a careful consi- The lengthiest delays occur during fee structures for attorneys, they are not deration of judicial administration and the litigation period. Under Order 17 mandatory; in practice attorneys charge infrastructure as well as a court-by-court Rule 1 of the Code of Civil Procedure, clients based on their own fee structure approach. In the past years, India’s ju- the court may give more time to the and expertise. Increasing competition diciary has taken steps to improve case parties and may also adjourn the hea- among lawyers reduces attorney fees. management with the use of information ring up to three times at any stage of Enforcement costs, which account on and communication technology. In 2008, the suit. In practice, judges often grant average for 2.6% of the value of the the Supreme Court of India allowed for adjournments and litigants use dilatory claim, are similar across states. electronic filing of cases.5 E-filing systems tactics to delay proceedings. These add The Code of Civil Procedure of 1908, are being planned for the various High to the long litigation period, showing last amended in 2002, is the applicable Courts in the near future and eventually the need to balance the power of judges rule across all 17 Indian states bench- in the District Courts as well.6 Allowing and the responsibilities of litigants and marked. Based on the Doing Business lawyers to file and submit documents their lawyers. case study, it takes 46 procedural steps online requires a reliable network infras- Contract enforcement costs least to enforce a contract in India but only 21 tructure and authentication framework. in Patna (16.9% of the value of the in Singapore, 24 in Hong Kong, China— “Indiancourts”7 is a website that provides claim) and in Hyderabad (17.7%) and the highest-ranking economy for enfor- a single-point access to information rela- most in New Delhi (33.7%) and Mumbai cing contracts—and 31 procedures in ted to the Supreme Court and all 21 High (39.5%)—both large cities with high the OECD economies. Some would argue Courts. Litigants can browse through attorney fees (figure 7.2). The main di- that more formal procedures in dispute judgments, case status, rules, and the list fference in the court cost is attributed to resolution ensure that due process is fo- of judges of each court. the different ad valorem fees deposited llowed and justice is done. The evidence at the time of filing the suit. These fees suggests otherwise. The more complex WHAT TO REFORM? are regulated by the respective Court the procedure for resolving disputes, the Fees Act of each state and calculated less likely firms are to report that judges SET UP SPECIALIZED COURTS OR COMMERCIAL DIVISIONS IN EXISTING based on the value of the claim. At an are impartial and court decisions fair.4 COURTS average of 6% of the value of the claim, Judicial reform is not easy. Out of the ad valorem fee is the second highest 239 reforms captured by Doing Business Setting up separate commercial courts or establishing specialized commercial FIGURE 7.1 chambers in existing courts can reduce Lenghty delays in the judgement phase across India the time and cost of commercial con- Time (days) 0 365 730 1,095 1,460 tract enforcement. Indian courts could Guwahati benefit from the proposed establishment Kochi Bhubaneshwar of commercial divisions within the High Hyderabad Courts. In 7 African countries that in- Patna troduced commercial courts or sections Ludhiana in the past 5 years—Burkina Faso, the Chennai Democratic Republic of Congo, Ghana, New Delhi Noida Mauritania, Mozambique, Nigeria, and Ranchi Rwanda—the average time to resolve a Indore commercial dispute dropped by about Jaipur 19%. Mozambique, the top reformer in Bengaluru enforcing contracts, reduced the average Gurgaon Kolkata time to resolve a commercial dispute Ahmedabad from 1,010 days to 730. Since March Mumbai 2008 the country has also gained 22 new Filing Judgment Enforcement judges—a 10% overall increase.

Source: Doing Business database. ENFORCING CONTRACTS 37

IMPLEMENT CASE MANAGEMENT on the time to resolve cases, and the SYSTEMS IN COURTS appeals rate allows an analysis of reform Strengthening administrative control and helps guide future policies of judi- 1. World Bank Enterprise Surveys (http:// www.enterprisesurveys.org). and information technology over the cial reform. This effort can also assist in 2. All Indian Seminar on “Judicial Reforms,” litigation process and court operation optimal case assignment and promotion Vigyan Bhavan, New Delhi, 23rd–24th will better equip judges and court staff to criteria for judges. Similar practices al- February 2008; http://www.supremecour- address backlogs and delays. Case mana- ready exist in India. Indore has a system tofindia.nic.in/new_links/speach.htm gement is successful if court data are si- in place whereby every judge at District 3. http://jharkhandhighcourt.nic.in/ multaneously being computerized and if Court and High Court is given a mark for 4. Based on the analysis of the Doing Bu- siness 2005 indicators with indicators of support functions such as case tracking, each disposed case and these marks are judicial impartiality from the Economic document management, deadline remin- taken into consideration for promotions. Freedom of the World; Geeta Batra, Da- ders, and scheduling of hearings are niel Kaufmann, and Andrew Stone. 2003. done automatically. In 2008, Macedonia, STRENGTHEN THE ALTERNATIVE Investment Climate Around the World: DISPUTE RESOLUTION (ADR) SYSTEM Voices of the Firms from the World Bu- Former Yugoslav Republic, continued to siness Environment Survey. Washington, systematically equip courts with electro- Due to the slow judicial process, there has D.C.: World Bank Group. nic case-management systems, speeding been a big focus on noncourt dispute-re- 5. World Bank. 2007. Doing Business 2008. contract enforcement in commercial solution in India, especially through the Washington, D.C.: World Bank Group. matters. Tonga’s newly appointed chief Lok Adalat system, constituted under the 6. http://www.supremecourtofindia.nic.in/ new_links/speach.htm justice introduced case management, National Legal Services Authority Act, 7. http://www.indiancourts.nic.in/ transferring 90% of all cases—criminal, 1987. Although Doing Business measures 8. India Law Institute. 2008. ADR: Status/ commercial, and land—from paper to the efficiency of the public court system Effectiveness Study, prepared for the In- computer and cut the time to enforce and not arbitration or mediation proce- ternational Center for Alternative Dispute contracts from 510 days to 350. dures, the use of ADR indirectly affects Resolution (ICADR) and the World Bank. court performance to the extent that it KEEP JUDICIAL STATISTICS AND reduces caseloads. While in India there is INCREASE JUDICIAL CAPACITY a strong ADR tradition, its impact on dis- Statistical information helps assess court pute resolution is minimal.8 Strengthe- performance. Keeping statistics on the ning the ADR mechanisms can reduce number of commercial cases being han- court burdens and create cheaper and dled and disposed of, the clearance rate speedier options for resolving disputes.

FIGURE 7.2 Cost to enforce a commercial contract across India (% of claim) 0 10203040 Patna Hyderabad Jaipur Ludhiana Guwahati Noida Bhubaneshwar Chennai Indore Kolkata Kochi Ranchi Ahmedabad Gurgaon Bengaluru Enforcement New Delhi fees Mumbai Attorney fees Court fees Source: Doing Business database. 38

Closing TABLE 8.1 Ease of closing a business across the Indian cities and states a business 1 Hyderabad, Andhra Pradesh (easiest) 10 Chennai, Tamil Nadu 2 Ludhiana, Punjab 10 Kochi, Kerala 3 Mumbai, Maharashtra 12 Guwahati, Assam 4 Ahmedabad, Gujarat 13 Ranchi, Jharkhand 5 Bhubaneshwar, Orissa 14 Jaipur, Rajasthan 6 Gurgaon, Haryana 15 Patna, Bihar 6 New Delhi, Delhi 16 Noida, Uttar Pradesh 8 Bengaluru, Karnataka 17 Kolkata, West Bengal 9 Indore, Madhya Pradesh Note: Ease of closing a business rankings are based on the recovery rate: how many cents on the dollar the creditor recovers from the insolvent firm. See Data Notes for details. Source: Doing Business database.

Farmers in India could apply for debt value, and the recovery rate is 13.7 cents at 15.9 cents on the dollar and Kolkata relief and have their movable property on the dollar. The process is slower than has the lowest recovery rate at 9.1 cents sold to pay back their debts as early as in South Asian countries, where it takes on the dollar (table 8.1). It costs be- the 1880s. Their farm would be divided on average 5 years, in East Asia and the tween 7 and 10% of the estate value to into two parts, one set aside for the Pacific (2.7 years), and in the OECD go through the debt-recovery process, support of the insolvent farmer and his countries (1.7 years). India is also less mostly due to attorney fees, newspaper dependents and the remainder to be lender-friendly than neighboring South publication costs, liquidator’s fees, and managed on behalf of the creditors and Asian countries, where creditors can ex- preservation costs. the village bankers.1 Creditors are more pect to recover on average 19.9 cents on India’s legal and regulatory frame- likely to lend where efficient insolvency the dollar. In the OECD economies the work in the area of bankruptcy has ad- laws exist, inspiring confidence that they recovery rate is almost five times higher, vanced in the last two decades. Among the will be able to collect on their loans.2 at 68.6 cents on the dollar (figure 8.1). various channels of recovery available for Bottlenecks in bankruptcy laws and There are variations in the speed financial institutions, the Debt Recovery proceedings cut into the amount claim- and cost of the insolvency process and Tribunals (DRTs) and the Securitization ants can recover. Access to credit shrinks, the recovery rates across Indian cities. and Reconstruction of Financial Assets and nonperforming loans and financial It is easier to go through bankruptcy in and Enforcement of Security Interest Act risk grow because creditors cannot re- Hyderabad and more difficult in Kolkata. 2002 (SARFAESI) have been the most ef- cover overdue loans. Conversely, efficient Hyderabad has the highest recovery rate fective in terms of amount recovered.4 bankruptcy laws can encourage entre- FIGURE 8.1 preneurs. Speedier processing of debt Average time, cost and recovery rate in insolvency proceedings recovery suits is also important to keep assets from deteriorating and to facilitate India 7.9 EAST ASIA Global 92.5 reinvestment; it can also lower the cost & PACIFIC highest REGION 23.2 of credit.3 The freedom to declare bank- JAPAN ruptcy, and to do so through an efficient OECD 68.6 process, puts people and capital to their SOUTH ASIA REGION 5.0 most effective use. The result is more EAST ASIA productive businesses and more jobs. India 8.6 OECD 8.4 & PACIFIC EAST ASIA In spite of bankruptcy laws in India REGION 2.7 SOUTH ASIA & PACIFIC REGION 6.5 REGION 28.4 being national, there are differences in Global OECD 1.7 Global lowest lowest SOUTH the functioning of the judicial bodies IRELAND 0.4 NORWAY 1.0 India 13.7 ASIA across the states. Across the 17 Indian SINGAPORE REGION 19.9 Time Cost Recovery rate cities, the insolvency process takes on (years) (% of estate) (cents on the dollar) average 7.9 years, costs 8.6% of the estate Source: Doing Business database. CLOSING A BUSINESS 39

What is measured? Even though it takes less time to go through debt-enforcement proceed- Closing a business studies the time, cost, and outcomes of bankruptcy proceedings* involving domestic entities based on a specific case study.Doing Business assumes that creditors want to ings at the DRTs than in the ordinary recover as much as possible as quickly as possible while debtors will defend themselves and may courts, the process from the moment of end up using dilatory tactics. Doing Business reports the maximum time, including appeals, to go defaulting on the loan until recovery of through the insolvency process and debt-enforcement procedures, from the moment the debtor defaults on the loan until recovery, and records the recovery rate of the creditor at the end of the the debt remains time-consuming and bankruptcy process. burdensome. The government has been * In this chapter the words ‘bankruptcy’ and ‘insolvency’ are used interchangeably as general terms to refer to a case where the debtor committed to strengthening DRT func- is unable to pay his or her debts; they do not cover personal bankruptcy rules. tioning over the last three years but Note: See the data notes for a detailed description of case-study assumptions and the methodology used to measure the ease of closing a business. problems remain. The number of DRTs across India has increased from 29 in 2005 to 33 in 2008.6 Still, not all cities The government introduced Debt Acts are used by creditors. In the past few have DRTs and due to staffing problems, Recovery Tribunals (DRTs) to speed up years case management at the DRTs has not all DRTs have presiding officers to the resolution of debt-recovery claims also advanced. The DRTs of Chennai each hear cases.7 DRT presiding officers are due to banks and financial institutions in have a website providing online informa- civil-court judges appointed for a five- 1993. The SARFAESI Act was enacted in tion about the tribunal, its composition, year term. Where no appointment has 2002 and amended in 2004, with a view and a list of upcoming cases. The DRTs been made or where an appointment is to making adequate provisions for the of Mumbai have started working faster pending for a DRT in a particular city, recovery of loans and to enforce security since more DRT judges were assigned the presiding officers of nearby DRTs ro- interests without the intervention of the recently. Additionally, the increasing use tate. Newly appointed officers also have court—or at least with minimum inter- of the SARFAESI Act has reduced resort to spend time in training and to famil- vention. Cases under the SARFAESI Act to the courts, particularly now that most iarize themselves with the recovery pro- are resolved faster than under the tradi- of the issues generated during the period ceedings. Once fully in the job, they may tional Debt Recovery Act and give the of transition to this new law have been have to re-hear the cases of the preceding debtor a very limited scope of defenses. resolved, eliminating the jurisdiction officer at the request of the parties. This Once the bank sends the notice taking disputes that arose with the enactment creates case backlogs and slows down the possession of the asset under the SAR- of the SARFAESI Act. 5 recovery process. FAESI Act, two things might happen: FIGURE 8.2 either the debtor agrees to the seizure of Few reforms in South Asia the secured asset, or the debtor files an objection or appeal with the DRT. This Doing Business report year DB2005 DB2006 DB2007 DB2008 DB2009 appeal starts the procedure by means of Eastern Europe which the debtor will try to prove that the & Central Asia 21 (28 economies) creditor’s taking possession of the asset is not justified or does not respect the OECD high income 19 terms of the agreement. Therefore, DRTs (24 economies) currently handle cases both under their East Asia Number of reforms making it easier original jurisdiction contemplated in the & Pacific 6 to close a business (24 economies) 1993 Debt Recovery Act and their juris- Latin America diction under the SARFAESI Act. Debt & Caribbean 6 Recovery Appellate Tribunals (DRAT) (32 economies) are the appellate courts that review deci- Sub-Saharan Africa 3 sions made by the DRTs. (46 economies) These positive changes in the law Middle East & have only taken full effect in practice in North Africa 2 (19 economies) the past couple of years. Until recently, South Asia the validity of the SARFAESI Act and (8 economies) 1 before that the validity of the DRTs were held up in court challenges, but now both Note: A reform is counted as 1 reform per reforming economy per year. Source: Doing Business database. 40 DOING BUSINESS IN INDIA 2009

The government has also been work- establishes a system for clearly ranking powers of creditors. France and Korea ing toward improving the legal and regu- creditors. Countries with laws meeting allow the creditors’ committee to vote on latory framework in the broader area of these three criteria normally achieve a the reorganization plan. bankruptcy. Initiatives to improve the higher recovery rate than countries with- insolvency framework include guidelines out such laws. DEVELOP ADEQUATE LICENSING AND TRAINING PROGRAMS FOR for One-Time Settlement (OTS) of out- INSOLVENCY PRACTITIONERS standing dues. WHAT TO REFORM? India could improve its insolvency Establishing public or private bench- and debt-recovery practice, not only by IMPLEMENT ONGOING REFORMS marks for insolvency practitioners will consolidating and fully implementing Strong insolvency laws are a mandate of strengthen the country’s capacity to deal the reform efforts already underway, but a market economy to rotate the invest- with insolvency cases. In India, the ad- also by learning from existing best in- ment wheel.8 The proposed Companies ministrators are being chosen from a ternational practices. In addition, the Bill (2008), which amends the current panel consisting of advocates, company respective roles of the key players in the Companies Act, introduces many im- secretaries, chartered accountants, and insolvency process should be considered: portant reforms for India’s insolvency such other professionals as the govern- insolvency practitioners, judges, liquida- framework. The government should ment may deem fit. There is no require- tors, creditors, and appraisers, etc., in focus on passing the proposed legislation ment, however, that these professionals order to build the institutional capac- in this area to deal with insolvency more have any demonstrated experience or ity and reinforce the insolvency regime efficiently. capacity in dealing with insolvent enti- within India. ties. The Indian Institute of Insolvency’s In 2009, the Doing Business report ESTABLISH SPECIALIZED COURTS Practitioners (IIIP) is a private-sector noted 16 countries out of 181 that have Specialized commercial or bankruptcy body, which could potentially carry out made it easier to go through bankruptcy courts make it easier to deal with insol- the functions of an insolvency regulator, proceedings and have reformed their vency cases. The Debt Recovery Tribu- including licensing, training, and disci- closing a business process (figure 8.2). nals are only handling cases of financial pline. The government could empower Reforming the bankruptcy system in a institutions at the moment. The National the IIIP to facilitate the development country requires a tough balancing act. Companies Law Tribunal (NCLT)9 con- of the licensing and training scheme in If banks cannot protect their credit, they stitutes a single forum for dealing with this area. Poland’s new Law on Trustee lend less—and at a higher rate. But if the rehabilitation of all types of com- Licensing tightened professional require- entrepreneurs believe that the law em- panies, their liquidation, and winding ments for administrators to ensure they powers creditors to push a company up. If established, the NCLT will ensure have the skills and education needed to into insolvency, they will be reluctant to uniformity and standardization in in- oversee bankruptcy proceedings. Obtain- start new businesses. But the balancing solvency and liquidation procedures for ing a trustee’s license now requires pass- exercise does not end at this. In some nonfinancial institutions. ing an exam in economics, law, finance, countries, like India, where laws distin- and management. The reform also limits guish between secured, unsecured, and EXPAND CREDITOR RIGHTS trustees’ pay to 3% of the bankrupt es- other types of creditors, laws should be Currently, unsecured creditors are al- tate’s value, down from 5%. expanded to allow for a greater role in lowed only a limited role in rehabilita- decision-making for all the parties in- tion and liquidation proceedings under volved in the bankruptcy process. the Companies Act and the Sick In- The philosophy underlying a good dustrial Companies (Special Provisions) 1. W.W. Hunter. 1886. The Indian Empire: Its People, History, and Products. Second bankruptcy law has three cornerstones. Act (SICA). The Companies Bill (2008) ed. London: Trubner & Co, Ludgate Hill, It seeks to rehabilitate viable businesses contemplates forming a creditor’s com- 449–51. and liquidate unviable ones. It aims to mittee, similar to other common-law 2. Djankov, Simeon, Oliver Hart, Caralee maximize the value received by credi- jurisdictions. Giving unsecured credi- McLiesh, and Andrei Shleifer. 2006. Debt Enforcement around the World. NBER tors, shareholders, employees, and other tors a statutory right to participate in Working Paper 12807. Cambridge, MA: stakeholders by requiring that businesses the vote for a rehabilitation scheme will National Bureau of Economic Research. be turned around, sold as going con- improve the liquidation and revival pro- 3. Visaria, Sujata. 2006. Legal Reform and cerns, or liquidated—whichever gen- cess within India. In the past 5 years, Loan Repayment: The Microeconomic erates the greatest total value. And it the OECD economies have expanded the Impact of Debt Recovery Tribunals in India. Institute for Economic Development CLOSING A BUSINESS 41

Working Papers Series dp-157. Boston, MA: Boston University, Department of Economics . 4. Reserve Bank of India Report on Trend and Progress of Banking in India, 2007– 2008. 5. The Act was successful in facilitating debt-recovery proceedings, but did not address the framework for rehabilitation or reorganization of insolvent companies. Rehabilitation is currently under the jurisdiction of the Sick Industrial Compa- nies (Special Provisions) Act (SICA) and is addressed in the proposed Companies Bill (2008). 6. Indian Ministry of Finance, Annual Re- port, 2007–2008. 7. For example, at the time of this study, Patna (Bihar) is sharing the Presiding Of- ficer with Kolkata (West Bengal). 8. Dube, Indrajit. 2008. Indian Corporate Insolvency Law: Efficiency and Efficacy from a Cross Border Perspective. Corpo- rate Law Teachers Association, Annual Proceedings. Kharagpur. Available at SSRN: http://ssrn.com/abstract=1141931. 9. The tribunal currently under the Compa- nies (Second Amendment) Act 2002 and included in the Companies Bill (2008) as part of the revised framework for the regulation on insolvency is being chal- lenged by the Supreme Court. 42 Data notes ECONOMY CHARACTERISTICS GROSS NATIONAL INCOME (GNI) PER CAPITA Doing Business in India 2009 reports 2007 income per capita and population as published in the World Bank’s World Development Indicators 2008. Income is calculated using the Atlas method (current US$). For cost indicators expressed as a percentage of income per capita, 2007 GNI in local currency units is used as the denominator. India’s GNI per capita in 2007 = US$ 950. EXCHANGE RATE The exchange rate used in this report is 1 US$ = 43.97 INR (Indian Rupees) REGION AND INCOME GROUP Doing Business uses the World Bank regional and income group classifications, available at http://www.worldbank.org/data/countryclass.

The indicators presented and analyzed in ness in South Asia 2007 and Mumbai in Doing LIMITS TO WHAT IS MEASURED Doing Business in India 2009 measure busi- Business 2009 as a baseline to capture differ- The Doing Business methodology has 4 limi- ness regulation and the protection of property ences in business regulations across cities. tations that should be considered when inter- rights—and their effect on businesses, espe- Surveys are administered through more than preting the data. First, the data often focus on cially small and medium-size domestic firms. 500 local experts, including lawyers, business a specific business form—generally a limited First, the indicators document the degree of consultants, accountants, freight forwarders, liability company (or its legal equivalent) of regulation, such as the number of procedures government officials and other professionals a specified size—and may not be representa- to start a business or to register and transfer routinely administering or advising on legal tive of the regulation on other businesses, commercial property. Second, they gauge reg- and regulatory requirements. These experts for example, sole proprietorships. Second, ulatory outcomes, such as the time and cost have several rounds of interaction with the transactions described in a standardized case to enforce a contract, go through bankruptcy subnational Doing Business team, through scenario refer to a specific set of issues and or trade across borders. Third, they measure face-to-face interviews, conference calls, writ- may not represent the full set of issues a busi- the extent of legal protections of property, for ten correspondence and visits by the team. ness encounters. Third, the measures of time example, the protections of investors against For Doing Business in India 2009 the team involve an element of judgment by the expert looting by company directors or the range of members visited India three times to recruit respondents. When sources indicate different assets that can be used as collateral accord- respondents, verify data and meet with local estimates, the time indicators reported in ing to secured transactions laws. Finally, a government officials. The team also invited Doing Business represent the median values set of indicators documents the tax burden local government officials and judges to re- of several responses given under the assump- on businesses. For details on how the rank- view the preliminary results and offered them tions of the standardized case. ings on these indicators are constructed, see a right of reply period. The data from surveys Finally, the methodology assumes that Ease of doing business. In this project, Doing are subjected to numerous tests for robust- a business has full information on what is Business indicators have been created for 17 ness, which lead to revisions or expansions of required and does not waste time when com- Indian cities—the complete list is available the information collected. pleting procedures. In practice, completing on page 58. The Doing Business methodology offers a procedure may take longer if the busi- The data for all sets of indicators in several advantages. It is transparent, using ness lacks information or is unable to follow Doing Business in India 2009 are current as of factual information about what laws and regu- up promptly. Alternatively, the business may February 2009. The data for paying taxes refer lations say and allowing multiple interactions choose to disregard some burdensome pro- to January–December 2007. with local respondents to clarify potential cedures. For both reasons the time delays misinterpretations of questions. Having rep- reported in Doing Business in India 2009 could METHODOLOGY resentative samples of respondents is not an differ from the perceptions of entrepreneurs The Doing Business in India 2009 data are issue, as the texts of the relevant laws and reg- reported in the World Bank Enterprise Sur- collected in a standardized way, following the ulations are collected and answers checked for veys or other perception surveys. methodology developed by the Doing Business accuracy. The methodology is inexpensive and Most laws and regulations underly- team. To start, the Doing Business team, with easily replicable, so data can be collected in a ing the Doing Business data are available on academic advisers, designs a survey. The sur- large sample of economies. Because standard the Doing Business website at http://www. vey uses a simple business case to ensure com- assumptions are used in the data collection, doingbusiness.org. All the sample surveys and parability across economies and over time— comparisons and benchmarks are valid across the details underlying the indicators are also with assumptions about the legal form of the economies. Finally, the data not only highlight published on the website. Questions on the business, its size, its location and the nature of the extent of specific regulatory obstacles to methodology and challenges to data can be its operations. Then, the survey is customized doing business but also identify their source submitted through the site’s “Ask a Question” to the particular case of India, using the data and point to what might be reformed. function. published for 10 Indian cities in Doing Busi- DATA NOTES 43

STARTING A BUSINESS PROCEDURES required for each procedure is 1 day. Although A procedure is defined as any interaction of procedures may take place simultaneously, Doing Business in India 2009 records all pro- the company founders with external parties they cannot start on the same day (that is, cedures officially required for an entrepreneur (for example, government agencies, lawyers, simultaneous procedures start on consecutive to start up and formally operate an industrial auditors or notaries). Interactions between days). A procedure is considered completed or commercial business. These include obtain- company founders or company officers and once the company has received the final docu- ing all necessary licenses and permits and employees are not counted as procedures. ment, such as the company registration cer- completing any required notifications, verifi- Procedures that must be completed in the tificate or tax number. It is assumed that the cations or inscriptions for the company and same building but in different offices are entrepreneur does not waste time and com- employees with relevant authorities. counted as separate procedures. If founders mits to completing each remaining procedure After a study of laws, regulations and have to visit the same office several times without delay. The time that the entrepreneur publicly available information on business for different sequential procedures, each is spends on gathering information is ignored. It entry, a detailed list of procedures is de- counted separately. The founders are assumed is assumed that the entrepreneur is aware of veloped, along with the time and cost of to complete all procedures themselves, with- all entry regulations and their sequence from complying with each procedure under nor- out middlemen, facilitators, accountants or the beginning but has had no prior contact mal circumstances and the paid-in minimum lawyers, unless the use of such a third party with any of the officials. capital requirements. Subsequently, local in- is mandated by law. If the services of profes- COST corporation lawyers and government officials sionals are required, procedures conducted by complete and verify the data. such professionals on behalf of the company Cost is recorded as a percentage of the econo- Information is also collected on the se- are counted separately. Each electronic pro- my’s income per capita. It includes all official quence in which procedures are to be com- cedure is counted separately. If 2 procedures fees and fees for legal or professional services pleted and whether procedures may be carried can be completed through the same website if such services are required by law. Fees for out simultaneously. It is assumed that any but require separate filings, they are counted purchasing and legalizing company books are required information is readily available and as 2 procedures. included if these transactions are required by that all agencies involved in the start-up pro- Both pre- and post-incorporation pro- law. The company law, the commercial code cess function without corruption. If answers cedures that are officially required for an and specific regulations and fee schedules are by local experts differ, inquiries continue until entrepreneur to formally operate a business used as sources for calculating costs. In the the data are reconciled. are recorded. absence of fee schedules, a government of- To make the data comparable across Procedures required for official corre- ficer’s estimate is taken as an official source. In economies, several assumptions about the spondence or transactions with public agen- the absence of a government officer’s estimate, business and the procedures are used. cies are also included. For example, if a com- estimates of incorporation lawyers are used. pany seal or stamp is required on official If several incorporation lawyers provide dif- ASSUMPTIONS ABOUT THE BUSINESS documents, such as tax declarations, obtain- ferent estimates, the median reported value is The business: ing the seal or stamp is counted. Similarly, if applied. In all cases the cost excludes bribes. r *TBMJNJUFEMJBCJMJUZDPNQBOZ a company must open a bank account before PAID-IN MINIMUM CAPITAL r 0QFSBUFTJOUIFFDPOPNZTTFMFDUFEDJUJFT registering for sales tax or value added tax, r *TEPNFTUJDBMMZPXOFEBOEIBT this transaction is included as a procedure. The paid-in minimum capital requirement re- owners, none of whom is a legal entity. Shortcuts are counted only if they fulfill 4 flects the amount that the entrepreneur needs r )BTTUBSUVQDBQJUBMPGUJNFTJODPNF criteria: they are legal, they are available to the to deposit in a bank or with a notary before per capita at the end of 2007, paid in general public, they are used by the major- registration and up to 3 months following in- cash. ity of companies, and avoiding them causes corporation and is recorded as a percentage of r 1FSGPSNTHFOFSBMJOEVTUSJBMPSDPNNFS- substantial delays. the economy’s income per capita. The amount cial activities, such as the production Only procedures required of all busi- is typically specified in the commercial code or sale to the public of products or nesses are covered. Industry-specific proce- or the company law. Many economies have services. The business does not perform dures are excluded. For example, procedures a minimum capital requirement but allow foreign trade activities and does not to comply with environmental regulations businesses to pay only a part of it before reg- handle products subject to a special tax are included only when they apply to all istration, with the rest to be paid after the first regime, for example, liquor or tobacco. businesses conducting general commercial year of operation. For example, in Germany in It is not using heavily polluting produc- or industrial activities. Procedures that the June 2008, the minimum capital requirement tion processes. company undergoes to connect to electricity, for limited liability companies was €25,000, r -FBTFTUIFDPNNFSDJBMQMBOUBOEPēDFT water, gas and waste disposal services are not of which at least €12,500 was payable before and is not a proprietor of real estate. included. registration. The paid-in minimum capital r %PFTOPURVBMJGZGPSJOWFTUNFOUJODFO- recorded for Germany is therefore €12,500, or tives or any special benefits. TIME 42.2% of income per capita. r )BTBUMFBTUBOEVQUPFNQMPZFFT Time is recorded in calendar days. The mea- 1 month after the commencement of operations, all of them nationals. sure captures the median duration that incor- The data details on starting a business can be poration lawyers indicate is necessary to com- found for each economy at http://www.doing- r )BTBUVSOPWFSPGBUMFBTUUJNFT income per capita. plete a procedure with minimum follow-up business.org. This methodology was developed with government agencies and no extra pay- in Djankov,Simeon, Rafael La Porta, Florencio r )BTBDPNQBOZEFFEQBHFTMPOH ments. It is assumed that the minimum time López-de-Silanes and Andrei Shleifer. 2002. 44 DOING BUSINESS IN INDIA 2009

“The Regulation of Entry.” Quarterly Journal of workers and third-person liability electricity meter. Economics 117 (1): 1–37; and is adopted here insurance). r #VJME$PJTBTTVNFEUPIBWFBMJDFOTFE with minor changes. r 0XOTUIFMBOEPOXIJDIUIFXBSFIPVTF electrician on its team to complete the is built. internal wiring for the warehouse. DEALING WITH CONSTRUCTION PERMITS ASSUMPTIONS ABOUT THE The water and sewerage connection: Doing Business in India 2009 records all WAREHOUSE r *TNFUFST GFFU JODIFT GSPN procedures required for a business in the the existing water source and sewer tap. construction industry to build a standardized The warehouse: r %PFTOPUSFRVJSFXBUFSGPSêSFQSPUFD- warehouse. These procedures include submit- r 8JMMCFVTFEGPSHFOFSBMTUPSBHF tion reasons; a fire extinguishing system ting all relevant project-specific documents activities, such as storage of books or (dry system) will be used instead. If a (for example, building plans and site maps) stationery. The warehouse will not be wet fire protection system is required to the authorities; obtaining all necessary used for any goods requiring special by law, it is assumed that the water clearances, licenses, permits and certificates; conditions, such as food, chemicals or demand specified below also covers the water needed for fire protection. completing all required notifications; and re- pharmaceuticals. ceiving all necessary inspections. Doing Busi- r )BTTUPSJFT CPUIBCPWFHSPVOE XJUI r )BTBOBWFSBHFXBUFSVTFPGMJUFST (175 gallons) a day and an average ness also records procedures for obtaining BUPUBMTVSGBDFPGBQQSPYJNBUFMZ square meters (14,000 square feet). XBTUFXBUFSëPXPGMJUFST HBM- connections for electricity, water, sewerage Each floor is 3 meters (9 feet, 10 inches) lons) a day. and a fixed land line. Procedures necessary to high. r )BTBQFBLXBUFSVTFPG MJUFST register the property so that it can be used as r )BTSPBEBDDFTTBOEJTMPDBUFEJOUIF gallons) a day and a peak wastewater collateral or transferred to another entity are periurban area of the economy’s selected ëPXPG MJUFST HBMMPOT BEBZ also counted. The survey divides the process cities (that is, on the fringes of the city r 8JMMIBWFBDPOTUBOUMFWFMPGXBUFSEF- of building a warehouse into distinct pro- but still within its official limits). mand and wastewater flow throughout cedures and calculates the time and cost of r *TOPUMPDBUFEJOBTQFDJBMFDPOPNJDPS the year. completing each procedure in practice under industrial zone. The zoning require- normal circumstances. ments for warehouses are met by build- The telephone connection: Information is collected from experts in ing in an area where similar warehouses r *TNFUFST GFFU JODIFT GSPN construction licensing, including architects, can be found. the main telephone network. construction lawyers, construction firms, r *TMPDBUFEPOBMBOEQMPUPGTRVBSF r *TBêYFEMBOEMJOF utility service providers and public officials meters (10,000 square feet) that is 100% who deal with building regulations, includ- owned by BuildCo and is accurately PROCEDURES ing approvals and inspections. To make the registered in the cadastre and land A procedure is any interaction of the compa- data comparable across economies, several as- registry. ny’s employees or managers with external par- sumptions about the business, the warehouse r *TBOFXDPOTUSVDUJPO UIFSFXBTOP ties, including government agencies, notaries, project and the utility connections are used. previous construction on the land). the land registry, the cadastre, utility compa- r )BTDPNQMFUFBSDIJUFDUVSBMBOE nies, public and private inspectors and tech- technical plans prepared by a licensed nical experts apart from in-house architects ASSUMPTIONS ABOUT THE architect. CONSTRUCTION COMPANY and engineers. Interactions between company r 8JMMJODMVEFBMMUFDIOJDBMFRVJQNFOU employees, such as development of the ware- required to make the warehouse fully The business (BuildCo): house plans and inspections conducted by operational. r *TBMJNJUFEMJBCJMJUZDPNQBOZ employees, are not counted as procedures. r 8JMMUBLFXFFLTUPDPOTUSVDU FYDMVE- Procedures that the company undergoes to r 0QFSBUFTJOUIFFDPOPNZTTFMFDUFEDJUJFT ing all delays due to administrative and r *TEPNFTUJDBMMZBOEQSJWBUFMZ regulatory requirements). connect to electricity, water, sewerage and owned. telephone services are included. All proce- r )BTPXOFST OPOFPGXIPNJTBMFHBM ASSUMPTIONS ABOUT THE UTILITY dures that are legally or in practice required CONNECTIONS entity. for building a warehouse are counted, even if r *TGVMMZMJDFOTFEBOEJOTVSFEUPDBSSZ The electricity connection: they may be avoided in exceptional cases. r *TNFUFST GFFU JODIFT GSPN out construction projects, such as TIME building warehouses. the main electricity network. r )BTCVJMEFSTBOEPUIFSFNQMPZFFT r *TBNFEJVNUFOTJPO QIBTF XJSF Time is recorded in calendar days. The mea- all of them nationals with the technical Y, 140-kVA connection. Three-phase sure captures the median duration that local expertise and professional experi- service is available in the construction experts indicate is necessary to complete a ence necessary to obtain construction area. procedure in practice. It is assumed that the permits and approvals. r 8JMMCFEFMJWFSFECZBOPWFSIFBE minimum time required for each procedure r )BTBUMFBTUFNQMPZFFXIPJTBMJ- service, unless overhead service is not is 1 day. Although procedures may take place censed architect and registered with the available in the periurban area. simultaneously, they cannot start on the same local association of architects. r $POTJTUTPGBTJNQMFIPPLVQVOMFTT day (that is, simultaneous procedures start r )BTQBJEBMMUBYFTBOEUBLFOPVUBMM installation of a private substation on consecutive days). If a procedure can be necessary insurance applicable to its (transformer) or extension of network accelerated legally for an additional cost, the is required. general business activity (for example, fastest procedure is chosen. It is assumed that accidental insurance for construction r 3FRVJSFTUIFJOTUBMMBUJPOPGPOMZPOF BuildCo does not waste time and commits to DATA NOTES 45 completing each remaining procedure without ASSUMPTIONS ABOUT THE PARTIES sumed that the buyer follows the fastest legal delay. The time that BuildCo spends on gather- The parties (buyer and seller): option available and used by the majority of ing information is ignored. It is assumed that r "SFMJNJUFEMJBCJMJUZDPNQBOJFT property owners. Although the buyer may use BuildCo is aware of all building requirements r "SFMPDBUFEJOUIFQFSJVSCBOBSFBPGUIF lawyers or other professionals where neces- and their sequence from the beginning. economy’s selected cities. sary in the registration process, it is assumed that it does not employ an outside facilitator COST r "SFEPNFTUJDBMMZBOEQSJWBUFMZ owned. in the registration process unless legally or in Cost is recorded as a percentage of the econ- r )BWFFNQMPZFFTFBDI BMMPGXIPN practice required to do so. omy’s income per capita. Only official costs are nationals. TIME are recorded. All the fees associated with r 1FSGPSNHFOFSBMDPNNFSDJBMBDUJWJUJFT completing the procedures to legally build Time is recorded in calendar days. The mea- a warehouse are recorded, including those ASSUMPTIONS ABOUT THE PROPERTY sure captures the median duration that prop- associated with obtaining land use approv- The property: erty lawyers, notaries or registry officials indi- als and preconstruction design clearances; r Has a value of 50 times income per cate is necessary to complete a procedure. It is receiving inspections before, during and after capita. The sale price equals the value. assumed that the minimum time required for construction; getting utility connections; and each procedure is 1 day. Although procedures r Is fully owned by the seller. registering the warehouse property. Nonre- may take place simultaneously, they cannot curring taxes required for the completion of r Has no mortgages attached and has start on the same day. It is assumed that the the warehouse project also are recorded. The been under the same ownership for the buyer does not waste time and commits to building code, information from local experts past 10 years. completing each remaining procedure with- and specific regulations and fee schedules are r Is registered in the land registry or out delay. If a procedure can be accelerated for used as sources for costs. If several local part- cadastre, or both, and is free of title an additional cost, the fastest legal procedure ners provide different estimates, the median disputes. available and used by the majority of property reported value is used. r Is located in a periurban commercial owners is chosen. If procedures can be under- zone, and no rezoning is required. taken simultaneously, it is assumed that they The data details on dealing with construction r Consists of land and a building. The are. It is assumed that the parties involved are permits can be found for each economy at MBOEBSFBJTTRVBSFNFUFST aware of all regulations and their sequence http://www.doingbusiness.org. square feet). A 2-story warehouse of from the beginning. Time spent on gathering 929 square meters (10,000 square feet) information is not considered. REGISTERING PROPERTY is located on the land. The warehouse is 10 years old, is in good condition COST Doing Business in India 2009 records the and complies with all safety standards, Cost is recorded as a percentage of the prop- full sequence of procedures necessary for a building codes and other legal require- erty value, assumed to be equivalent to 50 business (buyer) to purchase a property from ments. The property of land and build- times income per capita. Only official costs ing will be transferred in its entirety. another business (seller) and to transfer the required by law are recorded, including fees, property title to the buyer’s name so that the r Will not be subject to renovations transfer taxes, stamp duties and any other buyer can use the property for expanding its or additional building following the payment to the property registry, notaries, business, use the property as collateral in tak- purchase. public agencies or lawyers. Other taxes, such ing new loans or, if necessary, sell the property r Has no trees, natural water sources, as capital gains tax or value added tax, are to another business. The process starts with natural reserves or historical monu- excluded from the cost measure. Both costs obtaining the necessary documents, such as ments of any kind. borne by the buyer and those borne by the a copy of the seller’s title if necessary, and r Will not be used for special purposes, seller are included. If cost estimates differ conducting due diligence if required. The and no special permits, such as for among sources, the median reported value transaction is considered complete when the residential use, industrial plants, waste is used. buyer can use the property as collateral for a storage or certain types of agricultural bank loan. activities, are required. The data details on registering property can be Every procedure required by law or nec- r Has no occupants (legal or illegal), and found for each economy at http://www.doing- essary in practice is included, whether it is the no other party holds a legal interest in it. business.org. responsibility of the seller or the buyer or must PROCEDURES be completed by a third party on their behalf. -PDBMQSPQFSUZMBXZFST OPUBSJFTBOEQSPQFSUZ A procedure is defined as any interaction PAYING TAXES registries provide information on procedures of the buyer or the seller or their agents (if as well as the time and cost to complete each an agent is legally or in practice required) Doing Business in India 2009 records the of them. with external parties, including government taxes and mandatory contributions that a To make the data comparable across agencies, inspectors, notaries and lawyers. medium-size company must pay in a given economies, several assumptions about the Interactions between company officers and year, as well as measures of the administrative parties to the transaction, the property and employees are not considered. All procedures burden of paying taxes and contributions. the procedures are used. that are legally or in practice required for Taxes and contributions measured include registering property are recorded, even if they the profit or corporate income tax, social may be avoided in exceptional cases. It is as- contributions and labor taxes paid by the 46 DOING BUSINESS IN INDIA 2009 employer, property taxes, property transfer r Has a start-up capital of 102 times withholding) for each one. The frequency taxes, dividend tax, capital gains tax, financial JODPNFQFSDBQJUBBUUIFFOEPG of payment includes advance payments (or transactions tax, waste collection taxes and r Performs general industrial or commer- withholding) as well as regular payments (or vehicle and road taxes. cial activities. Specifically, it produces withholding). Doing Business in India 2009 measures ceramic flowerpots and sells them at TAX PAYMENTS all taxes and contributions that are govern- retail. It does not participate in foreign ment mandated (at any level—federal, state or trade (no import or export) and does The tax payments indicator reflects the total local), apply to the standardized business and not handle products subject to a special number of taxes and contributions paid, the tax regime, for example, liquor or have an impact in its income statements. In method of payment, the frequency of pay- tobacco. doing so, Doing Business goes beyond the tra- ment and the number of agencies involved ditional definition of a tax: as defined for the r At the beginning of 2007, owns 2 plots for this standardized case during the second purposes of government national accounts, of land, 1 building, machinery, office year of operation. It includes consumption taxes include only compulsory, unrequited equipment, computers and 1 truck and taxes paid by the company, such as sales tax or leases 1 truck. payments to general government. Doing value added tax. These taxes are traditionally Business departs from this definition because r Does not qualify for investment collected from the consumer on behalf of the it measures imposed charges that affect busi- incentives or any benefits apart from tax agencies. Although they do not affect the ness accounts, not government accounts. The those related to the age or size of the income statements of the company, they add company. main differences relate to labor contributions to the administrative burden of complying and value added tax. TheDoing Business r )BTFNQMPZFFTNBOBHFST BT- with the tax system and so are included in the measure includes government-mandated con- sistants and 48 workers. All are nation- tax payments measure. tributions paid by the employer to a requited als, and 1 manager is also an owner. The number of payments takes into ac- private pension fund or workers’ insurance r Has a turnover of 1,050 times income count electronic filing. Where full electronic fund. The indicator includes, for example, per capita. filing and payment is allowed and it is used Australia’s compulsory superannuation guar- r Makes a loss in the 1st year of operation. by the majority of medium-size businesses, antee and workers’ compensation insurance. It the tax is counted as paid once a year even if r Has a gross margin (pretax) of 20% excludes value added taxes from the total tax payments are more frequent. For taxes paid (that is, sales are 120% of the cost of rate because they do not affect the accounting goods sold). through third parties, such as tax on interest profits of the business—that is, they are not withheld at source by a financial institution reflected in the income statement. r Distributes 50% of its net profits as or fuel tax paid by the fuel distributor, only Doing Business has prepared a case dividends to the owners at the end of one payment is included even if payments are the second year. scenario to measure the taxes and contribu- more frequent. These are taxes withheld or tions paid by a standardized business and r Sells one of its plots of land at a profit paid at source where no filing is required of the complexity of an economy’s tax compli- during the second year. the company. ance system. This case scenario uses a set of r Has annual fuel costs for its trucks Where 2 or more taxes or contributions financial statements and assumptions about equal to twice income per capita. are filed for and paid jointly using the same transactions made over the year. Tax experts r Is subject to a series of detailed as- form, each of these joint payments is counted in each economy compute the taxes and con- sumptions on expenses and transac- once. For example, if mandatory health insur- tributions due in their jurisdiction based on tions to further standardize the case. ance contributions and mandatory pension the standardized case facts. Information is All financial statement variables are contributions are filed for and paid together, also compiled on the frequency of filing, tax proportional to 2005 income per capita. only one of these contributions would be in- audits and other costs of compliance. The For example, the owner who is also a cluded in the number of payments. project was developed and implemented in manager spends 10% of income per TIME cooperation with PricewaterhouseCoopers. capita on traveling for the company (20% of this owner’s expenses are To make the data comparable across Time is recorded in hours per year. The in- purely private, 20% are for entertaining economies, several assumptions about the DVTUPNFSTBOEGPSCVTJOFTTUSBWFM dicator measures the time taken to prepare, business and the taxes and contributions are file and pay 3 major types of taxes and con- used. ASSUMPTIONS ABOUT THE TAXES tributions: the corporate income tax, value AND CONTRIBUTIONS added or sales tax and labor taxes, includ- ASSUMPTIONS ABOUT THE BUSINESS All the taxes and contributions paid in the ing payroll taxes and social contributions. The business: second year of operation (fiscal 2007) are Preparation time includes the time to collect r Is a limited liability, taxable company. recorded. A tax or contribution is considered all information necessary to compute the tax distinct if it has a different name or is collected payable. If separate accounting books must r 4UBSUFEPQFSBUJPOTPO+BOVBSZ by a different agency. Taxes and contributions be kept for tax purposes—or separate cal- At that time the company purchased with the same name and agency, but charged culations made—the time associated with all the assets shown in its balance sheet and hired all its workers. at different rates depending on the business, these processes is included. This extra time is are counted as the same tax or contribution. included only if the regular accounting work r Operates in the economy’s selected cities. The number of times the company is not enough to fulfill the tax accounting r Is 100% domestically owned and has pays taxes and contributions in a year is the requirements. Filing time includes the time to 5 owners, all of whom are natural number of different taxes or contributions complete all necessary tax return forms and persons. multiplied by the frequency of payment (or make all necessary calculations. Payment time DATA NOTES 47 considers the hours needed to make the pay- times income per capita. ing zone or an industrial estate with ment online or at the tax authorities. Where This methodology is consistent with the special export or import privileges. taxes and contributions are paid in person, the Total Tax Contribution framework developed r Is domestically owned with no foreign time includes delays while waiting. by PricewaterhouseCoopers. This framework ownership. measures taxes that are borne by compa- TOTAL TAX RATE r Exports more than 10% of its sales. nies and affect their income statements, as The total tax rate measures the amount of does Doing Business. But while Pricewater- ASSUMPTIONS ABOUT THE TRADED taxes and mandatory contributions borne by houseCoopers bases its calculation on data GOODS the business in the second year of operation, from the largest companies in the economy, r ѮFUSBEFEQSPEVDUUSBWFMTJOBESZ expressed as a share of commercial profit. Doing Business focuses on a standardized cargo, 20-foot, full container load. It Doing Business in Veneto 2009 and Doing medium-size company. weighs 10 tons and is valued at $20,000. Business 2009 report the total tax rate for The product: fiscal 2007. The total amount of taxes borne The data details on paying taxes can be found r Is not hazardous nor does it include is the sum of all the different taxes and con- for each economy at http://www.doingbusi- military items. tributions payable after accounting for allow- ness.org. This methodology was developed r Does not require refrigeration or any able deductions and exemptions. The taxes in Djankov, Simeon, Tim Ganser, Caralee other special environment. withheld (such as personal income tax) or McLiesh, Rita Ramalho and Andrei Shleifer. collected by the company and remitted to the 2008. The Effect of Corporate Taxes on Invest- r Does not require any special phytosani- tax authorities (such as value added tax, sales ment and Entrepreneurship. NBER Working tary or environmental safety standards tax or goods and service tax) but not borne by Paper 13756. Cambridge, MA: National Bu- other than accepted international standards. the company are excluded. The taxes included reau of Economic Research. can be divided into 5 categories: profit or cor- DOCUMENTS porate income tax, social contributions and TRADING ACROSS BORDERS labor taxes paid by the employer (in respect All documents required per shipment to of which all mandatory contributions are in- Doing Business in India 2009 compiles export and import the goods are recorded. cluded, even if paid to a private entity such procedural requirements for exporting and It is assumed that the contract has already as a requited pension fund), property taxes, importing a standardized cargo of goods by been agreed upon and signed by both parties. turnover taxes and other small taxes (such as ocean transport. Every official procedure for Documents required for clearance by govern- municipal fees and vehicle and fuel taxes). exporting and importing the goods is re- ment ministries, customs authorities, port The total tax rate is designed to provide corded—from the contractual agreement be- and container terminal authorities, health a comprehensive measure of the cost of all tween the 2 parties to the delivery of goods— and technical control agencies and banks are the taxes a business bears. It differs from the along with the time and cost necessary for taken into account. Since payment is by letter statutory tax rate, which merely provides the completion. All documents needed by the of credit, all documents required by banks for factor to be applied to the tax base. In comput- trader for clearance of the goods across the the issuance or securing of a letter of credit ing the total tax rate, the actual tax payable is border are also recorded. For exporting goods, are also taken into account. Documents that divided by commercial profit. procedures range from packing the goods at are renewed at least annually and that do not Commercial profit is essentially net the factory to their departure from the port of require renewal per shipment (for example, profit before all taxes borne. It differs from exit. For importing goods, procedures range an annual tax clearance certificate) are not the conventional profit before tax, reported in from the vessel’s arrival at the port of entry to included. financial statements. In computing profit be- the cargo’s delivery at the factory warehouse. TIME fore tax, many of the taxes borne by a firm are The time and cost for ocean transport are not deductible. In computing commercial profit, included. Payment is made by letter of credit, The time for exporting and importing is re- these taxes are not deductible. Commercial and the time, cost and documents required corded in calendar days. The time calculation profit therefore presents a clear picture of the for the issuance of a letter of credit are taken for a procedure starts from the moment it is actual profit of a business before any of the into account. initiated and runs until it is completed. If a taxes it bears in the course of the fiscal year. -PDBMGSFJHIUGPSXBSEFST TIJQQJOHMJOFT procedure can be accelerated for an additional Commercial profit is computed as sales customs brokers, port officials and banks pro- cost and is available to all trading companies, minus cost of goods sold, minus gross sala- vide information on required documents and the fastest legal procedure is chosen. Fast- ries, minus administrative expenses, minus cost as well as the time to complete each pro- track procedures applying to firms located in other expenses, minus provisions, plus capital cedure. To make the data comparable across an export processing zone are not taken into gains (from the property sale) minus interest economies, several assumptions about the account because they are not available to all expense, plus interest income and minus com- business and the traded goods are used. trading companies. Ocean transport time is mercial depreciation. To compute the com- not included. It is assumed that neither the ex- ASSUMPTIONS ABOUT THE BUSINESS mercial depreciation, a straight-line depre- porter nor the importer wastes time and that ciation method is applied, with the following The business: each commits to completing each remain- rates: 0% for the land, 5% for the building, r )BTFNQMPZFFT ing procedure without delay. Procedures that 10% for the machinery, 33% for the comput- can be completed in parallel are measured ers, 20% for the office equipment, 20% for r Is located in the economy’s selected cities. as simultaneous. The waiting time between the truck and 10% for business development r Is a private, limited liability company. It procedures—for example, during unloading expenses. Commercial profit amounts to 59.4 does not operate in an export process- of the cargo—is included in the measure. 48 DOING BUSINESS IN INDIA 2009

COST r Expert opinions are given on the quality COST Cost measures the fees levied on a 20-foot of the delivered goods. If it is standard Cost is recorded as a percentage of the claim, container in INR and U.S. dollars. All the fees practice in the economy for parties to assumed to be equivalent to 200% of income associated with completing the procedures call witnesses or expert witnesses to per capita. No bribes are recorded. Three types give an opinion on the quality of the to export or import the goods are included. of costs are recorded: court costs, enforcement goods, the parties each call one witness These include costs for documents, adminis- or expert witness. If it is standard costs and average attorney fees. Court costs in- trative fees for customs clearance and techni- practice for the judge to appoint an clude all costs Seller must advance to the court cal control, terminal handling charges and independent expert to give an opinion or to the expert regardless of the final cost to inland transport. The cost measure does not on the quality of the goods, the judge Seller. Expert fees, if required by law or neces- include customs tariffs and duties or costs does so. In this case the judge does not sary in practice, are included in court costs. related to ocean transport. Only official costs allow opposing expert testimony. Enforcement costs are all costs Seller must are recorded. r The judgment is 100% in favor of Seller: advance to enforce the judgment through a the judge decides that the goods are of public sale of Buyer’s movable assets, regard- The data details on trading across borders adequate quality and that Buyer must less of the final cost to Seller. Average attorney can be found for each economy at http://www. pay the agreed price (200% of income fees are the fees Seller must advance to a local doingbusiness.org. This methodology was de- per capita). attorney to represent Seller in the standard- veloped in Djankov, Simeon, Caroline Freund r Buyer does not appeal the judgment. ized case. and Cong Pham. November 2008. “Trading on The judgment becomes final. Time.” Review of Economics and Statistics; and r Seller takes all required steps for prompt The data details on enforcing contracts can be is adopted here with minor changes. enforcement of the judgment. The found for each economy at http://www.doing- money is successfully collected through business.org. This methodology was developed ENFORCING CONTRACTS a public sale of Buyer’s movable assets in Djankov, Simeon, Rafael La Porta, Florencio (for example, office equipment). López-de-Silanes and Andrei Shleifer. 2003. Indicators on enforcing contracts measure the “Courts."Quarterly Journal of Economics 118 PROCEDURES efficiency of the judicial system in resolving (2): 453-517; and is adopted here with minor a commercial dispute. The data are built by A procedure is defined as any interaction changes. following the step-by-step evolution of a com- between the parties, or between them and the mercial sale dispute before local courts. The judge or court officer. This includes steps to CLOSING A BUSINESS data are collected through study of the codes file the case, steps for trial and judgment and of civil procedure and other court regulations steps necessary to enforce the judgment. Doing Business studies the time, cost and as well as surveys completed by local litigation The survey allows respondents to record outcomes of bankruptcy proceedings involv- lawyers as well as by judges. procedures that exist in civil law but not com- ing domestic entities. The data are derived mon law jurisdictions, and vice versa. For from survey responses by local insolvency ASSUMPTIONS ABOUT THE CASE example, in civil law countries the judge can practitioners and verified through a study of r The value of the claim equals 200% of appoint an independent expert, while in com- laws and regulations as well as public informa- the economy’s income per capita. mon law countries each party submits a list tion on bankruptcy systems. r The dispute concerns a lawful transac- of expert witnesses to the court. To indicate To make the data comparable across tion between 2 businesses (Seller the overall efficiency of court procedures, 1 economies, several assumptions about the and Buyer), located in the economy’s procedure is now subtracted for economies business and the case are used. selected cities. Seller sells goods worth that have specialized commercial courts and 1 ASSUMPTIONS ABOUT THE BUSINESS 200% of the economy’s income per procedure for economies that allow electronic capita to Buyer. After Seller delivers the filing of court cases. The business: goods to Buyer, Buyer refuses to pay for the goods on the grounds that the TIME r Is a limited liability company. delivered goods were not of adequate r Operates in the economy’s selected cities. quality. Time is recorded in calendar days, counted from the moment Seller files the lawsuit in r Is 100% domestically owned, with the r Seller sues Buyer to recover the amount court until payment. This includes both the founder, who is also the chairman of under the sales agreement (that is, days when actions take place and the waiting the supervisory board, owning 51% (no 200% of the economy’s income per periods between. The average duration of dif- other shareholder holds more than 5% capita). Buyer opposes Seller’s claim, of shares). saying that the quality of the goods is ferent stages of dispute resolution is recorded: not adequate. The claim is disputed on the completion of filing and service of process r Has downtown real estate, where it runs the merits. and of pretrial attachment (time to file the a hotel, as its major asset. case), the issuance of judgment (time for the r A court in the economy’s selected cities r Has a professional general manager. trial and obtaining the judgment) and the with jurisdiction over commercial r Has had average annual revenue of cases worth 200% of income per capita moment of payment (time for enforcement 1,000 times income per capita over the decides the dispute. of judgment). past 3 years. r Seller attaches Buyer’s goods prior to r Has 201 employees and 50 suppliers, obtaining a judgment because Seller each of which is owed money for the fears that Buyer may become insolvent last delivery. during the lawsuit. DATA NOTES 49 r Borrowed from a domestic bank 5 years COST EASE OF DOING BUSINESS ago (the loan has 10 years to full repay- The cost of the proceedings is recorded as a ment) and bought real estate (the hotel percentage of the estate’s value. The cost is The ease of doing business index ranks cities building), using it as security for the calculated on the basis of survey responses by from 1 to 17. For each city the index is calcu- bank loan. insolvency practitioners and includes court lated as the ranking on the simple average of r Has observed the payment schedule and fees as well as fees of insolvency practitioners, its percentile rankings on each of the 7 topics all other conditions of the loan till now. independent assessors, lawyers and accoun- covered in Doing Business in India 2009. The r Has a floating charge or mortgage, with tants. Respondents provide cost estimates ranking on each topic is the simple average the value of its principal being exactly from among the following options: a specific of the percentile rankings on its component equal to the market value of the hotel. percentage or less than 2%, 2–5%, 5–8%, indicators. 8–11%, 11–18%, 18–25%, 25–33%, 33–50%, The ease of doing business index is lim- ASSUMPTIONS ABOUT THE CASE 50–75% and more than 75% of the value of ited in scope. It does not account for an The business is experiencing liquidity prob- the business estate. economy's proximity to large markets, the lems. The company’s loss in 2007 reduced its quality of its infrastructure services (other RECOVERY RATE net worth to a negative figure. There is no cash than services related to trading across orders to pay the bank interest or principal in full, The recovery rate is recorded as cents on or construction permits), the security of prop- due tomorrow. The business therefore defaults the dollar recouped by creditors through the erty from theft and looting, macroeconomic on its loan. Management believes that losses bankruptcy, insolvency or debt enforcement conditions or the strength of underlying in- will be incurred in 2008 and 2009 as well. proceedings. The calculation takes into ac- stitutions. There remains a large unfinished The bank holds a floating charge against count whether the business emerges from the agenda for research into what regulation con- the hotel in economies where floating charges proceedings as a going concern as well as costs stitutes binding constraints, what package of are possible. If the law does not permit a float- and the loss in value due to the time spent reforms is most effective and how these issues ing charge but contracts commonly use some closing down. If the business keeps operating, are shaped by the context of an economy. The other provision to that effect, this provision is no value is lost on the initial claim, set at 100 Doing Business indicators provide a new em- specified in the lending contract. cents on the dollar. If it does not, the initial pirical data set that may improve understand- The business has too many creditors to 100 cents on the dollar are reduced to 70 cents ing of these issues. negotiate an informal out-of-court workout. It on the dollar. Then the official costs of the has the following options: a judicial procedure insolvency procedure are deducted (1 cent for aimed at the rehabilitation or reorganiza- each percentage of the initial value). Finally, tion of the business to permit its continued the value lost as a result of the time the money operation; a judicial procedure aimed at the remains tied up in insolvency proceedings liquidation or winding-up of the company; or is taken into account, including the loss of a debt enforcement or foreclosure procedure value due to depreciation of the hotel furni- aimed at selling the hotel either piecemeal or ture. Consistent with international accounting as a going concern, enforced either in court practice, the depreciation rate for furniture is (or through a government authority like a taken to be 20%. The furniture is assumed to debt collection agency) or out of court (for account for a quarter of the total value of as- example, by appointing a receiver). sets. The recovery rate is the present value of the remaining proceeds, based on end-2007 TIME lending rates from the International Mon- Time for creditors to recover their debt is etary Fund’s International Financial Statistics, recorded in calendar years. Information is supplemented with data from central banks. collected on the sequence of procedures and on whether any procedures can be carried This methodology was developed in Djankov, out simultaneously. Potential delay tactics by Simeon, Oliver Hart, Caralee McLiesh and An- the parties, such as the filing of dilatory ap- drei Shleifer. 2006. Debt Enforcement around peals or requests for extension, are taken into the World. NBER Working Paper 12807. Cam- consideration. bridge, MA: National Bureau of Economic Research. 50 DOING BUSINESS IN INDIA 2009 51 City tables 52 DOING BUSINESS IN INDIA 2009

Ahmedabad, Gujarat Ease of doing business (rank) 5 Starting a business (rank) 14 Paying taxes (rank) 11 Enforcing contracts (rank) 16 Procedures (number) 13 Payments (number per year) 75 Procedures (number) 46 Time (days) 35 Time (hours per year) 261 Time (days) 1,295 Cost (% of income per capita) 46.3 Total tax rate (% of profit) 69 Cost (% of claim) 30.9 Minimum capital (% of income per capita) 0 Trading across borders (rank) 3 Closing a business (rank) 4 Dealing with construction permits (rank) 4 Documents to export (number) 8 Time (years) 6.8 Procedures (number) 15 Time to export (days) 17 Cost (% of estate) 10 Time (days) 144 Cost to export (US$ per container) 946 Recovery rate (cents on the dollar) 15 Cost (% of income per capita) 746.1 Documents to import (number) 9 Time to import (days) 18 Registering property (rank) 2 Cost to import (US$ per container) 978 Procedures (number) 5 Time (days) 42 Cost (% of the property value) 7 Bengaluru, Karnataka Ease of doing business (rank) 13 Starting a business (rank) 17 Paying taxes (rank) 12 Enforcing contracts (rank) 15 Procedures (number) 13 Payments (number per year) 59 Procedures (number) 46 Time (days) 40 Time (hours per year) 291 Time (days) 1,058 Cost (% of income per capita) 64.7 Total tax rate (% of profit) 70.3 Cost (% of claim) 32.5 Minimum capital (% of income per capita) 0 Trading across borders (rank) 9 Closing a business (rank) 8 Dealing with construction permits (rank) 1 Documents to export (number) 8 Time (years) 7.3 Procedures (number) 15 Time to export (days) 25 Cost (% of estate) 10 Time (days) 97 Cost to export (US$ per container) 783 Recovery rate (cents on the dollar) 14.1 Cost (% of income per capita) 1,159 Documents to import (number) 9 Time to import (days) 25 Registering property (rank) 4 Cost to import (US$ per container) 1,024 Procedures (number) 5 Time (days) 28 Cost (% of the property value) 9.3 Bhubaneshwar, Orissa Ease of doing business (rank) 3 Starting a business (rank) 5 Paying taxes (rank) 9 Enforcing contracts (rank) 5 Procedures (number) 12 Payments (number per year) 63 Procedures (number) 46 Time (days) 37 Time (hours per year) 287 Time (days) 735 Cost (% of income per capita) 40 Total tax rate (% of profit) 68.2 Cost (% of claim) 25.2 Minimum capital (% of income per capita) 0 Trading across borders (rank) 1 Closing a business (rank) 5 Dealing with construction permits (rank) 8 Documents to export (number) 8 Time (years) 7.5 Procedures (number) 18 Time to export (days) 17 Cost (% of estate) 7 Time (days) 149 Cost to export (US$ per container) 834 Recovery rate (cents on the dollar) 15 Cost (% of income per capita) 294.7 Documents to import (number) 9 Time to import (days) 16 Registering property (rank) 17 Cost to import (US$ per container) 833 Procedures (number) 6 Time (days) 126 Cost (% of the property value) 7.5 Chennai, Tamil Nadu Ease of doing business (rank) 15 Starting a business (rank) 10 Paying taxes (rank) 17 Enforcing contracts (rank) 7 Procedures (number) 13 Payments (number per year) 68 Procedures (number) 46 Time (days) 34 Time (hours per year) 292 Time (days) 877 Cost (% of income per capita) 40.3 Total tax rate (% of profit) 70 Cost (% of claim) 25.3 Minimum capital (% of income per capita) 0 Trading across borders (rank) 2 Closing a business (rank) 10 Dealing with construction permits (rank) 3 Documents to export (number) 8 Time (years) 7.5 Procedures (number) 15 Time to export (days) 25 Cost (% of estate) 10 Time (days) 143 Cost to export (US$ per container) 541 Recovery rate (cents on the dollar) 13.8 Cost (% of income per capita) 831.7 Documents to import (number) 9 Time to import (days) 19 Registering property (rank) 16 Cost to import (US$ per container) 593 Procedures (number) 7 Time (days) 48 Cost (% of the property value) 10.1 CITY TABLES 53

Gurgaon, Haryana Ease of doing business (rank) 4 Starting a business (rank) 9 Paying taxes (rank) 7 Enforcing contracts (rank) 14 Procedures (number) 12 Payments (number per year) 62 Procedures (number) 46 Time (days) 33 Time (hours per year) 288 Time (days) 1163 Cost (% of income per capita) 50.7 Total tax rate (% of profit) 67 Cost (% of claim) 31.3 Minimum capital (% of income per capita) 0 Trading across borders (rank) 17 Closing a business (rank) 6 Dealing with construction permits (rank) 2 Documents to export (number) 8 Time (years) 7 Procedures (number) 19 Time to export (days) 25 Cost (% of estate) 10 Time (days) 110 Cost to export (US$ per container) 1,077 Recovery rate (cents on the dollar) 14.7 Cost (% of income per capita) 298 Documents to import (number) 9 Time to import (days) 28 Registering property (rank) 1 Cost to import (US$ per container) 1,184 Procedures (number) 4 Time (days) 26 Cost (% of the property value) 7.7 Guwahati, Assam Ease of doing business (rank) 8 Starting a business (rank) 13 Paying taxes (rank) 6 Enforcing contracts (rank) 2 Procedures (number) 13 Payments (number per year) 62 Procedures (number) 46 Time (days) 38 Time (hours per year) 278 Time (days) 600 Cost (% of income per capita) 40.5 Total tax rate (% of profit) 67.4 Cost (% of claim) 22.5 Minimum capital (% of income per capita) 0 Trading across borders (rank) 7 Closing a business (rank) 12 Dealing with construction permits (rank) 12 Documents to export (number) 8 Time (years) 8.3 Procedures (number) 16 Time to export (days) 22 Cost (% of estate) 7 Time (days) 179 Cost to export (US$ per container) 713 Recovery rate (cents on the dollar) 13.5 Cost (% of income per capita) 353.1 Documents to import (number) 9 Time to import (days) 28 Registering property (rank) 14 Cost to import (US$ per container) 794 Procedures (number) 4 Time (days) 84 Cost (% of the property value) 15.4 Hyderabad, Andhra Pradesh Ease of doing business (rank) 2 Starting a business (rank) 4 Paying taxes (rank) 13 Enforcing contracts (rank) 1 Procedures (number) 12 Payments (number per year) 78 Procedures (number) 46 Time (days) 33 Time (hours per year) 236 Time (days) 770 Cost (% of income per capita) 41.6 Total tax rate (% of profit) 69.4 Cost (% of claim) 17.8 Minimum capital (% of income per capita) 0 Trading across borders (rank) 13 Closing a business (rank) 1 Dealing with construction permits (rank) 4 Documents to export (number) 8 Time (years) 7 Procedures (number) 16 Time to export (days) 26 Cost (% of estate) 7 Time (days) 80 Cost to export (US$ per container) 1,012 Recovery rate (cents on the dollar) 15.9 Cost (% of income per capita) 1,314.2 Documents to import (number) 9 Time to import (days) 23 Registering property (rank) 9 Cost to import (US$ per container) 1,084 Procedures (number) 5 Time (days) 37 Cost (% of the property value) 10.5 Indore, Madhya Pradesh Ease of doing business (rank) 11 Starting a business (rank) 8 Paying taxes (rank) 10 Enforcing contracts (rank) 10 Procedures (number) 13 Payments (number per year) 64 Procedures (number) 46 Time (days) 32 Time (hours per year) 240 Time (days) 990 Cost (% of income per capita) 43.8 Total tax rate (% of profit) 69.6 Cost (% of claim) 26.3 Minimum capital (% of income per capita) 0 Trading across borders (rank) 11 Closing a business (rank) 9 Dealing with construction permits (rank) 13 Documents to export (number) 8 Time (years) 8 Procedures (number) 21 Time to export (days) 21 Cost (% of estate) 7 Time (days) 163 Cost to export (US$ per container) 912 Recovery rate (cents on the dollar) 14 Cost (% of income per capita) 205.2 Documents to import (number) 9 Time to import (days) 35 Registering property (rank) 10 Cost to import (US$ per container) 981 Procedures (number) 5 Time (days) 39 Cost (% of the property value) 10.7 54 DOING BUSINESS IN INDIA 2009

Jaipur, Rajasthan Ease of doing business (rank) 7 Starting a business (rank) 3 Paying taxes (rank) 2 Enforcing contracts (rank) 7 Procedures (number) 12 Payments (number per year) 60 Procedures (number) 46 Time (days) 31 Time (hours per year) 233 Time (days) 1,033 Cost (% of income per capita) 45.5 Total tax rate (% of profit) 67.7 Cost (% of claim) 18.6 Minimum capital (% of income per capita) 0 Trading across borders (rank) 14 Closing a business (rank) 14 Dealing with construction permits (rank) 13 Documents to export (number) 8 Time (years) 9.1 Procedures (number) 19 Time to export (days) 22 Cost (% of estate) 7 Time (days) 151 Cost to export (US$ per container) 1,289 Recovery rate (cents on the dollar) 12.3 Cost (% of income per capita) 414.6 Documents to import (number) 9 Time to import (days) 22 Registering property (rank) 3 Cost to import (US$ per container) 1,384 Procedures (number) 5 Time (days) 24 Cost (% of the property value) 9.9 Kochi, Kerala Ease of doing business (rank) 16 Starting a business (rank) 16 Paying taxes (rank) 14 Enforcing contracts (rank) 6 Procedures (number) 13 Payments (number per year) 76 Procedures (number) 46 Time (days) 41 Time (hours per year) 263 Time (days) 705 Cost (% of income per capita) 47.2 Total tax rate (% of profit) 69.1 Cost (% of claim) 30.2 Minimum capital (% of income per capita) 0 Trading across borders (rank) 5 Closing a business (rank) 10 Dealing with construction permits (rank) 15 Documents to export (number) 8 Time (years) 7.5 Procedures (number) 22 Time to export (days) 28 Cost (% of estate) 10 Time (days) 224 Cost to export (US$ per container) 432 Recovery rate (cents on the dollar) 13.8 Cost (% of income per capita) 233.8 Documents to import (number) 9 Time to import (days) 21 Registering property (rank) 7 Cost to import (US$ per container) 480 Procedures (number) 4 Time (days) 27 Cost (% of the property value) 15.5 Kolkata, West Bengal Ease of doing business (rank) 17 Starting a business (rank) 10 Paying taxes (rank) 16 Enforcing contracts (rank) 13 Procedures (number) 13 Payments (number per year) 68 Procedures (number) 46 Time (days) 36 Time (hours per year) 303 Time (days) 1,183 Cost (% of income per capita) 39.6 Total tax rate (% of profit) 69.1 Cost (% of claim) 26.9 Minimum capital (% of income per capita) 0 Trading across borders (rank) 6 Closing a business (rank) 17 Dealing with construction permits (rank) 16 Documents to export (number) 8 Time (years) 10.8 Procedures (number) 27 Time to export (days) 20 Cost (% of estate) 10 Time (days) 258 Cost to export (US$ per container) 644 Recovery rate (cents on the dollar) 9.1 Cost (% of income per capita) 2,549.6 Documents to import (number) 9 Time to import (days) 31 Registering property (rank) 13 Cost to import (US$ per container) 710 Procedures (number) 5 Time (days) 107 Cost (% of the property value) 7.4 Ludhiana, Punjab Ease of doing business (rank) 1 Starting a business (rank) 7 Paying taxes (rank) 1 Enforcing contracts (rank) 4 Procedures (number) 12 Payments (number per year) 59 Procedures (number) 46 Time (days) 33 Time (hours per year) 255 Time (days) 862 Cost (% of income per capita) 48 Total tax rate (% of profit) 67.6 Cost (% of claim) 20 Minimum capital (% of income per capita) 0 Trading across borders (rank) 12 Closing a business (rank) 2 Dealing with construction permits (rank) 7 Documents to export (number) 8 Time (years) 7.3 Procedures (number) 17 Time to export (days) 21 Cost (% of estate) 7 Time (days) 143 Cost to export (US$ per container) 1,105 Recovery rate (cents on the dollar) 15.3 Cost (% of income per capita) 622.9 Documents to import (number) 9 Time to import (days) 25 Registering property (rank) 11 Cost to import (US$ per container) 1,154 Procedures (number) 4 Time (days) 67 Cost (% of the property value) 10.6 CITY TABLES 55

Mumbai, Maharashtra Ease of doing business (rank) 10 Starting a business (rank) 12 Paying taxes (rank) 4 Enforcing contracts (rank) 17 Procedures (number) 13 Payments (number per year) 59 Procedures (number) 46 Time (days) 30 Time (hours per year) 271 Time (days) 1420 Cost (% of income per capita) 70.9 Total tax rate (% of profit) 68.5 Cost (% of claim) 39.6 Minimum capital (% of income per capita) 0 Trading across borders (rank) 3 Closing a business (rank) 3 Dealing with construction permits (rank) 17 Documents to export (number) 8 Time (years) 7 Procedures (number) 37 Time to export (days) 17 Cost (% of estate) 9 Time (days) 200 Cost to export (US$ per container) 945 Recovery rate (cents on the dollar) 15.1 Cost (% of income per capita) 2,718 Documents to import (number) 9 Time to import (days) 21 Registering property (rank) 5 Cost to import (US$ per container) 960 Procedures (number) 5 Time (days) 44 Cost (% of the property value) 7.4 New Delhi, Delhi Ease of doing business (rank) 6 Starting a business (rank) 1 Paying taxes (rank) 7 Enforcing contracts (rank) 12 Procedures (number) 11 Payments (number per year) 60 Procedures (number) 46 Time (days) 32 Time (hours per year) 277 Time (days) 900 Cost (% of income per capita) 41.1 Total tax rate (% of profit) 68.5 Cost (% of claim) 33.8 Minimum capital (% of income per capita) 0 Trading across borders (rank) 14 Closing a business (rank) 6 Dealing with construction permits (rank) 4 Documents to export (number) 8 Time (years) 7 Procedures (number) 19 Time to export (days) 25 Cost (% of estate) 10 Time (days) 144 Cost to export (US$ per container) 1,077 Recovery rate (cents on the dollar) 14.7 Cost (% of income per capita) 256 Documents to import (number) 9 Time to import (days) 28 Registering property (rank) 7 Cost to import (US$ per container) 1,158 Procedures (number) 5 Time (days) 55 Cost (% of the property value) 7.5 Noida, Uttar Pradesh Ease of doing business (rank) 12 Starting a business (rank) 6 Paying taxes (rank) 2 Enforcing contracts (rank) 7 Procedures (number) 12 Payments (number per year) 59 Procedures (number) 46 Time (days) 30 Time (hours per year) 278 Time (days) 970 Cost (% of income per capita) 52.5 Total tax rate (% of profit) 66.5 Cost (% of claim) 24 Minimum capital (% of income per capita) 0 Trading across borders (rank) 16 Closing a business (rank) 16 Dealing with construction permits (rank) 9 Documents to export (number) 8 Time (years) 8.7 Procedures (number) 19 Time to export (days) 25 Cost (% of estate) 10 Time (days) 139 Cost to export (US$ per container) 1,077 Recovery rate (cents on the dollar) 11.9 Cost (% of income per capita) 696.1 Documents to import (number) 9 Time to import (days) 27 Registering property (rank) 12 Cost to import (US$ per container) 1,187 Procedures (number) 5 Time (days) 37 Cost (% of the property value) 25.4 Patna, Bihar Ease of doing business (rank) 14 Starting a business (rank) 2 Paying taxes (rank) 15 Enforcing contracts (rank) 2 Procedures (number) 11 Payments (number per year) 64 Procedures (number) 46 Time (days) 37 Time (hours per year) 405 Time (days) 792 Cost (% of income per capita) 38.6 Total tax rate (% of profit) 68.4 Cost (% of claim) 17 Minimum capital (% of income per capita) 0 Trading across borders (rank) 10 Closing a business (rank) 15 Dealing with construction permits (rank) 9 Documents to export (number) 8 Time (years) 9.3 Procedures (number) 19 Time to export (days) 19 Cost (% of estate) 7 Time (days) 185 Cost to export (US$ per container) 941 Recovery rate (cents on the dollar) 12 Cost (% of income per capita) 204.4 Documents to import (number) 9 Time to import (days) 32 Registering property (rank) 15 Cost to import (US$ per container) 985 Procedures (number) 5 Time (days) 87 Cost (% of the property value) 12.4 56 DOING BUSINESS IN INDIA 2009

Ranchi, Jharkhand Ease of doing business (rank) 9 Starting a business (rank) 15 Paying taxes (rank) 4 Enforcing contracts (rank) 11 Procedures (number) 12 Payments (number per year) 63 Procedures (number) 46 Time (days) 38 Time (hours per year) 271 Time (days) 985 Cost (% of income per capita) 51.5 Total tax rate (% of profit) 67 Cost (% of claim) 30.6 Minimum capital (% of income per capita) 0 Trading across borders (rank) 8 Closing a business (rank) 13 Dealing with construction permits (rank) 9 Documents to export (number) 8 Time (years) 8.5 Procedures (number) 19 Time to export (days) 21 Cost (% of estate) 7 Time (days) 170 Cost to export (US$ per container) 678 Recovery rate (cents on the dollar) 13.2 Cost (% of income per capita) 226.4 Documents to import (number) 9 Time to import (days) 36 Registering property (rank) 6 Cost to import (US$ per container) 717 Procedures (number) 5 Time (days) 56 Cost (% of the property value) 5.4 57 Doing Business Indicators 58 DOING BUSINESS IN INDIA 2009

Starting a business Dealing with construction permits

Paid-in Ease of minimum Ease of dealing with Cost capital starting a Cost construction Procedures Time (% of GNI (% of GNI business Procedures Time (% of GNI permits (number) (days) per capita) per capita) (rank) (number) (days) per capita) (rank) Ahmedabad 13 35 46.3 0 14 15 144 746.1 4 Gujarat Bengaluru 13 40 64.7 0 17 15 97 1,158.7 1 Karnataka Bhubaneshwar 12 37 40.0 0 5 18 149 294.7 8 Orissa Chennai 13 34 40.3 0 10 15 143 831.7 3 Tamil Nadu Gurgaon 12 33 50.7 0 9 19 110 298.0 2 Haryana Guwahati 13 38 40.5 0 13 16 179 353.1 12 Assam Hyderabad 12 33 41.6 0 4 16 80 1,314.2 4 Andhra Pradesh Indore 13 32 43.8 0 8 21 163 205.2 13 Madhya Pradesh Jaipur 12 31 45.5 0 3 19 151 414.6 13 Rajasthan Kochi 13 41 47.2 0 16 22 224 233.8 15 Kerala Kolkata 13 36 39.6 0 10 27 258 2,549.6 16 West Bengal Ludhiana 12 33 48.0 0 7 17 143 622.9 7 Punjab Mumbai 13 30 70.9 0 12 37 200 2,717.7 17 Maharashtra New Delhi 11 32 41.1 0 1 19 144 256.0 4 Delhi Noida 12 30 52.5 0 6 19 139 696.1 9 Uttar Pradesh Patna 11 37 38.6 0 2 19 185 204.4 9 Bihar Ranchi 12 38 51.5 0 15 19 170 226.4 9 Jharkhand INDICATORS 59

Registering property Trading across borders

Cost Ease of Cost to Cost to (% of registering Documents Time for export Documents Time for import Ease of Procedures Time property property for export export (US$ per for import import (US$ per trading (number) (days) value) (rank) (number) (days) container) (number) (days) container) (rank) Ahmedabad 5 42 7.0 2 8 17 946 9 18 978 3 Gujarat Bengaluru 5 28 9.3 4 8 25 783 9 25 1,024 9 Karnataka Bhubaneshwar 6 126 7.5 17 8 17 834 9 16 833 1 Orissa Chennai 7 48 10.1 16 8 25 541 9 19 593 2 Tamil Nadu Gurgaon 4 26 7.7 1 8 25 1,077 9 28 1,184 17 Haryana Guwahati 4 84 15.4 14 8 22 713 9 28 794 7 Assam Hyderabad 5 37 10.5 9 8 26 1,012 9 23 1,084 13 Andhra Pradesh Indore 5 39 10.7 10 8 21 912 9 35 981 11 Madhya Pradesh Jaipur 5 24 9.9 3 8 22 1,289 9 22 1,384 14 Rajasthan Kochi 4 27 15.5 7 8 28 432 9 21 480 5 Kerala Kolkata 5 107 7.9 13 8 20 644 9 31 710 6 West Bengal Ludhiana 4 67 10.6 11 8 21 1,105 9 25 1,154 12 Punjab Mumbai 5 44 7.4 5 8 17 945 9 21 960 3 Maharashtra New Delhi 5 55 7.5 7 8 25 1,077 9 28 1,158 14 Delhi Noida 5 37 25.4 12 8 25 1,077 9 27 1,187 16 Uttar Pradesh Patna 5 87 12.4 15 8 19 941 9 32 985 10 Bihar Ranchi 5 56 5.4 6 8 21 678 9 36 717 8 Jharkhand 60 DOING BUSINESS IN INDIA 2009

Paying taxes Enforcing contracts

Ease of Ease of Total tax closing a enforcing Payments Time rate business Procedures Time Cost contracts (number) (hours) (% profit) (rank) (number) (days) (% of debt) (rank) Ahmedabad 75 261 69.0 11 46 1,295 30.9 16 Gujarat Bengaluru 59 291 70.3 12 46 1,058 32.5 15 Karnataka Bhubaneshwar 63 287 68.2 9 46 735 25.2 5 Orissa Chennai 68 292 70.0 17 46 877 25.3 7 Tamil Nadu Gurgaon 62 288 67.0 7 46 1,163 31.3 14 Haryana Guwahati 62 278 67.4 6 46 600 22.5 2 Assam Hyderabad 78 236 69.4 13 46 770 17.8 1 Andhra Pradesh Indore 64 240 69.6 10 46 990 26.3 10 Madhya Pradesh Jaipur 60 233 67.7 2 46 1,033 18.6 7 Rajasthan Kochi 76 263 69.1 14 46 705 30.2 6 Kerala Kolkata 68 303 69.1 16 46 1,183 26.9 13 West Bengal Ludhiana 59 255 67.6 1 46 862 20.0 4 Punjab Mumbai 59 271 68.5 4 46 1,420 39.6 17 Maharashtra New Delhi 60 277 68.5 7 46 900 33.8 12 Delhi Noida 59 278 66.5 2 46 970 24.0 7 Uttar Pradesh Patna 64 405 68.4 15 46 792 17.0 2 Bihar Ranchi 63 271 67.0 4 46 985 30.6 11 Jharkhand INDICATORS 61

Closing a business

Ease of Cost Recovery rate closing a Time (% of (cents on the business (years) estate) dollar) (rank) Ahmedabad 6.8 10 15.0 4 Gujarat Bengaluru 7.3 10 14.1 8 Karnataka Bhubaneshwar 7.5 7 15.0 5 Orissa Chennai 7.5 10 13.8 10 Tamil Nadu Gurgaon 7 10 14.7 6 Haryana Guwahati 8.3 7 13.5 12 Assam Hyderabad 7 7 15.9 1 Andhra Pradesh Indore 8 7 14.0 9 Madhya Pradesh Jaipur 9.1 7 12.3 14 Rajasthan Kochi 7.5 10 13.8 10 Kerala Kolkata 10.8 10 9.1 17 West Bengal Ludhiana 7.3 7 15.3 2 Punjab Mumbai 7 9 15.1 3 Maharashtra New Delhi 7 10 14.7 6 Delhi Noida 8.7 10 11.9 16 Uttar Pradesh Patna 9.3 7 12.0 15 Bihar Ranchi 8.5 7 13.2 13 Jharkhand 62 DOING BUSINESS IN INDIA 2009 63

LIST OF PROCEDURES List of Starting a business procedures Ahmedabad, Gujarat Standard company legal form: Private Limited Company Starting a business Paid-in-minimum capital requirement: none Data as of: February 2009 Registering property Procedure 1. Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National) Dealing with Time: 1 day Cost: INR 100 construction permits Comments: The applicant is required to fill out and submit Form DIN-1 to obtain the provisional DIN. This form is available online on the Ministry of Corporate Affairs 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately issued. The applicant is also required to pay an application fee of INR 100, which can be done online. The printed application form must then be signed and sent for approval to the Ministry of Corporate Affairs by courier, along with proof of payment (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of residence within 60 days of the date of generation of the provisional DIN. On receipt of the DIN application form and attached supporting documents, the concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The status of the DIN approval process can be checked online on the MCA portal. The provisional DIN itself is approved as the permanent DIN.

Procedure 2. Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National) Time: 2 days Cost: INR 1,500 Comments: To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost structure. Company directors submit the prescribed application form along with proof of identity and address. After the DSC is obtained, it must be registered on the MCA portal before it can be affixed on any e-form. Once the Director has obtained the provisional DIN online, DSC may be obtained while the provisional DIN is being registered.

Procedure 3. Reserve the company name online with the Registrar of Companies (ROC) (National) Time: 2 days Cost: INR 500 Comments: Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on the MCA 21 website. A maximum of 6 suggested names can be submitted; they are then checked by ROC staff for any similarities with all other names in India. After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the Registrar of Companies electronically informs the applicant. In practice, it takes 2 days to obtain a clearance of the name if the proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee can be made online.

Procedure 4. Stamp the company documents at the State Treasury (State) Time: 1 day Cost: INR 3,020 (INR 1,000 for MOA + INR 2,000 for AOA for a share capital between INR 100,000 and INR 500,000 + INR 20 for stamp paper for declaration on Form 1) Comments: The request for stamping the incorporation documents should be accompanied by unsigned copies of the memorandum of association (MOA), articles of association (AOA), and the payment receipt. The Superintendent at the State Treasury returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father's name, address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed. 64 DOING BUSINESS IN INDIA 2009

Comments: Value-Added Tax (VAT) registration is mandatory for companies with a An employee's individual insurance involves a separate process, one which is initi- turnover of INR 500,000 and above. Under the Gujarat VAT Act (2003), the application ated after employer's registration. The employer should fill out declaration forms for should be filed with the Commercial Tax Department using Form 101 and, upon veri- all coverable employees and submit the same, along with Form 3, to the appropriate fication, the authority shall issue the Certificate of Registration on Form 102 within regional office within 10 days of the employee's appointment date. The employees' 30 days of the application receipt. If the certificate is not issued within 30 days, the temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get company is deemed registered. The application must be accompanied by the fol- a permanent ESI card. lowing supporting documentation: Permanent Account Number, Memorandum of More information is available at http://www.esic.nic.in. Association, Certificate of Incorporation, proof of ownership of the place of business, and details of owners. No fee is charged for registration but there is a provision for a deposit of INR 25,000 to be made, which can be adjusted against future tax liability. * This procedure can be completed simultaneously with previous procedures The purpose of such deposit is to indemnify the office in case of any loss caused to the department owing to any misrepresentation or act of the entrepreneur. The said STARTING A BUSINESS deposit is refunded in the event the registration is surrendered or cancelled. The request for a deposit is at the discretion of the authority and the amount depends Bengaluru, Karnataka on the submission of several documents such as paid telephone and electricity bills Standard company legal form: Private Limited Company or proof of ownership of immovable assets or residential property. In practice, many Paid-in-minimum capital requirement: none firms do not pay such a deposit and instead have another dealer act as a guarantor. Data as of: February 2009 Taxpayers can also apply online for VAT registration and amendments to the Certifi- cate of Registration at commercialtax.gujarat.gov.in. Upon online registration, the Procedure 1. Obtain director identification number (DIN) online company receives an inspection within 3 or 4 days. The certificate is subsequently from the Ministry of Corporate Affairs portal (National) sent by mail within 10-15 days. Most applicants still use the offline option to register Time: 1 day for VAT. Cost: INR 100 Procedure 11.* Register for Profession Tax at the Profession Tax Comments: The applicant is required to fill out and submit Form DIN-1 to obtain Office (State/ Municipal) the provisional DIN. This form is available online on the Ministry of Corporate Affairs 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately Time: 3 days issued. The applicant is also required to pay an application fee of INR 100, which Cost: No cost can be done online. The printed application form must then be signed and sent for Comments: As per the amendment to the Gujarat State Tax on Profession, Trades, approval to the Ministry of Corporate Affairs by courier, along with proof of payment Calling, and Employment Act, in effect from April 2008, registration and power to (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of levy and collect Profession Tax have been transferred from the State to the Municipal residence within 60 days of the date of generation of the provisional DIN. On receipt level. Registration is now being done at the Civic Centers of Ahmedabad Municipal of the DIN application form and attached supporting documents, the concerned Corporation. The application should be made within 60 days of the commencement authority verifies all the documents and, upon approval, issues a permanent DIN. of business. The application form is available online from the Ahmedabad Municipal The status of the DIN approval process can be checked online on the MCA portal. The Corporation website or at the Civic Centers. It should be accompanied by a registra- provisional DIN itself is approved as the permanent DIN. tion certificate (such as the Permanent Account Number card or the Certificate of Incorporation), a proof of place of business, and details of employees. Upon verifica- Procedure 2. Obtain digital signature certificate online from tion, the Profession Tax Registration Certificate is issued. private agency authorized by the Ministry of Corporate Affairs (National) Procedure 12.* Register with the Employees' Provident Fund Time: 3 days Organization (National) Cost: INR 1,500 Time: 15 days Comments: To use the new electronic filing system under MCA 21, the applicant Cost: No cost must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Comments: The Employees Provident Fund Organization (EPFO) is a statutory from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). organization under the Ministry of Labor and Employment. The Provident Fund Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, registration focuses on delinquent reporting, underreporting, or nonreporting of depending upon various factors such as validity period, delivery time, and cost workforce size. If a company has more than 20 employees, then it is mandatory to structure. Company directors submit the prescribed application form along with register with the EPFO and a code number will be allotted to the company. Once the proof of identity and address. After the DSC is obtained, it must be registered on the employer is registered with the EPFO, it will register his employees with the office MCA portal before it can be affixed on any e-form. Once the Director has obtained and open Provident Fund accounts in the name of each employee. More information the provisional DIN online, DSC may be obtained while the provisional DIN is being is available at www.epfindia.gov.in. registered. As per an internal circular, the code number is to be allotted within 3 days of the date of submission, if the application is complete in all respects. However, in many cases Procedure 3. Reserve the company name online with the applicants have received the intimation letter with the code number later: in 12 to Registrar of Companies (ROC) (National) 15 days. Time: 2 days Cost: INR 500 Procedure 13.* Register for medical insurance at the regional office of the Employees' State Insurance Corporation (National) Comments: Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company Time: 15 days name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Cost: No cost they are then checked by ROC staff for any similarities with all other names in India. Comments: Registration is the process by which every employer and every paid em- After being cleared by the junior officer, the name requests are sent to the senior of- ployee is identified for health-insurance purposes. The Employees' State Insurance ficer for approval. Once approved, the Registrar of Companies electronically informs (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- the applicant. In practice, it takes 2 days to obtain a clearance of the name if the tributions is made both by the employer and the employee at the rates prescribed by proposed name is available and conforms to the naming standards established by the National Government. the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee The Employer should register within 15 days after the Act becomes applicable. For can be made online. this purpose, the employer should submit Form 01 to the ESI regional office. Upon receipt of the registration form, the office shall allot an employer's code number and shall inform the employer of that number through an "intimation letter" sent Procedure 4. Stamp the company documents at the State by post. Treasury (State) Time: 1 day Cost: INR 1,520 (INR 1,000 for MOA + INR 500 for AOA for every 1,000,000 of share capital or part thereof + INR 20 for stamp paper for declaration on Form 1 ) 66 DOING BUSINESS IN INDIA 2009

Comments: The request for stamping the incorporation documents should be The application for PAN can also be made online or using the rush process called accompanied by unsigned copies of the memorandum (MOA), articles of association TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- (AOA), and the payment receipt. The Superintendent at the State Treasury returns ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although the copies, one of which is duly stamped, signed, and embossed, showing payment the online application would speed up the process to obtain the PAN, applicants are of the requisite stamp duty. Once the memorandum and articles of association have not using the online system mostly because the documents must still be physically been stamped, they must be signed and dated by the company promoters, including dropped off for verification with the authorized agent. For more details, see www. the company name and the description of its activities and purpose, father's name, incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed. Procedure 8.* Obtain a Tax Account Number (TAN) for income The time involved in engrossing the documents may vary from 1 to 4 days, depend- taxes deducted at the source from an authorized franchise or ing upon the mode of payment of the stamp duty charges: if the stamp duty is agent appointed by the National Securities Depository Ltd. paid in cash (most common form of payment for small amounts such as these duty (NSDL), as outsourced by the Income Tax Department (National) charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand draft, then engrossing may take 3-4 days. Time: 14 days Cost: INR 57 (INR 50 application fee + 12.36% service tax) Procedure 5. Get the Certificate of Incorporation from the Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Registrar of Companies, Ministry of Corporate Affairs (National) required of anyone responsible for deducting or collecting tax. The provisions of Time: 6 days Section 203A of the Income Tax Act require that all persons who deduct or collect Cost: INR 13,700 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing tax at the source must apply for a TAN. The application for allotment of a TAN must fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR be filed using Form 49B and submitted at any TIN Facilitation Center authorized to 200 + POA from 5 subscribers: INR 500) receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can Comments: The following forms are required to be electronically filed on the be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) of the application, the same is sent to the Income Tax Department for validation. e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies The department will issue the TAN and communicate it to NSDL online. On the basis of the Memorandum and Articles of Association (MOA and AOA) and duly executed of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, Power of Attorney (POA) must be attached to Form 1. any authorized franchise or agent appointed by the National Securities Depository The fees for registering a company can be paid online by credit card or in cash at Services Limited (NSDL) can accept and process the TAN application. The national certain authorized banks. Paying online reduces the time by 2-3 days compared with government levies the income tax. paying by bank draft. The application for a TAN can also be made online. An application (Form 49B) can One copy of the Memorandum of Association, Articles of Association, Form 1, be submitted through TAN online at the NSDL-TIN website. Once the application Form 32, Form 18, and the original name-approval letter, consent of directors, and is submitted online, a unique 14-digit acknowledgment number is generated. stamped power of attorney must be physically submitted to the Registrar of Com- This acknowledgment number should be printed and sent to NSDL at the address panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of mentioned on the NSDL-TIN website along with the processing fee. Payment can be Incorporation, which is available online on the Ministry of Corporate Affairs website made by check or credit card. Tracking the status of the e-registration at is available (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time company office by registered or rush mail. The process takes from 3 to 7 working to obtain the TAN by 2-3 days. However, the majority of applicants are not using days. the online system mainly because the online application has to be followed with an offline submission: the hard copy of the application is required to be physically Procedure 6. Make a seal (Private) filed with NSDL. A TATKAL facility has also been introduced to make this registration Time: 1 day faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allotted on a priority basis, at an extra cost, in approximately 5 days. Cost: INR 350 (costs start at INR 350 for a seal, depending on the number of words to be engraved) Procedure 9.* Register with the Office of Inspector, Shops, and Comments: Although making a company seal is not a legal requirement for the Establishment Act (State/ Municipal) company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the Time: 7 days number of seals required, and the time period for delivery. The cost can range from Cost: INR 6,250 (the registration fee schedule depends on the number of employees: INR 300 to INR 500. a. No employees: INR 125; b. 1 to 9 employees: INR 250; Procedure 7.* Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National c. 10 to 19 employees: INR 2,500; Securities Depository Ltd. (NSDL) or the Unit Trust of India d. 20 to 49 employees: INR 6,250; (UTI) Investors Services Ltd., as outsourced by the Income Tax e. 50 to 99 employees: INR 12,500; Department (National) f. 100 employees and above: INR 25,000.) Time: 15 days Comments: Under the Karnataka Shops and Commercial Establishments Act (1961), Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application within thirty days of the establishment of the new company, the employer shall send form, if not downloaded) to the inspector of the area concerned a statement in the prescribed form containing the following information: Comments: Under the Income Tax Act (1961), each person must quote the Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit a. The name of the employer and the manager, if any; alphanumeric number issued on a laminated card by an assessing officer of the b. The postal address of the establishment; Income Tax Department. In order to improve PAN-related services, the Income c. The name, if any, of the establishment; Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor d. Other particulars as may be prescribed. Services Ltd., which was authorized to set up and manage IT PAN Service Centers. On receipt of the statement and fees, the inspector shall, on being satisfied with the The National Securities Depository Limited (NSDL) has also launched PAN operations correctness of the statement, register the establishment. The Registration Certificate effective June 2004, setting up TIN Facilitation Centers. The PAN application is made shall be prominently displayed at the establishment. through the abovementioned service centers using Form 49A, with a certified copy of the Certificate of Registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable Procedure 10.* Register for Value-Added Tax (VAT) at the taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- Commercial Tax Office (State) tation Centers will supply the PAN application form (Form 49A), assist the applicant Time: 20 days in filling out the form, collect the filled-out form, and issue an acknowledgment slip. Cost: INR 500 After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case may be, will print the PAN card and deliver it to the applicant. LIST OF PROCE%63&4t STARTING A BUSINESS 67

Comments: Under the Karnataka Value-Added Tax Act (2005), the application for STARTING A BUSINESS VAT registration is to be made on Form 1, within 30 days of the company becoming Bhubaneshwar, Orissa liable to taxation, to the respective local tax office, depending upon the jurisdiction in which the office of the company is situated. A refundable deposit ranging from Standard company legal form: Private Limited Company INR 2,000 to INR 25,000 is to be paid on the basis of the turnover: Paid-in-minimum capital requirement: none a. For a turnover below INR 1,000,000: INR 2000; Data as of: February 2009 b. For a turnover above INR 1,000,000 but below INR 25,000,000: INR 3000; Procedure 1. Obtain director identification number (DIN) online c. For a turnover above INR 25,000,000: INR 10,000; from the Ministry of Corporate Affairs portal (National) d. For a turnover below INR 25,000,000 in areas other than the City Municipal Corpo- Time: 1 day ration limits: INR 1000 Cost: INR 100 VAT registration is mandatory for: Comments: The applicant is required to fill out and submit Form DIN-1 to obtain 1. Every dealer whose taxable turnover is likely to exceed INR 200,000 in any year; the provisional DIN. This form is available online on the Ministry of Corporate Affairs 2. Every dealer whose taxable turnover exceeds INR 15,000 in any one month after 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately the date from which the tax shall be levied and every dealer executing a works issued. The applicant is also required to pay an application fee of INR 100, which contract whose receipts exceed INR 15,000 in any one month; can be done online. The printed application form must then be signed and sent for 3. Every dealer who obtains or brings taxable goods from outside the state; approval to the Ministry of Corporate Affairs by courier, along with proof of payment 4. Every dealer who exports taxable goods; (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of residence within 60 days of the date of generation of the provisional DIN. On receipt 5. Every dealer who performs sale of goods in the course of interstate trade; of the DIN application form and attached supporting documents, the concerned 6. Every casual dealer and every nonresident dealer or their agents; authority verifies all the documents and, upon approval, issues a permanent DIN. 7. Every dealer involved in the execution of works contract. The status of the DIN approval process can be checked online on the MCA portal. The provisional DIN itself is approved as the permanent DIN. Procedure 11.* Register for Profession Tax at the Profession Tax Office (State) Procedure 2. Obtain digital signature certificate online from Time: 7 days private agency authorized by the Ministry of Corporate Affairs (National) Cost: INR 2,500 (there is no registration fee. However, every employer is required to pay an annual fee of INR 2,500. In the first year, the same is paid when applying for Time: 3 days registration, while in subsequent years the same is paid on or before April 30) Cost: INR 1,500 Comments: The company is required to register as an employer under Section 5 of Comments: To use the new electronic filing system under MCA 21, the applicant the Karnataka Tax on Professions, Trades, Callings, and Employment Act (1976). The must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained concerned authority is the Professional Tax Office, depending upon the jurisdiction from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). in which the office of the company is situated. For registration, application is to be Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, made on Form 1 prescribed under the said Act. depending upon various factors such as validity period, delivery time, and cost structure. Company directors submit the prescribed application form along with Procedure 12.* Register with the Employees' Provident Fund proof of identity and address. After the DSC is obtained, it must be registered on the Organization (National) MCA portal before it can be affixed on any e-form. Once the Director has obtained Time: 21 days the provisional DIN online, DSC may be obtained while the provisional DIN is being registered. Cost: No cost Comments: The Employees Provident Fund Organization (EPFO) is a statutory Procedure 3. Reserve the company name online with the organization under the Ministry of Labor and Employment. The Provident Fund Registrar of Companies (ROC) (National) registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. A company with more than 20 employees must register with the Time: 2 days EPFO and a code number will be allotted. Once the employer is registered with the Cost: INR 500 EPFO, it will register his employees with the office and open Provident Fund accounts Comments: Company name approval must be done electronically. Under e-filing in the name of each employee. More information is available at www.epfindia.gov.in. for name approval, the applicant can check the availability of the desired company The code number is to be allotted within 3 days of the date of submission, if the ap- name on the MCA 21 website. A maximum of 6 suggested names can be submitted; plication is complete in all respects. However, in many cases applicants have received they are then checked by ROC staff for any similarities with all other names in India. the intimation letter with the code number later: in 12 to 15 days. After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the Registrar of Companies electronically informs Procedure 13.* Register for medical insurance at the regional the applicant. In practice, it takes 2 days to obtain a clearance of the name if the office of the Employees' State Insurance Corporation (National) proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the Time: 14 days MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee Cost: No cost can be made online. Comments: Registration is the process by which every employer and every paid employee is identified for health-insurance purposes. The Employees' State Insurance Procedure 4. Stamp the company documents at the State (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- Treasury (State) tributions is made both by the employer and the employee at the rates prescribed by Time: 1 day the National Government. Cost: INR 650 (INR 300 for MOA + INR 300 for AOA + INR 50 for stamp paper for The Employer should register within 15 days after the Act becomes applicable by declaration on Form 1) submitting Form 01 to the ESI regional office. Upon receipt of the registration form, the office shall allot an employer's code number and shall inform the employer of Comments: The request for stamping the incorporation documents should be that number through an "intimation letter" sent by post. accompanied by unsigned copies of the memorandum (MOA), articles of association (AOA), and the payment receipt. The Superintendent at the State Treasury returns An employee's individual insurance involves a separate process, one which is initi- the copies, one of which is duly stamped, signed, and embossed, showing payment ated after employer's registration. The employer should fill out declaration forms for of the requisite stamp duty. Once the memorandum and articles of association have all coverable employees and submit the same, along with Form 3, to the appropriate been stamped, they must be signed and dated by the company promoters, including regional office within 10 days of the employee's appointment date. The employees' the company name and the description of its activities and purpose, father's name, temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get address, occupation, and the number of shares subscribed. This information must be a permanent ESI card. in the applicant's handwriting and duly witnessed. More information is available at http://www.esic.nic.in.

* This procedure can be completed simultaneously with previous procedures 68 DOING BUSINESS IN INDIA 2009

The time involved in engrossing the documents may vary from 1 to 4 days, depend- Procedure 8.* Obtain a Tax Account Number (TAN) for income ing upon the mode of payment of the stamp duty charges: if the stamp duty is taxes deducted at the source from an authorized franchise or paid in cash (most common form of payment for small amounts such as these duty agent appointed by the National Securities Depository Ltd. charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand (NSDL), as outsourced by the Income Tax Department (National) draft, then engrossing may take 3-4 days. Time: 14 days Procedure 5. Get the Certificate of Incorporation from the Cost: INR 57 (INR 50 application fee + 12.36% service tax) Registrar of Companies, Ministry of Corporate Affairs (National) Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Time: 6 days required of anyone responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect Cost: INR 13,300 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing tax at the source must apply for a TAN. The application for allotment of a TAN must fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR be filed using Form 49B and submitted at any TIN Facilitation Center authorized to 200 + POA from 5 subscribers: INR 100) receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. Comments: The following forms are required to be electronically filed on the It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies of the application, the same is sent to the Income Tax Department for validation. of the Memorandum and Articles of Association (MOA and AOA) and duly executed The department will issue the TAN and communicate it to NSDL online. On the basis Power of Attorney (POA) must be attached to Form 1. of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, The fees for registering a company can be paid online by credit card or in cash at any authorized franchise or agent appointed by the National Securities Depository certain authorized banks. Paying online reduces the time by 2-3 days compared with Services Limited (NSDL) can accept and process the TAN application. The national paying by bank draft. government levies the income tax. One copy of the Memorandum of Association, Articles of Association, Form 1, The application for a TAN can also be made online. An application (Form 49B) can Form 32, Form 18, and the original name-approval letter, consent of directors, and be submitted through TAN online at the NSDL-TIN website. Once the application stamped power of attorney must be physically submitted to the Registrar of Com- is submitted online, a unique 14-digit acknowledgment number is generated. panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of This acknowledgment number should be printed and sent to NSDL at the address Incorporation, which is available online on the Ministry of Corporate Affairs website mentioned on the NSDL-TIN website along with the processing fee. Payment can be (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the made by check or credit card. Tracking the status of the e-registration at is available company office by registered or rush mail. The process takes from 3 to 7 working at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time days. to obtain the TAN by 2-3 days. However, the majority of applicants are not using the online system mainly because the online application has to be followed with Procedure 6. Make a seal (Private) an offline submission: the hard copy of the application is required to be physically Time: 1 day filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Cost: INR 350 (costs start at INR 350 for a seal, depending on the number of words ted on a priority basis, at an extra cost, in approximately 5 days. to be engraved) Comments: Although making a company seal is not a legal requirement for the Procedure 9.* Register with the Office of Inspector, Shops, and company to be incorporated, companies require a seal to issue share certificates and Establishment Act (State/ Municipal) other documents. The cost depends on the number of words to be engraved, the number of seals required, and the time period for delivery. The cost can range from Time: 5 days INR 300 to INR 500. Cost: INR 65 Comments: The procedure for obtaining the Registration Certificate under the Procedure 7.* Obtain a Permanent Account Number (PAN) from Orissa Shops and Commercial Establishments Act (1958) is as follows: the employer an authorized franchise or agent appointed by the National of every establishment shall, within thirty days of the date of commencement of its Securities Depository Ltd. (NSDL) or the Unit Trust of India work, submit to the inspector of the area concerned a statement in the prescribed (UTI) Investors Services Ltd., as outsourced by the Income Tax form along with the applicable fee (depending on the number of employees work- Department (National) ing in the establishment) for registration of the establishment. The statement shall consist of the following information: Time: 15 days a. The name of the employer and the manager, if any; Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application b. The postal address of the establishment; form, if not downloaded) c. The name, if any, of the establishment; Comments: Under the Income Tax Act (1961), each person must quote the Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit d. The category of the establishment. alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN-related services, the Income Procedure 10.* Register for Value-Added Tax (VAT) and Profession Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor Tax at the Commercial Tax Office (State) Services Ltd., which was authorized to set up and manage IT PAN Service Centers. Time: 20 days The National Securities Depository Limited (NSDL) has also launched PAN operations Cost: INR 100 (no registration fee is prescribed for VAT. Stamp duty of INR 100 effective June 2004, setting up TIN Facilitation Centers. The PAN application is made is required to be affixed to the application for registration. No registration fee is through the abovementioned service centers using Form 49A, with a certified copy prescribed for Profession Tax.) of the Certificate of Registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable Comments: The registration for both VAT and Profession Tax is done at the same taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- window, by the same officer, at the Commercial Tax office. Application for VAT regis- tation Centers will supply the PAN application form (Form 49A), assist the applicant tration automatically triggers registration for Professional Tax. in filling out the form, collect the filled-out form, and issue an acknowledgment slip. 1. VAT registration After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case VAT registration is affective from date of issuance of the Certificate of Registration. may be, will print the PAN card and deliver it to the applicant. The company shall apply on Form 101. In addition to Form 101, other accompanying The application for PAN can also be made online or using the rush process called documentation includes: TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- a. Form VAT-101-D with details about the director(s); ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although b. Certified true copy of the Memorandum and Articles of Association of the com- the online application would speed up the process to obtain the PAN, applicants are pany; not using the online system mostly because the documents must still be physically dropped off for verification with the authorized agent. For more details, see www. c. Proof of address of the registered office premises; incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. d. Antecedents of directors; e. Copy of the Permanent Account Number card; f. Current bank account number; g. Original challan of payment of registration fees; LIST OF PROCE%63&4t STARTING A BUSINESS 69 h. Two passport-sized photographs of the authorized signatory; (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of i. Board resolution authorizing the signatory to sign the application form and residence within 60 days of the date of generation of the provisional DIN. On receipt appear before the Commercial Tax Officer to complete the formalities related to of the DIN application form and attached supporting documents, the concerned registration. authority verifies all the documents and, upon approval, issues a permanent DIN. The status of the DIN approval process can be checked online on the MCA portal. The No time limit is prescribed. Registration is granted after verification of the docu- provisional DIN itself is approved as the permanent DIN. ments and enquiry about the business. 2. Profession Tax registration Procedure 2. Obtain digital signature certificate online from The company is required to register as an 'employer' under Section 6 of the Orissa private agency authorized by the Ministry of Corporate Affairs State Tax on Professions, Trades, Callings, and Employment Act 2(000), within 90 (National) days of the company becoming liable to taxation. Application is to be made on Form I, prescribed under the said Act. The assessing authority shall grant certificate of Time: 3 days registration within 30 days of the application receipt. Cost: INR 1,500 Comments: To use the new electronic filing system under MCA 21, the applicant Procedure 11.* Register with the Employees' Provident Fund must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Organization (National) from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Time: 12 days Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost Cost: No cost structure. Company directors submit the prescribed application form along with Comments: The Employees Provident Fund Organization (EPFO) is a statutory proof of identity and address. After the DSC is obtained, it must be registered on the organization under the Ministry of Labor and Employment. The Provident Fund MCA portal before it can be affixed on any e-form. Once the Director has obtained registration focuses on delinquent reporting, underreporting, or nonreporting of the provisional DIN online, DSC may be obtained while the provisional DIN is being workforce size. If a company has more than 20 employees, then it is mandatory to registered. register with the EPFO and a code number will be allotted to the company. Once the employer is registered with the EPFO, it will register his employees with the office Procedure 3. Reserve the company name online with the and open Provident Fund accounts in the name of each employee. More information Registrar of Companies (ROC) (National) is available at www.epfindia.gov.in. Time: 2 days As per an internal circular, the code number is to be allotted within 3 days of the date of submission, if the application is complete in all respects. However, in many cases Cost: INR 500 applicants have received the intimation letter with the code number later: in 12 to Comments: Company name approval must be done electronically. Under e-filing 15 days. for name approval, the applicant can check the availability of the desired company name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Procedure 12.* Register for medical insurance at the regional they are then checked by ROC staff for any similarities with all other names in India. office of the Employees' State Insurance Corporation (National) After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the Registrar of Companies electronically informs Time: 15 days the applicant. In practice, it takes 2 days to obtain a clearance of the name if the Cost: No cost proposed name is available and conforms to the naming standards established by Comments: Registration is the process by which every employer and every paid em- the Company Act (1 day for submission of the name and 1 day for it to appear on the ployee is identified for health-insurance purposes. The Employees' State Insurance MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- can be made online. tributions is made both by the employer and the employee at the rates prescribed by the National Government. Procedure 4. Stamp the company documents at the State The Employer should register within 15 days after the Act becomes applicable. For Treasury (State) this purpose, the employer should submit Form 01 to the ESI regional office. Upon Time: 1 day receipt of the registration form, the office shall allot an employer's code number Cost: INR 520 (INR 200 for MOA if accompanied by AOA + INR 300 for AOA + INR 20 and shall inform the employer of that number through an "intimation letter" sent for stamp paper for declaration on Form 1) by post. Comments: The request for stamping the incorporation documents should be An employee's individual insurance involves a separate process, one which is initi- accompanied by unsigned copies of the memorandum (MOA), articles of association ated after employer's registration. The employer should fill out declaration forms for (AOA), and the payment receipt. The Superintendent at the State Treasury returns all coverable employees and submit the same, along with Form 3, to the appropriate the copies, one of which is duly stamped, signed, and embossed, showing payment regional office within 10 days of the employee's appointment date. The employees' of the requisite stamp duty. Once the memorandum and articles of association have temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get been stamped, they must be signed and dated by the company promoters, including a permanent ESI card. the company name and the description of its activities and purpose, father's name, More information is available at http://www.esic.nic.in. address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed. * This procedure can be completed simultaneously with previous procedures The time involved in engrossing the documents may vary from 1 to 4 days, depending upon the mode of payment of the stamp duty charges: if the stamp duty is STARTING A BUSINESS paid in cash (most common form of payment for small amounts such as these duty charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Chennai, Tamil Nadu draft, then engrossing may take 3-4 days. Standard company legal form: Private Limited Company Paid-in-minimum capital requirement: none Procedure 5. Get the Certificate of Incorporation from the Data as of: February 2009 Registrar of Companies, Ministry of Corporate Affairs (National) Time: 6 days Procedure 1. Obtain director identification number (DIN) online Cost: INR 13,225 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing from the Ministry of Corporate Affairs portal (National) fee on Form 1: INR 200 + filling fee on Form 18: INR 200 + filling fee on Form 32: INR Time: 1 day 200 + POA from 5 subscribers: INR 25) Cost: INR 100 Comments: The following forms are required to be electronically filed on the Comments: The applicant is required to fill out and submit Form DIN-1 to obtain website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) the provisional DIN. This form is available online on the Ministry of Corporate Affairs e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately of the Memorandum and Articles of Association (MOA and AOA) and duly executed issued. The applicant is also required to pay an application fee of INR 100, which Power of Attorney (POA) must be attached to Form 1. can be done online. The printed application form must then be signed and sent for approval to the Ministry of Corporate Affairs by courier, along with proof of payment 70 DOING BUSINESS IN INDIA 2009

The fees for registering a company can be paid online by credit card or in cash at any authorized franchise or agent appointed by the National Securities Depository certain authorized banks. Paying online reduces the time by 2-3 days compared with Services Limited (NSDL) can accept and process the TAN application. The national paying by bank draft. government levies the income tax. One copy of the Memorandum of Association, Articles of Association, Form 1, The application for a TAN can also be made online. An application (Form 49B) can Form 32, Form 18, and the original name-approval letter, consent of directors, and be submitted through TAN online at the NSDL-TIN website. Once the application stamped power of attorney must be physically submitted to the Registrar of Com- is submitted online, a unique 14-digit acknowledgment number is generated. panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of This acknowledgment number should be printed and sent to NSDL at the address Incorporation, which is available online on the Ministry of Corporate Affairs website mentioned on the NSDL-TIN website along with the processing fee. Payment can be (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the made by check or credit card. Tracking the status of the e-registration at is available company office by registered or rush mail. The process takes from 3 to 7 working at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time days. to obtain the TAN by 2-3 days. However, the majority of applicants are not using the online system mainly because the online application has to be followed with Procedure 6. Make a seal (Private) an offline submission: the hard copy of the application is required to be physically Time: 1 day filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Cost: INR 350 (cost depends on the number of seals required and the time period ted on a priority basis, at an extra cost, in approximately 5 days. for delivery) Comments: Although making a company seal is not a legal requirement for the Procedure 9.* Register with the Office of Inspector, Shops, and company to be incorporated, companies require a seal to issue share certificates and Establishment Act (State/ Municipal) other documents. The cost depends on the number of words to be engraved, the number of seals required and the time period for delivery. The cost can range from Time: 5 days INR 300 to INR 500. Cost: No cost Comments: There is no separate registration required under the Tamil Nadu Procedure 7.* Obtain a Permanent Account Number (PAN) from Shops and Establishments Act. However, the company must declare the number an authorized franchise or agent appointed by the National of employees and their particulars on Forms 1, 2, 5, and S and submit them to the As- Securities Depository Ltd. (NSDL) or the Unit Trust of India sistant Inspector of Labor for the designated region where the office is located. Upon (UTI) Investors Services Ltd., as outsourced by the Income Tax verification, the Labor Office will give a copy of the form back to the entrepreneur, Department (National) containing the list of holidays that is granted to the employees. A copy of the form is to be displayed at the premises of the company. Apart from submitting this informa- Time: 15 days tion, the company is required to ensure compliance of the following: Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application a. The company must display a weekly holiday notice on its premises; form, if not downloaded) b. Apart from declaring the three national holidays, the company must also declare Comments: Under the Income Tax Act (1961), each person must quote the five festival holidays. Particulars of the five festival holidays are to be submitted to Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit the Assistant Inspector of Labor; alphanumeric number issued on a laminated card by an assessing officer of the c. The company must maintain various registers such as the Attendance Register, Income Tax Department. In order to improve PAN-related services, the Income Leave Register, and Service Register. The Company must submit annual returns to Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor the Inspector of Labor. Services Ltd., which was authorized to set up and manage IT PAN Service Centers. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made Procedure 10.* Register for Value-Added Tax (VAT) at the through the abovementioned service centers using Form 49A, with a certified copy Commercial Tax Office (State) of the Certificate of Registration, issued by the Registrar of Companies, along with Time: 17 days proof of company address and personal identity. A fee of INR 60 (plus applicable Cost: INR 500 (for principal place of business) taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- Comments: Under the Tamil Nadu VAT Act (2006), every dealer is required to register tation Centers will supply the PAN application form (Form 49A), assist the applicant within 30 days of opening a business. New dealers are requested to fill out Form A in filling out the form, collect the filled-out form, and issue an acknowledgment slip. available online (www.tnvat.gov.in) and send the filled-in application with the neces- After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case sary enclosures, including two passport-sized photographs of the applicant and a may be, will print the PAN card and deliver it to the applicant. stamped self-addressed envelope along with proof of payment of registration fee, to The application for PAN can also be made online or using the rush process called the registering authority of the area in which the principal place of business is situ- TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- ated. The registering authority shall acknowledge receipt of Form A. The authority, ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although on satisfying itself that the application is in order, shall assign a Taxpayer Identifica- the online application would speed up the process to obtain the PAN, applicants are tion Number (TIN) and issue the Certificate of Registration on Form D within thirty not using the online system mostly because the documents must still be physically days of the application receipt. dropped off for verification with the authorized agent. For more details, see www. incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. Procedure 11.* Register for Profession Tax at the Profession Tax Office (State/ Municipal) Procedure 8.* Obtain a Tax Account Number (TAN) for income taxes deducted at the source from an authorized franchise or Time: 7 days agent appointed by the National Securities Depository Ltd. Cost: No cost (NSDL), as outsourced by the Income Tax Department (National) Comments: The company is required to register as an employer under the Tamil Nadu Tax on Professions, Trades, Callings, and Employment Act. The concerned Time: 14 days authority for registration under the Act is the Revenue Officer from the Profession Cost: INR 57 (INR 50 application fee + 12.36% service tax) Tax section at Chennai Municipal Corporation. The application form, along with the Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number certificate from the Registrar of Trades, is to be submitted to the said authority within required of anyone responsible for deducting or collecting tax. The provisions of 60 days of the company becoming liable to taxation. Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The application for allotment of a TAN must Procedure 12.* Register with the Employees' Provident Fund be filed using Form 49B and submitted at any TIN Facilitation Center authorized to Organization (National) receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. Time: 14 days It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification Cost: No cost of the application, the same is sent to the Income Tax Department for validation. Comments: The Employees Provident Fund Organization (EPFO) is a statutory The department will issue the TAN and communicate it to NSDL online. On the basis organization under the Ministry of Labor and Employment. The Provident Fund of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, registration focuses on delinquent reporting, underreporting, or nonreporting of workforce size. If a company has more than 20 employees, then it is mandatory to register with the EPFO and a code number will be allotted to the company. Once the LIST OF PROCE%63&4t STARTING A BUSINESS 71 employer is registered with the EPFO, it will register his employees with the office Procedure 3. Reserve the company name online with the and open Provident Fund accounts in the name of each employee. More information Registrar of Companies (ROC) (National) is available at www.epfindia.gov.in. Time: 2 days As per an internal circular, the code number is to be allotted within 3 days of the date Cost: INR 500 of submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number later: in 12 to Comments: Company name approval must be done electronically. Under e-filing 15 days. for name approval, the applicant can check the availability of the desired company name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Procedure 13.* Register for medical insurance at the regional they are then checked by ROC staff for any similarities with all other names in India. office of the Employees' State Insurance Corporation (National) After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the Registrar of Companies electronically informs Time: 14 days the applicant. In practice, it takes 2 days to obtain a clearance of the name if the Cost: No cost proposed name is available and conforms to the naming standards established by Comments: Registration is the process by which every employer and every paid em- the Company Act (1 day for submission of the name and 1 day for it to appear on the ployee is identified for health-insurance purposes. The Employees' State Insurance MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- can be made online. tributions is made both by the employer and the employee at the rates prescribed by the National Government. Procedure 4. Stamp the company documents at the State The Employer should register within 15 days after the Act becomes applicable. For Treasury (State) this purpose, the employer should submit Form 01 to the ESI regional office. Upon Time: 1 day receipt of the registration form, the office shall allot an employer's code number Cost: INR 190 (INR 60 for MOA if accompanied by AOA + INR 120 for AOA for and shall inform the employer of that number through an "intimation letter" sent authorized capital exceeding INR 100,000 + INR 10 for stamp paper for declaration by post. on Form 1) An employee's individual insurance involves a separate process, one which is initi- Comments: The request for stamping the incorporation documents should be ated after employer's registration. The employer should fill out declaration forms for accompanied by unsigned copies of the memorandum (MOA) and articles of as- all coverable employees and submit the same, along with Form 3, to the appropriate sociation (AOA) and the payment receipt. The Superintendent at the State Treasury regional office within 10 days of the employee's appointment date. The employees' returns the copies, one of which is duly stamped, signed, and embossed, showing temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get payment of the requisite stamp duty. Once the memorandum and articles of associa- a permanent ESI card. tion have been stamped, they must be signed and dated by the company promoters, More information is available at http://www.esic.nic.in. including the company name and the description of its activities and purpose, father's name, address, occupation, and the number of shares subscribed. This infor- * This procedure can be completed simultaneously with previous procedures mation must be in the applicant's handwriting and duly witnessed. The time involved in engrossing the documents may vary from 1 to 4 days, depending upon the mode of payment of the stamp duty charges: if the stamp duty is STARTING A BUSINESS paid in cash (most common form of payment for small amounts such as these duty Gurgaon, Haryana charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Standard company legal form: Private Limited Company draft, then engrossing may take 3-4 days. Paid-in-minimum capital requirement: none Procedure 5. Get the Certificate of Incorporation from the Data as of: February 2009 Registrar of Companies, Ministry of Corporate Affairs (National) Procedure 1. Obtain director identification number (DIN) online Time: 5 days from the Ministry of Corporate Affairs portal (National) Cost: INR 13,300 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing Time: 1 day fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR 200 + POA from 5 subscribers: INR 100) Cost: INR 100 Comments: The following forms are required to be electronically filed on the Comments: The applicant is required to fill out and submit Form DIN-1 to obtain website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) the provisional DIN. This form is available online on the Ministry of Corporate Affairs e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately of the Memorandum and Articles of Association (MOA and AOA) and duly executed issued. The applicant is also required to pay an application fee of INR 100, which Power of Attorney (POA) must be attached to Form 1. can be done online. The printed application form must then be signed and sent for approval to the Ministry of Corporate Affairs by courier, along with proof of payment The fees for registering a company can be paid online by credit card or in cash at (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of certain authorized banks. Paying online reduces the time by 2-3 days compared with residence within 60 days of the date of generation of the provisional DIN. On receipt paying by bank draft. of the DIN application form and attached supporting documents, the concerned One copy of the Memorandum of Association, Articles of Association, Form 1, authority verifies all the documents and, upon approval, issues a permanent DIN. Form 32, Form 18, and the original name-approval letter, consent of directors, and The status of the DIN approval process can be checked online on the MCA portal. The stamped power of attorney must be physically submitted to the Registrar of Com- provisional DIN itself is approved as the permanent DIN. panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of Incorporation, which is available online on the Ministry of Corporate Affairs website Procedure 2. Obtain digital signature certificate online from (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the private agency authorized by the Ministry of Corporate Affairs company office by registered or rush mail. The process takes from 3 to 7 working (National) days. Time: 3 days Procedure 6. Make a seal (Private) Cost: INR 1,500 Time: 1 day Comments: To use the new electronic filing system under MCA 21, the applicant Cost: INR 350 (costs start at INR 350 for seal, depending on the number of words to must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained be engraved) from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, Comments: Although making a company seal is not a legal requirement for the depending upon various factors such as validity period, delivery time, and cost company to be incorporated, companies require a seal to issue share certificates and structure. Company directors submit the prescribed application form along with other documents. The cost depends on the number of words to be engraved, the proof of identity and address. After the DSC is obtained, it must be registered on the number of seals required, and the time period for delivery. The cost can range from MCA portal before it can be affixed on any e-form. Once the Director has obtained INR 300 to INR 500. the provisional DIN online, DSC may be obtained while the provisional DIN is being registered. 72 DOING BUSINESS IN INDIA 2009

Procedure 7.* Obtain a Permanent Account Number (PAN) from 1. INR 10,000 for starred hotels, nursing homes, movie theaters, privately managed an authorized franchise or agent appointed by the National educational institutions, private colleges, gas stations, banks, insurance compa- Securities Depository Ltd. (NSDL) or the Unit Trust of India nies, and financial institutions; (UTI) Investors Services Ltd., as outsourced by the Income Tax 2. INR 5,000 for workshops, automobile service stations not covered under the Department (National) Factories Act, computer training centers, shorthand and type institutions, health and fitness clubs, clinics and medical laboratories, restaurants, un-starred hotels, Time: 15 days and all other shops and establishments, excluding dhabas and halwais employing Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application 10 employees or more. form, if not downloaded) Comments: Under the Punjab Shops and Establishment Act, as applicable in Comments: Under the Income Tax Act (1961), each person must quote the Haryana, Form F is submitted to the jurisdictional Office of Inspector Shops and Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit Establishment Act. Upon verification, the inspector issues the Registration Certificate alphanumeric number issued on a laminated card by an assessing officer of the for three years. The certificate is must be renewed upon expiration. The registration Income Tax Department. In order to improve PAN-related services, the Income fee depends upon the type of business. Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor Services Ltd., which was authorized to set up and manage IT PAN Service Centers. Procedure 10.* Register for Value-Added Tax (VAT) at the The National Securities Depository Limited (NSDL) has also launched PAN operations Commercial Tax Office (State) effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the abovementioned service centers using Form 49A, with a certified copy Time: 15 days of the Certificate of Registration, issued by the Registrar of Companies, along with Cost: INR 100 proof of company address and personal identity. A fee of INR 60 (plus applicable Comments: Under the Haryana VAT Act (2003), the dealer shall apply for registration taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- to the appropriate assessing authority using Form VAT-A1, along with a deposit of tation Centers will supply the PAN application form (Form 49A), assist the applicant INR 100, within 15 days of the dealer becoming liable to taxation under the Act. The in filling out the form, collect the filled-out form, and issue an acknowledgment slip. assessing authority, after making such enquiry as deemed necessary, shall register After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case the dealer and shall issue the Certificate of Registration on Form VAT-G1. The registra- may be, will print the PAN card and deliver it to the applicant. tion is valid from the date of the application receipt or from the date of commence- The application for PAN can also be made online or using the rush process called ment of the liability to taxation, whichever is later. Every Certificate of Registration TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- shall bear a unique Taxpayer Identification Number (TIN). ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although the online application would speed up the process to obtain the PAN, applicants are Procedure 11.* Register with the Employees' Provident Fund not using the online system mostly because the documents must still be physically Organization (National) dropped off for verification with the authorized agent. For more details, see www. Time: 12 days incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. Cost: No cost Procedure 8.* Obtain a Tax Account Number (TAN) for income Comments: The Employees Provident Fund Organization (EPFO) is a statutory taxes deducted at the source from an authorized franchise or organization under the Ministry of Labor and Employment. The Provident Fund agent appointed by the National Securities Depository Ltd. registration focuses on delinquent reporting, underreporting, or nonreporting of workforce size. If a company has more than 20 employees, then it is mandatory to (NSDL), as outsourced by the Income Tax Department (National) register with the EPFO and a code number will be allotted to the company. Once the Time: 14 days employer is registered with the EPFO, it will register his employees with the office Cost: INR 57 (INR 50 application fee + 12.36% service tax) and open Provident Fund accounts in the name of each employee. More information Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number is available at www.epfindia.gov.in. required of anyone responsible for deducting or collecting tax. The provisions of As per an internal circular, the code number is to be allotted within 3 days of the date Section 203A of the Income Tax Act require that all persons who deduct or collect of submission, if the application is complete in all respects. However, in many cases tax at the source must apply for a TAN. The application for allotment of a TAN must applicants have received the intimation letter with the code number later: in 12 to be filed using Form 49B and submitted at any TIN Facilitation Center authorized to 15 days. receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can Procedure 12.* Register for medical insurance at the regional be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification office of the Employees' State Insurance Corporation (National) of the application, the same is sent to the Income Tax Department for validation. Time: 15 days The department will issue the TAN and communicate it to NSDL online. On the basis of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, Cost: No cost any authorized franchise or agent appointed by the National Securities Depository Comments: Registration is the process by which every employer and every paid em- Services Limited (NSDL) can accept and process the TAN application. The national ployee is identified for health-insurance purposes. The Employees' State Insurance government levies the income tax. (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- The application for a TAN can also be made online. An application (Form 49B) can tributions is made both by the employer and the employee at the rates prescribed by be submitted through TAN online at the NSDL-TIN website. Once the application the National Government. is submitted online, a unique 14-digit acknowledgment number is generated. The Employer should register within 15 days after the Act becomes applicable. For This acknowledgment number should be printed and sent to NSDL at the address this purpose, the employer should submit Form 01 to the ESI regional office. Upon mentioned on the NSDL-TIN website along with the processing fee. Payment can be receipt of the registration form, the office shall allot an employer's code number made by check or credit card. Tracking the status of the e-registration at is available and shall inform the employer of that number through an "intimation letter" sent at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time by post. to obtain the TAN by 2-3 days. However, the majority of applicants are not using An employee's individual insurance involves a separate process, one which is initi- the online system mainly because the online application has to be followed with ated after employer's registration. The employer should fill out declaration forms for an offline submission: the hard copy of the application is required to be physically all coverable employees and submit the same, along with Form 3, to the appropriate filed with NSDL. A TATKAL facility has also been introduced to make this registration regional office within 10 days of the employee's appointment date. The employees' faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get ted on a priority basis, at an extra cost, in approximately 5 days. a permanent ESI card. More information is available at http://www.esic.nic.in. Procedure 9.* Register with the Office of Inspector, Shops, and * This procedure can be completed simultaneously with previous procedures Establishment Act (State/ Municipal) Time: 14 days Cost: INR 5,000 (the registration fee varies between INR 5,000 and INR 10,000 depending on the type of establishment: LIST OF PROCE%63&4t STARTING A BUSINESS 73

STARTING A BUSINESS The time involved in engrossing the documents may vary from 1 to 4 days, depend- Guwahati, Assam ing upon the mode of payment of the stamp duty charges: if the stamp duty is paid in cash (most common form of payment for small amounts such as these duty Standard company legal form: Private Limited Company charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Paid-in-minimum capital requirement: none draft, then engrossing may take 3-4 days. Data as of: February 2009 Procedure 5. Get the Certificate of Incorporation from the Procedure 1. Obtain director identification number (DIN) online Registrar of Companies, Ministry of Corporate Affairs (National) from the Ministry of Corporate Affairs portal (National) Time: 7 days Time: 1 day Cost: INR 13,250 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing Cost: INR 100 fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR Comments: The applicant is required to fill out and submit Form DIN-1 to obtain 200 + POA from 5 subscribers: INR 50) the provisional DIN. This form is available online on the Ministry of Corporate Affairs Comments: The following forms are required to be electronically filed on the 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) issued. The applicant is also required to pay an application fee of INR 100, which e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies can be done online. The printed application form must then be signed and sent for of the Memorandum and Articles of Association (MOA and AOA) and duly executed approval to the Ministry of Corporate Affairs by courier, along with proof of payment Power of Attorney (POA) must be attached to Form 1. (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of The fees for registering a company can be paid online by credit card or in cash at residence within 60 days of the date of generation of the provisional DIN. On receipt certain authorized banks. Paying online reduces the time by 2-3 days compared with of the DIN application form and attached supporting documents, the concerned paying by bank draft. authority verifies all the documents and, upon approval, issues a permanent DIN. One copy of the Memorandum of Association, Articles of Association, Form 1, The status of the DIN approval process can be checked online on the MCA portal. The Form 32, Form 18, and the original name-approval letter, consent of directors, and provisional DIN itself is approved as the permanent DIN. stamped power of attorney must be physically submitted to the Registrar of Com- Procedure 2. Obtain digital signature certificate online from panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of Incorporation, which is available online on the Ministry of Corporate Affairs website private agency authorized by the Ministry of Corporate Affairs (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the (National) company office by registered or rush mail. The process takes from 3 to 7 working Time: 3 days days. Cost: INR 1,500 Procedure 6. Make a seal (Private) Comments: To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Time: 1 day from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Cost: INR 350 (costs start at INR 350 for seal, depending on the number of words to Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, be engraved) depending upon various factors such as validity period, delivery time, and cost Comments: Although making a company seal is not a legal requirement for the structure. Company directors submit the prescribed application form along with company to be incorporated, companies require a seal to issue share certificates and proof of identity and address. After the DSC is obtained, it must be registered on the other documents. The cost depends on the number of words to be engraved, the MCA portal before it can be affixed on any e-form. Once the Director has obtained number of seals required, and the time period for delivery. The cost can range from the provisional DIN online, DSC may be obtained while the provisional DIN is being INR 300 to INR 500. registered. Procedure 7.* Obtain a Permanent Account Number (PAN) from Procedure 3. Reserve the company name online with the an authorized franchise or agent appointed by the National Registrar of Companies (ROC) (National) Securities Depository Ltd. (NSDL) or the Unit Trust of India Time: 2 days (UTI) Investors Services Ltd., as outsourced by the Income Tax Cost: INR 500 Department (National) Comments: Company name approval must be done electronically. Under e-filing Time: 15 days for name approval, the applicant can check the availability of the desired company Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application name on the MCA 21 website. A maximum of 6 suggested names can be submitted; form, if not downloaded) they are then checked by ROC staff for any similarities with all other names in India. After being cleared by the junior officer, the name requests are sent to the senior of- Comments: Under the Income Tax Act (1961), each person must quote the ficer for approval. Once approved, the Registrar of Companies electronically informs Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit the applicant. In practice, it takes 2 days to obtain a clearance of the name if the alphanumeric number issued on a laminated card by an assessing officer of the proposed name is available and conforms to the naming standards established by Income Tax Department. In order to improve PAN-related services, the Income the Company Act (1 day for submission of the name and 1 day for it to appear on the Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee Services Ltd., which was authorized to set up and manage IT PAN Service Centers. can be made online. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made Procedure 4. Stamp the company documents at the State through the abovementioned service centers using Form 49A, with a certified copy Treasury (State) of the Certificate of Registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable Time: 1 day taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- Cost: INR 510 (INR 200 for MOA + INR 300 for AOA + INR 10 for stamp paper for tation Centers will supply the PAN application form (Form 49A), assist the applicant declaration on Form 1) in filling out the form, collect the filled-out form, and issue an acknowledgment slip. Comments: The request for stamping the incorporation documents should be After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case accompanied by unsigned copies of the memorandum (MOA), articles of association may be, will print the PAN card and deliver it to the applicant. (AOA), and the payment receipt. The Superintendent at the State Treasury returns The application for PAN can also be made online or using the rush process called the copies, one of which is duly stamped, signed, and embossed, showing payment TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- of the requisite stamp duty. Once the memorandum and articles of association have ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although been stamped, they must be signed and dated by the company promoters, including the online application would speed up the process to obtain the PAN, applicants are the company name and the description of its activities and purpose, father's name, not using the online system mostly because the documents must still be physically address, occupation, and the number of shares subscribed. This information must be dropped off for verification with the authorized agent. For more details, see www. in the applicant's handwriting and duly witnessed. incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. 74 DOING BUSINESS IN INDIA 2009

Procedure 8.* Obtain a Tax Account Number (TAN) for income Cost: No cost taxes deducted at the source from an authorized franchise or Comments: The Employees Provident Fund Organization (EPFO) is a statutory agent appointed by the National Securities Depository Ltd. organization under the Ministry of Labor and Employment. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of (NSDL), as outsourced by the Income Tax Department (National) workforce size. If a company has more than 20 employees, then it is mandatory to Time: 15 days register with the EPFO and a code number will be allotted to the company. Once the Cost: INR 57 (INR 50 application fee + 12.36% service tax) employer is registered with the EPFO, it will register his employees with the office Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number and open Provident Fund accounts in the name of each employee. More information required of anyone responsible for deducting or collecting tax. The provisions of is available at www.epfindia.gov.in. Section 203A of the Income Tax Act require that all persons who deduct or collect As per an internal circular, the code number is to be allotted within 3 days of the date tax at the source must apply for a TAN. The application for allotment of a TAN must of submission, if the application is complete in all respects. However, in many cases be filed using Form 49B and submitted at any TIN Facilitation Center authorized to applicants have received the intimation letter with the code number later: in 12 to receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. 15 days. It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification Procedure 13.* Register for medical insurance at the regional of the application, the same is sent to the Income Tax Department for validation. office of the Employees' State Insurance Corporation (National) The department will issue the TAN and communicate it to NSDL online. On the basis Time: 15 days of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, any authorized franchise or agent appointed by the National Securities Depository Cost: No cost Services Limited (NSDL) can accept and process the TAN application. The national Comments: Registration is the process by which every employer and every paid em- government levies the income tax. ployee is identified for health-insurance purposes. The Employees' State Insurance The application for a TAN can also be made online. An application (Form 49B) can (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- be submitted through TAN online at the NSDL-TIN website. Once the application tributions is made both by the employer and the employee at the rates prescribed by is submitted online, a unique 14-digit acknowledgment number is generated. the National Government. This acknowledgment number should be printed and sent to NSDL at the address The Employer should register within 15 days after the Act becomes applicable. For mentioned on the NSDL-TIN website along with the processing fee. Payment can be this purpose, the employer should submit Form 01 to the ESI regional office. Upon made by check or credit card. Tracking the status of the e-registration at is available receipt of the registration form, the office shall allot an employer's code number at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time and shall inform the employer of that number through an "intimation letter" sent to obtain the TAN by 2-3 days. However, the majority of applicants are not using by post. the online system mainly because the online application has to be followed with An employee's individual insurance involves a separate process, one which is initi- an offline submission: the hard copy of the application is required to be physically ated after employer's registration. The employer should fill out declaration forms for filed with NSDL. A TATKAL facility has also been introduced to make this registration all coverable employees and submit the same, along with Form 3, to the appropriate faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- regional office within 10 days of the employee's appointment date. The employees' ted on a priority basis, at an extra cost, in approximately 5 days. temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get a permanent ESI card. Procedure 9.* Register with the Office of Inspector, Shops, and More information is available at http://www.esic.nic.in. Establishment Act (State/ Municipal) Time: 21 days * This procedure can be completed simultaneously with previous procedures Cost: INR 500 (the registration fee depends on the number of employees): 1. No employees: INR 100; STARTING A BUSINESS 2. Between 1 and 3 employees: INR 200; Hyderabad, Andhra Pradesh 3. Between 4 and 9 employees: INR 300; Standard company legal form: Private Limited Company 4. 10 employees and above: INR 500. Paid-in-minimum capital requirement: none Comments: Under the Assam Shops and Establishment Act 1971, Form O in dupli- Data as of: February 2009 cate is to be submitted with the jurisdictional Office of Inspector, Shops and Estab- lishment Act. Upon verification, the inspector issues the Registration Certificate. Procedure 1. Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National) Procedure 10.* Register for Value-Added Tax (VAT) at the Commercial Tax Office (State) Time: 1 day Cost: INR 100 Time: 15 days Comments: The applicant is required to fill out and submit Form DIN-1 to obtain Cost: INR 100 the provisional DIN. This form is available online on the Ministry of Corporate Affairs Comments: Under the Assam VAT Act (2003), to obtain registration, a company shall 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately submit application using Form 2 along with the following documents: issued. The applicant is also required to pay an application fee of INR 100, which a. Proof of ownership; can be done online. The printed application form must then be signed and sent for b. Memorandum of Association; approval to the Ministry of Corporate Affairs by courier, along with proof of payment (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of c. Copy of the Permanent Account Number card; residence within 60 days of the date of generation of the provisional DIN. On receipt d. Certificate of Incorporation. of the DIN application form and attached supporting documents, the concerned Within 30 days of the application receipt, the Tax Department shall issue the Certifi- authority verifies all the documents and, upon approval, issues a permanent DIN. cate of Registration on Form 3. The status of the DIN approval process can be checked online on the MCA portal. The provisional DIN itself is approved as the permanent DIN. Procedure 11.* Register for Profession Tax at the Profession Tax Office (State) Procedure 2. Obtain digital signature certificate online from Time: 5 days private agency authorized by the Ministry of Corporate Affairs Cost: No cost (National) Comments: Registration is to be made under the provisions of the Assam Profes- Time: 3 days sions, Trades, Callings, and Employments Taxation Act (1947). Cost: INR 1,500 Comments: To use the new electronic filing system under MCA 21, the applicant Procedure 12.* Register with the Employees' Provident Fund must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Organization (National) from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Time: 18 days Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost LIST OF PROCE%63&4t STARTING A BUSINESS 75 structure. Company directors submit the prescribed application form along with Comments: Although making a company seal is not a legal requirement for the proof of identity and address. After the DSC is obtained, it must be registered on the company to be incorporated, companies require a seal to issue share certificates and MCA portal before it can be affixed on any e-form. Once the Director has obtained other documents. The cost depends on the number of words to be engraved, the the provisional DIN online, DSC may be obtained while the provisional DIN is being number of seals required, and the time period for delivery. The cost can range from registered. INR 300 to INR 500.

Procedure 3. Reserve the company name online with the Procedure 7.* Obtain a Permanent Account Number (PAN) from Registrar of Companies (ROC) (National) an authorized franchise or agent appointed by the National Time: 2 days Securities Depository Ltd. (NSDL) or the Unit Trust of India Cost: INR 500 (UTI) Investors Services Ltd., as outsourced by the Income Tax Comments: Company name approval must be done electronically. Under e-filing Department (National) for name approval, the applicant can check the availability of the desired company Time: 15 days name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application they are then checked by ROC staff for any similarities with all other names in India. form, if not downloaded) After being cleared by the junior officer, the name requests are sent to the senior of- Comments: Under the Income Tax Act (1961), each person must quote the ficer for approval. Once approved, the Registrar of Companies electronically informs Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit the applicant. In practice, it takes 2 days to obtain a clearance of the name if the alphanumeric number issued on a laminated card by an assessing officer of the proposed name is available and conforms to the naming standards established by Income Tax Department. In order to improve PAN-related services, the Income the Company Act (1 day for submission of the name and 1 day for it to appear on the Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee Services Ltd., which was authorized to set up and manage IT PAN Service Centers. can be made online. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made Procedure 4. Stamp the company documents at the State through the abovementioned service centers using Form 49A, with a certified copy Treasury (State) of the Certificate of Registration, issued by the Registrar of Companies, along with Time: 1 day proof of company address and personal identity. A fee of INR 60 (plus applicable Cost: INR 510 (INR 200 for MOA + INR 300 for AOA + INR 10 for stamp paper for taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- declaration on Form1) tation Centers will supply the PAN application form (Form 49A), assist the applicant in filling out the form, collect the filled-out form, and issue an acknowledgment slip. Comments: The request for stamping the incorporation documents should be After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case accompanied by unsigned copies of the memorandum (MOA), articles of association may be, will print the PAN card and deliver it to the applicant. (AOA), and the payment receipt. The Superintendent at the State Treasury returns the copies, one of which is duly stamped, signed, and embossed, showing payment The application for PAN can also be made online or using the rush process called of the requisite stamp duty. Once the memorandum and articles of association have TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- been stamped, they must be signed and dated by the company promoters, including ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although the company name and the description of its activities and purpose, father's name, the online application would speed up the process to obtain the PAN, applicants are address, occupation, and the number of shares subscribed. This information must be not using the online system mostly because the documents must still be physically in the applicant's handwriting and duly witnessed. dropped off for verification with the authorized agent. For more details, see www. incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. The time involved in engrossing the documents may vary from 1 to 4 days, depending upon the mode of payment of the stamp duty charges: if the stamp duty is Procedure 8.* Obtain a Tax Account Number (TAN) for income paid in cash (most common form of payment for small amounts such as these duty charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand taxes deducted at the source from an authorized franchise or draft, then engrossing may take 3-4 days. agent appointed by the National Securities Depository Ltd. (NSDL), as outsourced by the Income Tax Department (National) Procedure 5. Get the Certificate of Incorporation from the Time: 14 days Registrar of Companies, Ministry of Corporate Affairs (National) Cost: INR 57 (INR 50 application fee + 12.36% service tax) Time: 5 days Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Cost: INR 13,300 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing required of anyone responsible for deducting or collecting tax. The provisions of fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR Section 203A of the Income Tax Act require that all persons who deduct or collect 200 + POA from 5 subscribers: INR 100) tax at the source must apply for a TAN. The application for allotment of a TAN must Comments: The following forms are required to be electronically filed on the be filed using Form 49B and submitted at any TIN Facilitation Center authorized to website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can of the Memorandum and Articles of Association (MOA and AOA) and duly executed be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification Power of Attorney (POA) must be attached to Form 1. of the application, the same is sent to the Income Tax Department for validation. The department will issue the TAN and communicate it to NSDL online. On the basis The fees for registering a company can be paid online by credit card or in cash at of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, certain authorized banks. Paying online reduces the time by 2-3 days compared with any authorized franchise or agent appointed by the National Securities Depository paying by bank draft. Services Limited (NSDL) can accept and process the TAN application. The national One copy of the Memorandum of Association, Articles of Association, Form 1, government levies the income tax. Form 32, Form 18, and the original name-approval letter, consent of directors, and The application for a TAN can also be made online. An application (Form 49B) can stamped power of attorney must be physically submitted to the Registrar of Com- be submitted through TAN online at the NSDL-TIN website. Once the application panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of is submitted online, a unique 14-digit acknowledgment number is generated. Incorporation, which is available online on the Ministry of Corporate Affairs website This acknowledgment number should be printed and sent to NSDL at the address (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the mentioned on the NSDL-TIN website along with the processing fee. Payment can be company office by registered or rush mail. The process takes from 3 to 7 working made by check or credit card. Tracking the status of the e-registration at is available days. at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time to obtain the TAN by 2-3 days. However, the majority of applicants are not using Procedure 6. Make a seal (Private) the online system mainly because the online application has to be followed with Time: 1 day an offline submission: the hard copy of the application is required to be physically Cost: INR 350 (cost depends on the number of seals required and the time period filed with NSDL. A TATKAL facility has also been introduced to make this registration for delivery) faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allotted on a priority basis, at an extra cost, in approximately 5 days. 76 DOING BUSINESS IN INDIA 2009

Procedure 9.* Register with the Office of Inspector, Shops, and Every person engaged in any profession, trade, calling, or employment must obtain a Certificate of Registration under the Andhra Pradesh Tax on Professional, Trades, Establishment Act (State/ Municipal) Callings, and Employments Act (1987). Within 30 days of becoming liable to taxation, Time: 15 days the dealer must apply for a Certificate of Registration using Form 1. The assessing Cost: INR 1,000 (the registration fee schedule under Andhra Pradesh Shops and authority shall make such enquiry as may be necessary and shall, within 30 days of Establishments Act [1988] is as follows: application, grant the Registration Certificate on Form IA, if everything is in order. 1. No employees: INR 30; Procedure 11.* Register with Employees' Provident Fund 2. Employing up to 5 persons: INR 100; Organization (National) 3. Employing more than 6 and up to 10 persons: INR 200; Time: 12 days 4. Employing more than 11 and up to 20 persons: INR 350; Cost: No cost 5. Employing more than 21 and up to 50 persons: INR 1,000; Comments: The Employees Provident Fund Organization (EPFO) is a statutory 6. Employing more than 51 and up to 100 persons: INR 2,000; organization under the Ministry of Labor and Employment. The Provident Fund 7. Employing 101 persons and above: INR 2,500.) registration focuses on delinquent reporting, underreporting, or non-reporting of Comments: The procedure for obtaining the Registration Certificate under the workforce size. If a company has more than 20 employees, then it is mandatory to Andhra Pradesh Shops and Establishments Act (1988) is as follows: the employer of register with the EPFO and a code number will be allotted to the company. Once the every establishment shall, within 30 days of the date of opening business, submit to employer is registered with the EPFO, it will register his employees with the office the inspector of the area concerned a statement in the prescribed form along with and open Provident Fund accounts in the name of each employee. More information the applicable fee (depending on the number of employees) for registration of the is available at www.epfindia.gov.in. establishment. The statement shall consist of the following information: As per an internal circular, the code number is to be allotted within 3 days of the date a. The name of the employer and the manager, if any; of submission, if the application is complete in all respects. However, in many cases b. The postal address of the establishment; applicants have received the intimation letter with the code number later: in 12 to 15 days. c. Other particulars as may be prescribed. The inspector shall then register the establishment by entering the name of the Procedure 12.* Register for medical insurance at the regional establishment in the Register of Establishments and shall issue a Certificate of Regis- office of the Employees' State Insurance Corporation (National) tration to the employer. The Certificate of Registration is required to be prominently displayed at the establishment. Time: 15 days Cost: No cost Procedure 10.* Register for Value-Added Tax (VAT) and Profession Comments: Registration is the process by which every employer and every paid em- Tax at the Commercial Tax Office (State) ployee is identified for health-insurance purposes. The Employees' State Insurance Time: 15 days (ESI) Act (1948) provides for a fund administered by the ESI corporation in which contributions is made both by the employer and the employee at the rates prescribed by Cost: No cost the National Government. Comments: The registration for both VAT and Profession Tax is done at the same The Employer should register within 15 days after the Act becomes applicable. For window by the same officer at the Commercial Tax Office. Application for VAT regis- this purpose, the employer should submit Form 01 to the ESI regional office. Upon tration automatically triggers registration for Professional Tax. receipt of the registration form, the office shall allot an employer's code number i. VAT and shall inform the employer of that number through an "intimation letter" sent Companies registered with the Sales Tax Department prior to April 1, 2005 must by post. register under the Andhra Pradesh Vat Act, which became effective on April 1, 2005. An employee's individual insurance involves a separate process, one which is initi- Companies incorporated after April 1, 2005 can directly register for VAT. The applica- ated after employer's registration. The employer should fill out declaration forms for tion for registration must be made by the following categories of dealers: all coverable employees and submit the same, along with Form 3, to the appropriate 1. Every dealer other than a casual dealer; regional office within 10 days of the employee's appointment date. The employees' 2. Every dealer commencing business and whose estimated taxable turnover for temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get twelve consecutive months is more than INR 4,000,000 shall be liable to register a permanent ESI card. as a VAT dealer before the commencement of business. Dealers with a taxable More information is available at http://www.esic.nic.in. turnover, in a tax period of 12 months, between INR 500,000 and INR 4,000,000 are registered as Turnover Tax (TOT) dealers; * This procedure can be completed simultaneously with previous procedures 3. Every dealer whose taxable turnover in the preceding three months exceeds INR 1,000,000 or in the preceding twelve months exceeds INR 4,000,000; STARTING A BUSINESS 4. The following dealers shall be liable to be registered irrespective of their taxable turnover: Indore, Madhya Pradesh a. Dealers importing goods; Standard company legal form: Private Limited Company b. Dealers registered under the Central Sales Tax; Paid-in-minimum capital requirement: none c. Dealers residing outside the State but carrying business within the State; Data as of: February 2009 d. Every commission agent, agent, broker, declared agent, auctioneer, or any mer- Procedure 1. Obtain director identification number (DIN) online cantile agent; from the Ministry of Corporate Affairs portal (National) e. Dealers with a sales-tax deferal; Time: 1 day f. Every dealer executing a works contract exceeding INR 500,000. Cost: INR 100 The application for registration shall be made using Forms 100, 100B, and 150A providing for details such as: Comments: The applicant is required to fill out and submit Form DIN-1 to obtain the provisional DIN. This form is available online on the Ministry of Corporate Affairs 1. Status of business; 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately 2. Occupancy status of the business premises; issued. The applicant is also required to pay an application fee of INR 100, which 3. Nature of the principal activity of the business; can be done online. The printed application form must then be signed and sent for 4. Business bank account details; approval to the Ministry of Corporate Affairs by courier, along with proof of payment (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of 5. Details of directors. residence within 60 days of the date of generation of the provisional DIN. On receipt II. Profession Tax of the DIN application form and attached supporting documents, the concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The status of the DIN approval process can be checked online on the MCA portal. The provisional DIN itself is approved as the permanent DIN. LIST OF PROCE%63&4t STARTING A BUSINESS 77

Procedure 2. Obtain digital signature certificate online from One copy of the Memorandum of Association, Articles of Association, Form 1, private agency authorized by the Ministry of Corporate Affairs Form 32, Form 18, and the original name-approval letter, consent of directors, and (National) stamped power of attorney must be physically submitted to the Registrar of Com- panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of Time: 3 days Incorporation, which is available online on the Ministry of Corporate Affairs website Cost: INR 1,500 (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the Comments: To use the new electronic filing system under MCA 21, the applicant company office by registered or rush mail. The process takes from 3 to 7 working must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained days. from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, Procedure 6. Make a seal (Private) depending upon various factors such as validity period, delivery time, and cost Time: 1 day structure. Company directors submit the prescribed application form along with Cost: INR 350 (costs start at INR 350 for seal, depending on the number of words to proof of identity and address. After the DSC is obtained, it must be registered on the be engraved) MCA portal before it can be affixed on any e-form. Once the Director has obtained the provisional DIN online, DSC may be obtained while the provisional DIN is being Comments: Although making a company seal is not a legal requirement for the registered. company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the Procedure 3. Reserve the company name online with the number of seals required, and the time period for delivery. The cost can range from Registrar of Companies (ROC) (National) INR 300 to INR 500. Time: 2 days Procedure 7.* Obtain a Permanent Account Number (PAN) from Cost: INR 500 an authorized franchise or agent appointed by the National Comments: Company name approval must be done electronically. Under e-filing Securities Depository Ltd. (NSDL) or the Unit Trust of India for name approval, the applicant can check the availability of the desired company (UTI) Investors Services Ltd., as outsourced by the Income Tax name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Department (National) they are then checked by ROC staff for any similarities with all other names in India. After being cleared by the junior officer, the name requests are sent to the senior of- Time: 15 days ficer for approval. Once approved, the Registrar of Companies electronically informs Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application the applicant. In practice, it takes 2 days to obtain a clearance of the name if the form, if not downloaded) proposed name is available and conforms to the naming standards established by Comments: Under the Income Tax Act (1961), each person must quote the the Company Act (1 day for submission of the name and 1 day for it to appear on the Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee alphanumeric number issued on a laminated card by an assessing officer of the can be made online. Income Tax Department. In order to improve PAN-related services, the Income Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor Procedure 4. Stamp the company documents at the State Services Ltd., which was authorized to set up and manage IT PAN Service Centers. Treasury (State) The National Securities Depository Limited (NSDL) has also launched PAN operations Time: 1 day effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the abovementioned service centers using Form 49A, with a certified copy Cost: INR 1,510 (INR. 500 for MOA + INR 1,000 for AOA or 0.15% of share capital sub- of the Certificate of Registration, issued by the Registrar of Companies, along with ject to a minimum of INR 1,000 and a maximum of INR 500,000 + INR 10 for stamp proof of company address and personal identity. A fee of INR 60 (plus applicable paper for declaration on Form 1) taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- Comments: The request for stamping the incorporation documents should be tation Centers will supply the PAN application form (Form 49A), assist the applicant accompanied by unsigned copies of the memorandum (MOA), articles of association in filling out the form, collect the filled-out form, and issue an acknowledgment slip. (AOA), and the payment receipt. The Superintendent at the State Treasury returns After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case the copies, one of which is duly stamped, signed, and embossed, showing payment may be, will print the PAN card and deliver it to the applicant. of the requisite stamp duty. Once the memorandum and articles of association have The application for PAN can also be made online or using the rush process called been stamped, they must be signed and dated by the company promoters, including TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- the company name and the description of its activities and purpose, father's name, ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although address, occupation, and the number of shares subscribed. This information must be the online application would speed up the process to obtain the PAN, applicants are in the applicant's handwriting and duly witnessed. not using the online system mostly because the documents must still be physically The time involved in engrossing the documents may vary from 1 to 4 days, depend- dropped off for verification with the authorized agent. For more details, see www. ing upon the mode of payment of the stamp duty charges: if the stamp duty is incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. paid in cash (most common form of payment for small amounts such as these duty charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Procedure 8.* Obtain a Tax Account Number (TAN) for income draft, then engrossing may take 3-4 days. The State government is in the process of taxes deducted at the source from an authorized franchise or implementing an e-stamping online facility under the integrated computerization agent appointed by the National Securities Depository Ltd. project. (NSDL), as outsourced by the Income Tax Department (National) Procedure 5. Get the Certificate of Incorporation from the Time: 14 days Registrar of Companies, Ministry of Corporate Affairs (National) Cost: INR 57 (INR 50 application fee + 12.36% service tax) Time: 6 days Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Cost: INR 13,450 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing required of anyone responsible for deducting or collecting tax. The provisions of fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR Section 203A of the Income Tax Act require that all persons who deduct or collect 200 + POA from 5 subscribers: INR 250) tax at the source must apply for a TAN. The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to Comments: The following forms are required to be electronically filed on the receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification of the Memorandum and Articles of Association (MOA and AOA) and duly executed of the application, the same is sent to the Income Tax Department for validation. Power of Attorney (POA) must be attached to Form 1. The department will issue the TAN and communicate it to NSDL online. On the basis The fees for registering a company can be paid online by credit card or in cash at of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, certain authorized banks. Paying online reduces the time by 2-3 days compared with any authorized franchise or agent appointed by the National Securities Depository paying by bank draft. Services Limited (NSDL) can accept and process the TAN application. The national government levies the income tax. 78 DOING BUSINESS IN INDIA 2009

The application for a TAN can also be made online. An application (Form 49B) can employer is registered with the EPFO, it will register his employees with the office be submitted through TAN online at the NSDL-TIN website. Once the application and open Provident Fund accounts in the name of each employee. More information is submitted online, a unique 14-digit acknowledgment number is generated. is available at www.epfindia.gov.in. This acknowledgment number should be printed and sent to NSDL at the address As per an internal circular, the code number is to be allotted within 3 days of the date mentioned on the NSDL-TIN website along with the processing fee. Payment can be of submission, if the application is complete in all respects. However, in many cases made by check or credit card. Tracking the status of the e-registration at is available applicants have received the intimation letter with the code number later: in 12 to at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time 15 days. to obtain the TAN by 2-3 days. However, the majority of applicants are not using the online system mainly because the online application has to be followed with Procedure 13.* Register for medical insurance at the regional an offline submission: the hard copy of the application is required to be physically office of the Employees' State Insurance Corporation (National) filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Time: 10 days ted on a priority basis, at an extra cost, in approximately 5 days. Cost: No cost Comments: Registration is the process by which every employer and every paid em- Procedure 9.* Register with the Office of Inspector, Shops, and ployee is identified for health-insurance purposes. The Employees' State Insurance Establishment Act (State/ Municipal) (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- Time: 15 days tributions is made both by the employer and the employee at the rates prescribed by the National Government. Cost: INR 250 (the registration fee depends on the number of employees: The Employer should register within 15 days after the Act becomes applicable. For 1. No employee: INR 100; this purpose, the employer should submit Form 01 to the ESI regional office. Upon 2. Between 1 and 3 employees: INR 150; receipt of the registration form, the office shall allot an employer's code number 3. Between 4 and 9 employees: INR 200; and shall inform the employer of that number through an "intimation letter" sent 4. 10 employees and above: INR 250) by post. Comments: Under the Madhya Pradesh Shops and Establishment Act, Form A is An employee's individual insurance involves a separate process, one which is initi- submitted with the jurisdictional Office of Inspector, Shops and Establishment. Upon ated after employer's registration. The employer should fill out declaration forms for verification the inspector issues the Registration Certificate, valid for 5 years, on Form all coverable employees and submit the same, along with Form 3, to the appropriate C. regional office within 10 days of the employee's appointment date. The employees' temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get Procedure 10.* Register for Value-Added Tax (VAT) at the a permanent ESI card. Commercial Tax Office (State) More information is available at http://www.esic.nic.in. Time: 1 day Cost: INR 500 * This procedure can be completed simultaneously with previous procedures Comments: Under the Madhya Pradesh VAT Act (2002), a registration application shall be filed, in duplicate, with the Commercial Tax Department using Form 6, within STARTING A BUSINESS 30 days of when the Act becomes applicable. The application shall be accompanied Jaipur, Rajasthan by an affidavit in support of the particulars given in the application and also a satis- factory proof of payment of a registration fee of INR 500. Other required information Standard company legal form: Private Limited Company includes: Paid-in-minimum capital requirement: none a. A bank account; Data as of: February 2009 b. An introduction from an already registered dealer; Procedure 1. Obtain director identification number (DIN) online c. First purchase bill; from the Ministry of Corporate Affairs portal (National) d. First sales bill; Time: 1 day e. Certificate of incorporation. Cost: INR 100 On the day the application is received, the concerned authority shall grant the certifi- Comments: The applicant is required to fill out and submit Form DIN-1 to obtain cate of registration and shall verify the particulars of the application later (including the provisional DIN. This form is available online on the Ministry of Corporate Affairs inspection of the business). If the information submitted is found to be incorrect, 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately the authority will reject the application and cancel the Registration Certificate. The issued. The applicant is also required to pay an application fee of INR 100, which registration threshold is a turnover of INR 500,000 per annum. can be done online. The printed application form must then be signed and sent for approval to the Ministry of Corporate Affairs by courier, along with proof of payment Procedure 11.* Register for Profession Tax at the Profession Tax (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of Office (State) residence within 60 days of the date of generation of the provisional DIN. On receipt Time: 10 days of the DIN application form and attached supporting documents, the concerned Cost: No cost authority verifies all the documents and, upon approval, issues a permanent DIN. The status of the DIN approval process can be checked online on the MCA portal. The Comments: Under the Madhya Pradesh Professional Tax Act (1995), every employer provisional DIN itself is approved as the permanent DIN. shall obtain a Certificate of Registration from the assessing authority by making an application using Form 3 within 30 days of becoming liable to taxation under the Procedure 2. Obtain digital signature certificate online from Act. The threshold for registration is INR 500,000 in annual turnover. The assessing authority shall, after conducting the necessary enquiries, grant the Certificate of Reg- private agency authorized by the Ministry of Corporate Affairs istration within 60 days of the application receipt. At the time of registration, no fee (National) is applicable. There is an annual fee of INR 2,500, payable each year after registration. Time: 3 days Cost: INR 1,500 Procedure 12.* Register with the Employees' Provident Fund Comments: To use the new electronic filing system under MCA 21, the applicant Organization (National) must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Time: 13 days from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Cost: No cost Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost Comments: The Employees Provident Fund Organization (EPFO) is a statutory structure. Company directors submit the prescribed application form along with organization under the Ministry of Labor and Employment. The Provident Fund proof of identity and address. After the DSC is obtained, it must be registered on the registration focuses on delinquent reporting, underreporting, or non-reporting of MCA portal before it can be affixed on any e-form. Once the Director has obtained workforce size. If a company has more than 20 employees, then it is mandatory to the provisional DIN online, DSC may be obtained while the provisional DIN is being register with the EPFO and a code number will be allotted to the company. Once the registered. Procedure 3. Reserve the company name online with the Procedure 7.* Obtain a Permanent Account Number (PAN) from Registrar of Companies (ROC) (National) an authorized franchise or agent appointed by the National Time: 2 days Securities Depository Ltd. (NSDL) or the Unit Trust of India Cost: INR 500 (UTI) Investors Services Ltd., as outsourced by the Income Tax Comments: Company name approval must be done electronically. Under e-filing Department (National) for name approval, the applicant can check the availability of the desired company Time: 15 days name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application they are then checked by ROC staff for any similarities with all other names in India. form, if not downloaded) After being cleared by the junior officer, the name requests are sent to the senior of- Comments: Under the Income Tax Act (1961), each person must quote the ficer for approval. Once approved, the Registrar of Companies electronically informs Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit the applicant. In practice, it takes 2 days to obtain a clearance of the name if the alphanumeric number issued on a laminated card by an assessing officer of the proposed name is available and conforms to the naming standards established by Income Tax Department. In order to improve PAN-related services, the Income the Company Act (1 day for submission of the name and 1 day for it to appear on the Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee Services Ltd., which was authorized to set up and manage IT PAN Service Centers. can be made online. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made Procedure 4. Stamp the company documents at the State through the abovementioned service centers using Form 49A, with a certified copy Treasury (State) of the Certificate of Registration, issued by the Registrar of Companies, along with Time: 1 day proof of company address and personal identity. A fee of INR 60 (plus applicable Cost: INR 2,365 (INR 500 for MOA + INR 1,855 for AOA or 0.5% of authorized share taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- capital + INR 10 for stamp paper for declaration on Form 1) tation Centers will supply the PAN application form (Form 49A), assist the applicant in filling out the form, collect the filled-out form, and issue an acknowledgment slip. Comments: The request for stamping the incorporation documents should be After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case accompanied by unsigned copies of the memorandum of association (MOA), articles may be, will print the PAN card and deliver it to the applicant. of association (AOA), and the payment receipt. The Superintendent at the State Treasury returns the copies, one of which is duly stamped, signed, and embossed, The application for PAN can also be made online or using the rush process called showing payment of the requisite stamp duty. Once the memorandum and articles TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- of association have been stamped, they must be signed and dated by the company ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although promoters, including the company name and the description of its activities and the online application would speed up the process to obtain the PAN, applicants are purpose, father's name, address, occupation, and the number of shares subscribed. not using the online system mostly because the documents must still be physically This information must be in the applicant's handwriting and duly witnessed. dropped off for verification with the authorized agent. For more details, see www. incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. The time involved in engrossing the documents may vary from 1 to 4 days, depending upon the mode of payment of the stamp duty charges: if the stamp duty is Procedure 8.* Obtain a Tax Account Number (TAN) for income paid in cash (most common form of payment for small amounts such as these duty charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand taxes deducted at the source from an authorized franchise or draft, then engrossing may take 3-4 days. agent appointed by the National Securities Depository Ltd. (NSDL), as outsourced by the Income Tax Department (National) Procedure 5. Get the Certificate of Incorporation from the Time: 14 days Registrar of Companies, Ministry of Corporate Affairs (National) Cost: INR 57 (INR 50 application fee + 12.36% service tax) Time: 6 days Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Cost: INR 13,450 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing required of anyone responsible for deducting or collecting tax. The provisions of fee on Form 1: INR 200 + filing fee on Form 32: INR 200 + filing fee on Form 18: INR Section 203A of the Income Tax Act require that all persons who deduct or collect 200 + POA from 5 subscribers: INR 250) tax at the source must apply for a TAN. The application for allotment of a TAN must Comments: The following forms are required to be electronically filed on the be filed using Form 49B and submitted at any TIN Facilitation Center authorized to website of the Ministry of Corporate Affairs using digital signatures: e-Form 1; receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. e-Form 18; and e-Form 32. Along with these forms, signed and scanned copies of the It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can Memorandum and Articles of Association (MOA and AOA) and duly executed Power be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification of Attorney (POA) must be attached to Form 1. of the application, the same is sent to the Income Tax Department for validation. The department will issue the TAN and communicate it to NSDL online. On the basis The fees for registering a company can be paid online by credit card or in cash at of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, certain authorized banks. Paying online reduces the time by 2-3 days compared with any authorized franchise or agent appointed by the National Securities Depository paying by bank draft. Services Limited (NSDL) can accept and process the TAN application. The national One copy of the Memorandum of Association, Articles of Association, Form 1, government levies the income tax. Form 32, Form 18, and the original name-approval letter, consent of directors, and The application for a TAN can also be made online. An application (Form 49B) can stamped power of attorney must be physically submitted to the Registrar of Com- be submitted through TAN online at the NSDL-TIN website. Once the application panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of is submitted online, a unique 14-digit acknowledgment number is generated. Incorporation, which is available online on the Ministry of Corporate Affairs website This acknowledgment number should be printed and sent to NSDL at the address (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the mentioned on the NSDL-TIN website along with the processing fee. Payment can be company office by registered or rush mail. The process takes from 3 to 7 working made by check or credit card. Tracking the status of the e-registration at is available days. at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time to obtain the TAN by 2-3 days. However, the majority of applicants are not using Procedure 6. Make a seal (Private) the online system mainly because the online application has to be followed with Time: 1 day an offline submission: the hard copy of the application is required to be physically Cost: INR 350 (costs start at INR 350 for seal, depending on the number of words to filed with NSDL. A TATKAL facility has also been introduced to make this registration be engraved) faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Comments: Although making a company seal is not a legal requirement for the ted on a priority basis, at an extra cost, in approximately 5 days. company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the Procedure 9.* Register with the Office of Inspector, Shops, and number of seals required, and the time period for delivery. The cost can range from Establishment Act (State/ Municipal) INR 300 to INR 500. Time: 15 days Cost: INR 625 80 DOING BUSINESS IN INDIA 2009

Comments: The procedure for obtaining the Registration Certificate under the Raj- The Employer should register within 15 days after the Act becomes applicable. For asthan Shops and Commercial Establishments Act (1958) is as follows: the employer this purpose, the employer should submit Form 01 to the ESI regional office. Upon of every establishment shall, within 30 days of the opening of business, submit to receipt of the registration form, the office shall allot an employer's code number the concerned authority (Joint Commissioner, Labor Department), a statement in and shall inform the employer of that number through an "intimation letter" sent the prescribed form along with the applicable fee (depending on the number of by post. employees) for registration of the establishment. The statement shall consist of the An employee's individual insurance involves a separate process, one which is initi- following information: ated after employer's registration. The employer should fill out declaration forms for a. The name of the employer and the manager, if any; all coverable employees and submit the same, along with Form 3, to the appropriate b. The postal address of the establishment; regional office within 10 days of the employee's appointment date. The employees' temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get c. Proof of opening of the establishment; a permanent ESI card. d. List of workers; More information is available at http://www.esic.nic.in. e. Other particulars as may be prescribed.

Procedure 10.* Register for Value-Added Tax (VAT) at the * This procedure can be completed simultaneously with previous procedures Commercial Tax Office (State) Time: 1 day STARTING A BUSINESS Cost: No cost Kochi, Kerala Comments: An application for registration under the Rajasthan VAT Act shall be Standard company legal form: Private Limited Company submitted, in duplicate, using Form VAT-01, along with enclosures, to the office of Paid-in-minimum capital requirement: none the authority competent to grant registration. The authorized officer, having checked Data as of: February 2009 that the application is complete, shall issue the Registration Certificate on Form VAT-03, within 24 hours of receipt of such application. The assessing authority shall, Procedure 1. Obtain director identification number (DIN) online within 45 days of such issuance, conduct an enquiry to verify the facts and state- from the Ministry of Corporate Affairs portal (National) ments made in the application for registration. The application for registration shall be accompanied by: Time: 1 day a. Declaration of business manager on Form VAT 02; Cost: INR 100 b. Copy of Partnership Deed, if any; Comments: The applicant is required to fill out and submit Form DIN-1 to obtain the provisional DIN. This form is available online on the Ministry of Corporate Affairs c. Memorandum and Articles of Association of the company; 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately d. Deed of Trust; issued. The applicant is also required to pay an application fee of INR 100, which e. Copy of the resolution passed by the Board of Directors, in case of a company, can be done online. The printed application form must then be signed and sent for or by the governing body, in case of other entities, for authorization to file the approval to the Ministry of Corporate Affairs by courier, along with proof of payment application for registration; (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of f. Security required to be furnished as per Section 15 of the Act in such form as residence within 60 days of the date of generation of the provisional DIN. On receipt prescribed in Rule 77; of the DIN application form and attached supporting documents, the concerned authority verifies all the documents and, upon approval, issues a permanent DIN. g. Signed photo, duly attested by a gazette officer or a notary public, of proprietor, The status of the DIN approval process can be checked online on the MCA portal. The partners, or managing director(s), as the case may be; provisional DIN itself is approved as the permanent DIN. h. Copy of voter identification card, passport, Permanent Account Number, or driver's license; Procedure 2. Obtain digital signature certificate online from i. Copy of rent deed, rent receipt, electricity bill, telephone bill, water bill, or own private agency authorized by the Ministry of Corporate Affairs property documents, as proof of address. (National) Procedure 11.* Register with the Employees' Provident Fund Time: 3 days Organization (National) Cost: INR 1,500 Comments: To use the new electronic filing system under MCA 21, the applicant Time: 12 days must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Cost: No cost from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Comments: The Employees Provident Fund Organization (EPFO) is a statutory Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, organization under the Ministry of Labor and Employment. The Provident Fund depending upon various factors such as validity period, delivery time, and cost registration focuses on delinquent reporting, underreporting, or non-reporting of structure. Company directors submit the prescribed application form along with workforce size. If a company has more than 20 employees, then it is mandatory to proof of identity and address. After the DSC is obtained, it must be registered on the register with the EPFO and a code number will be allotted to the company. Once the MCA portal before it can be affixed on any e-form. Once the Director has obtained employer is registered with the EPFO, it will register his employees with the office the provisional DIN online, DSC may be obtained while the provisional DIN is being and open Provident Fund accounts in the name of each employee. More information registered. is available at www.epfindia.gov.in. As per an internal circular, the code number is to be allotted within 3 days of the date Procedure 3. Reserve the company name online with the of submission, if the application is complete in all respects. However, in many cases Registrar of Companies (ROC) (National) applicants have received the intimation letter with the code number later: in 12 to Time: 2 days 15 days. Cost: INR 500 Procedure 12.* Register for medical insurance at the regional Comments: Company name approval must be done electronically. Under e-filing office of the Employees' State Insurance Corporation (National) for name approval, the applicant can check the availability of the desired company name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Time: 10 days they are then checked by ROC staff for any similarities with all other names in India. Cost: No cost After being cleared by the junior officer, the name requests are sent to the senior of- Comments: Registration is the process by which every employer and every paid em- ficer for approval. Once approved, the Registrar of Companies electronically informs ployee is identified for health-insurance purposes. The Employees' State Insurance the applicant. In practice, it takes 2 days to obtain a clearance of the name if the (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- proposed name is available and conforms to the naming standards established by tributions is made both by the employer and the employee at the rates prescribed by the Company Act (1 day for submission of the name and 1 day for it to appear on the the National Government. MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee can be made online. LIST OF PROCE%63&4t STARTING A BUSINESS 81

Procedure 4. Stamp the company documents at the State tation Centers will supply the PAN application form (Form 49A), assist the applicant Treasury (State) in filling out the form, collect the filled-out form, and issue an acknowledgment slip. After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case Time: 1 day may be, will print the PAN card and deliver it to the applicant. Cost: INR 1,525 (INR 1,000 for AOA + INR 500 for MOA + INR 25 for stamp paper for The application for PAN can also be made online or using the rush process called declaration on Form 1) TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- Comments: The request for stamping the incorporation documents should be ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although accompanied by unsigned copies of the memorandum (MOA), articles of association the online application would speed up the process to obtain the PAN, applicants are (AOA), and the payment receipt. The Superintendent at the State Treasury returns not using the online system mostly because the documents must still be physically the copies, one of which is duly stamped, signed, and embossed, showing payment dropped off for verification with the authorized agent. For more details, see www. of the requisite stamp duty. Once the memorandum and articles of association have incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father's name, Procedure 8.* Obtain a Tax Account Number (TAN) for income address, occupation, and the number of shares subscribed. This information must be taxes deducted at the source from an authorized franchise or in the applicant's handwriting and duly witnessed. agent appointed by the National Securities Depository Ltd. The time involved in engrossing the documents may vary from 1 to 4 days, depend- (NSDL), as outsourced by the Income Tax Department (National) ing upon the mode of payment of the stamp duty charges: if the stamp duty is paid in cash (most common form of payment for small amounts such as these duty Time: 14 days charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Cost: INR 57 (INR 50 application fee + 12.36% service tax) draft, then engrossing may take 3-4 days. Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number required of anyone responsible for deducting or collecting tax. The provisions of Procedure 5. Get the Certificate of Incorporation from the Section 203A of the Income Tax Act require that all persons who deduct or collect Registrar of Companies, Ministry of Corporate Affairs (National) tax at the source must apply for a TAN. The application for allotment of a TAN must Time: 5 days be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. Cost: INR 13,300 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification 200 + POA from 5 subscribers: INR 100) of the application, the same is sent to the Income Tax Department for validation. Comments: The following forms are required to be electronically filed on the The department will issue the TAN and communicate it to NSDL online. On the basis website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies any authorized franchise or agent appointed by the National Securities Depository of the Memorandum and Articles of Association (MOA and AOA) and duly executed Services Limited (NSDL) can accept and process the TAN application. The national Power of Attorney (POA) must be attached to Form 1. government levies the income tax. The fees for registering a company can be paid online by credit card or in cash at The application for a TAN can also be made online. An application (Form 49B) can certain authorized banks. Paying online reduces the time by 2-3 days compared with be submitted through TAN online at the NSDL-TIN website. Once the application paying by bank draft. is submitted online, a unique 14-digit acknowledgment number is generated. One copy of the Memorandum of Association, Articles of Association, Form 1, This acknowledgment number should be printed and sent to NSDL at the address Form 32, Form 18, and the original name-approval letter, consent of directors, and mentioned on the NSDL-TIN website along with the processing fee. Payment can be stamped power of attorney must be physically submitted to the Registrar of Com- made by check or credit card. Tracking the status of the e-registration at is available panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time Incorporation, which is available online on the Ministry of Corporate Affairs website to obtain the TAN by 2-3 days. However, the majority of applicants are not using (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the the online system mainly because the online application has to be followed with company office by registered or rush mail. The process takes from 3 to 7 working an offline submission: the hard copy of the application is required to be physically days. filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Procedure 6. Make a seal (Private) ted on a priority basis, at an extra cost, in approximately 5 days. Time: 1 day Procedure 9.* Register with the Office of Inspector, Shops, and Cost: INR 350 (cost depends on the number of seals required and the time period for delivery) Establishment Act (State/ Municipal) Comments: Although making a company seal is not a legal requirement for the Time: 14 days company to be incorporated, companies require a seal to issue share certificates and Cost: INR 500 (the registration fee is: other documents. The cost depends on the number of words to be engraved, the 1. No employee: INR 10; number of seals required, and the time period for delivery. The cost can range from 2. Up to 5 employees: INR 50; INR 300 to INR 500. 3. 6 to 10 employees: INR 100; Procedure 7.* Obtain a Permanent Account Number (PAN) from 4. 11 to 20 employees: INR 200; an authorized franchise or agent appointed by the National 5. 21 to 30 employees: INR 300; Securities Depository Ltd. (NSDL) or the Unit Trust of India 6. 31 to 50 employees: INR 500; (UTI) Investors Services Ltd., as outsourced by the Income Tax 7. 51 to 100 employees: INR 1,000; Department (National) 8. 100 employees and above: INR 2,000) Time: 15 days Comments: Under the Kerala Shops and Establishment Act (1960), the application Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application for registration using Form B1 must be submitted to the Labor Commissioner within form, if not downloaded) 30 days of the opening of the establishment. An inspection may be made to verify Comments: Under the Income Tax Act (1961), each person must quote the the facts stated in the application. The registration fee depends upon the number of Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit employees in the establishment. alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN-related services, the Income Procedure 10.* Register for Value-Added Tax (VAT) at the Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor Commercial Tax Office (State) Services Ltd., which was authorized to set up and manage IT PAN Service Centers. Time: 25 days The National Securities Depository Limited (NSDL) has also launched PAN operations Cost: INR 1,800 effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the abovementioned service centers using Form 49A, with a certified copy of the Certificate of Registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- 82 DOING BUSINESS IN INDIA 2009

Comments: Under the Kerala VAT Act (2003), the application should be filed with the STARTING A BUSINESS Commercial Tax Department using Form 1 and, upon verification, the authority shall Kolkata, West Bengal issue the Certificate of Registration within 30 days of the application receipt. The application must be accompanied by: Standard company legal form: Private Limited Company 1. Attested copy of proof of identity such as passport or Permanent Account Num- Paid-in-minimum capital requirement: none ber card; Data as of: February 2009 2. Declaration stating the name of the person deemed to be the manager of such Procedure 1. Obtain director identification number (DIN) online business; from the Ministry of Corporate Affairs portal (National) 3. Memorandum and Articles of Association; Time: 1 day 4. Certified copy of the Certificate of Incorporation; Cost: INR 100 5. Latest copy of the income-tax return; Comments: The applicant is required to fill out and submit Form DIN-1 to obtain 6. Copy of the Board of Directors' resolution to apply for registration. the provisional DIN. This form is available online on the Ministry of Corporate Affairs The schedule of fees is as follows: 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately a. Where the total turnover of the company is less than INR 500,000: INR 500; issued. The applicant is also required to pay an application fee of INR 100, which b. Where the total turnover is greater than INR 500,000 but less than INR 1,000,000: can be done online. The printed application form must then be signed and sent for INR 750; approval to the Ministry of Corporate Affairs by courier, along with proof of payment (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of c. Where the total turnover is greater than INR 1,000,000 but less than INR residence within 60 days of the date of generation of the provisional DIN. On receipt 5,000,000: INR 1,000 + INR 25 for each INR 100,000 or part thereof above INR of the DIN application form and attached supporting documents, the concerned 1,000,000; authority verifies all the documents and, upon approval, issues a permanent DIN. d. Where the total turnover is INR 5,000,000 and above: INR 2,000 + INR 50 for each The status of the DIN approval process can be checked online on the MCA portal. The INR 100,000 or part thereof above INR 5,000,000 (the total registration fee shall provisional DIN itself is approved as the permanent DIN. not exceed INR 20,000). Procedure 2. Obtain digital signature certificate online from Procedure 11.* Register for Profession Tax at the Profession Tax private agency authorized by the Ministry of Corporate Affairs Office (State/ Municipal) (National) Time: 9 days Time: 3 days Cost: No cost Cost: INR 1,500 Comments: This Act is applicable to all concerned shops and establishments in Comments: To use the new electronic filing system under MCA 21, the applicant Kerala. Every employer is required to deduct a specified amount, based on the rates must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained prescribed by the Act, from the salary of the employees. While registration is at the from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). level of the state government, collection of tax is at the Municipal Corporation level. Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost Procedure 12.* Register with the Employees' Provident Fund structure. Company directors submit the prescribed application form along with Organization (National) proof of identity and address. After the DSC is obtained, it must be registered on the Time: 18 days MCA portal before it can be affixed on any e-form. Once the Director has obtained Cost: No cost the provisional DIN online, DSC may be obtained while the provisional DIN is being registered. Comments: The Employees Provident Fund Organization (EPFO) is a statutory organization under the Ministry of Labor and Employment. The Provident Fund Procedure 3. Reserve the company name online with the registration focuses on delinquent reporting, underreporting, or non-reporting of Registrar of Companies (ROC) (National) workforce size. If a company has more than 20 employees, then it is mandatory to register with the EPFO and a code number will be allotted to the company. Once the Time: 2 days employer is registered with the EPFO, it will register his employees with the office Cost: INR 500 and open Provident Fund accounts in the name of each employee. More information Comments: Company name approval must be done electronically. Under e-filing is available at www.epfindia.gov.in. for name approval, the applicant can check the availability of the desired company As per an internal circular, the code number is to be allotted within 3 days, if the ap- name on the MCA 21 website. A maximum of 6 suggested names can be submitted; plication is complete. However, in many cases applicants have received the intimation they are then checked by ROC staff for any similarities with all other names in India. letter with the code number later: in 12 to 15 days. After being cleared by the junior officer, the name requests are sent to the senior officer for approval. Once approved, the Registrar of Companies electronically informs Procedure 13.* Register for medical insurance at the regional the applicant. In practice, it takes 2 days to obtain a clearance of the name if the office of the Employees' State Insurance Corporation (National) proposed name is available and conforms to the naming standards established by Time: 15 days the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee Cost: No cost can be made online. Comments: Registration is the process by which every employer and every paid employee is identified for health-insurance purposes. The Employees' State Insurance Procedure 4. Stamp the company documents at the State (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- Treasury (State) tributions is made both by the employer and the employee at the rates prescribed by the National Government. Time: 1 day The Employer should register within 15 days after the Act becomes applicable. The Cost: INR 370 (INR 60 for MOA + INR 300 for AOA if authorized share capital exceeds employer should submit Form 01 to the ESI regional office. Upon receipt of the INR 100,000 + INR 10 for stamp paper for declaration on Form 1) registration form, the office shall allot an employer's code number and shall inform Comments: The request for stamping the incorporation documents should be the employer of that number through an "intimation letter" sent by post. accompanied by unsigned copies of the memorandum (MOA), articles of association An employee's individual insurance involves a separate process, one which is initi- (AOA), and the payment receipt. The Superintendent at the State Treasury returns ated after employer's registration. The employer should fill out declaration forms for the copies, one of which is duly stamped, signed, and embossed, showing payment all coverable employees and submit the same, along with Form 3, to the appropriate of the requisite stamp duty. Once the memorandum and articles of association have regional office within 10 days of the employee's appointment date. The employees' been stamped, they must be signed and dated by the company promoters, including temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get the company name and the description of its activities and purpose, father's name, a permanent ESI card. address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed. More information is available at http://www.esic.nic.in.

* This procedure can be completed simultaneously with previous procedures LIST OF PROCE%63&4t STARTING A BUSINESS 83

Comments: As per the West Bengal State Tax, Trades, Callings, and Employment Act Procedure 2. Obtain digital signature certificate online from (1979), every person who is engaged in any profession, trade, calling, or employment is required to pay a profession tax. An application for registration is to be made private agency authorized by the Ministry of Corporate Affairs by the employer, using Form I, to the Profession Tax Office having jurisdiction over (National) the employer's place of business. Application should be filed within 90 days of the Time: 3 days date of accrual of liability. The registration certificate is issued by the Profession Tax Cost: INR 1,500 authorities on Form IA. Comments: To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Procedure 12.* Register with the Employees' Provident Fund from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Organization (National) Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, Time: 15 days depending upon various factors such as validity period, delivery time, and cost Cost: No cost structure. Company directors submit the prescribed application form along with proof of identity and address. After the DSC is obtained, it must be registered on the Comments: The Employees Provident Fund Organization (EPFO) is a statutory MCA portal before it can be affixed on any e-form. Once the Director has obtained organization under the Ministry of Labor and Employment. The Provident Fund the provisional DIN online, DSC may be obtained while the provisional DIN is being registration focuses on delinquent reporting, underreporting, or non-reporting of registered. workforce size. If a company has more than 20 employees, then it is mandatory to register with the EPFO and a code number will be allotted to the company. Once the employer is registered with the EPFO, it will register his employees with the office Procedure 3. Reserve the company name online with the and open Provident Fund accounts in the name of each employee. More information Registrar of Companies (ROC) (National) is available at www.epfindia.gov.in. Time: 2 days As per an internal circular, the code number is to be allotted within 3 days of the date of Cost: INR 500 submission, if the application is complete in all respects. However, in many cases appli- Comments: Company name approval must be done electronically. Under e-filing cants have received the intimation letter with the code number later: in 12 to 15 days. for name approval, the applicant can check the availability of the desired company name on the MCA 21 website. A maximum of 6 suggested names can be submitted; Procedure 13.* Register for medical insurance at the regional they are then checked by ROC staff for any similarities with all other names in India. office of the Employees' State Insurance Corporation (National) After being cleared by the junior officer, the name requests are sent to the senior of- Time: 15 days ficer for approval. Once approved, the Registrar of Companies electronically informs the applicant. In practice, it takes 2 days to obtain a clearance of the name if the Cost: No cost proposed name is available and conforms to the naming standards established by Comments: Registration is the process by which every employer and every paid em- the Company Act (1 day for submission of the name and 1 day for it to appear on the ployee is identified for health-insurance purposes. The Employees' State Insurance MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- can be made online. tributions is made both by the employer and the employee at the rates prescribed by the National Government. Procedure 4. Stamp the company documents at the State The Employer should register within 15 days after the Act becomes applicable. For Treasury (State) this purpose, the employer should submit Form 01 to the ESI regional office. Upon Time: 1 day receipt of the registration form, the office shall allot an employer's code number and shall inform the employer of that number through an "intimation letter" sent Cost: INR 1,515 (INR 500 for MOA + INR 1,000 for AOA for a share capital above by post. 100,000 + INR 15 for stamp paper for declaration on Form 1) An employee's individual insurance involves a separate process, one which is initi- Comments: The request for stamping the incorporation documents should be ated after employer's registration. The employer should fill out declaration forms for accompanied by unsigned copies of the memorandum (MOA), articles of association all coverable employees and submit the same, along with Form 3, to the appropriate (AOA), and the payment receipt. The Superintendent at the State Treasury returns regional office within 10 days of the employee's appointment date. The employees' the copies, one of which is duly stamped, signed, and embossed, showing payment temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get of the requisite stamp duty. Once the memorandum and articles of association have a permanent ESI card. been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father's name, More information is available at http://www.esic.nic.in. address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed. * This procedure can be completed simultaneously with previous procedures The time involved in engrossing the documents may vary from 1 to 4 days, depending upon the mode of payment of the stamp duty charges: if the stamp duty is STARTING A BUSINESS paid in cash (most common form of payment for small amounts such as these duty Ludhiana, Punjab charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand draft, then engrossing may take 3-4 days. Standard company legal form: Private Limited Company Paid-in-minimum capital requirement: none Procedure 5. Get the Certificate of Incorporation from the Data as of: February 2009 Registrar of Companies, Ministry of Corporate Affairs (National) Time: 5 days Procedure 1. Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National) Cost: INR 13,700 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR Time: 1 day 200 + POA from 5 subscribers: INR 500) Cost: INR 100 Comments: The following forms are required to be electronically filed on the Comments: The applicant is required to fill out and submit Form DIN-1 to obtain website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) the provisional DIN. This form is available online on the Ministry of Corporate Affairs e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately of the Memorandum and Articles of Association (MOA and AOA) and duly executed issued. The applicant is also required to pay an application fee of INR 100, which Power of Attorney (POA) must be attached to Form 1. can be done online. The printed application form must then be signed and sent for The fees for registering a company can be paid online by credit card or in cash at approval to the Ministry of Corporate Affairs by courier, along with proof of payment certain authorized banks. Paying online reduces the time by 2-3 days compared with (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of paying by bank draft. residence within 60 days of the date of generation of the provisional DIN. On receipt One copy of the Memorandum of Association, Articles of Association, Form 1, of the DIN application form and attached supporting documents, the concerned Form 32, Form 18, and the original name-approval letter, consent of directors, and authority verifies all the documents and, upon approval, issues a permanent DIN. stamped power of attorney must be physically submitted to the Registrar of Com- The status of the DIN approval process can be checked online on the MCA portal. The panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of provisional DIN itself is approved as the permanent DIN. Incorporation, which is available online on the Ministry of Corporate Affairs website LIST OF PROCE%63&4t STARTING A BUSINESS 85

(as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the to obtain the TAN by 2-3 days. However, the majority of applicants are not using company office by registered or rush mail. The process takes from 3 to 7 working the online system mainly because the online application has to be followed with days. an offline submission: the hard copy of the application is required to be physically filed with NSDL. A TATKAL facility has also been introduced to make this registration Procedure 6. Make a seal (Private) faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Time: 1 day ted on a priority basis, at an extra cost, in approximately 5 days. Cost: INR 350 (costs start at INR 350 for a seal, depending on the number of words Procedure 9.* Register with the Office of Inspector, Shops, and to be engraved) Establishment Act (State/ Municipal) Comments: Although making a company seal is not a legal requirement for the company to be incorporated, companies require a seal to issue share certificates and Time: 15 days other documents. The cost depends on the number of words to be engraved, the Cost: INR 100 number of seals required, and the time period for delivery. The cost can range from Comments: As per the Punjab Shops and Commercial Establishments Act (1958), a INR 300 to INR 500. dealer has to apply for registration along with the following particulars: 1. Name of the employer and manager, if any; Procedure 7.* Obtain a Permanent Account Number (PAN) from 2. Postal address of the establishment; an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India 3. Name of establishment, if any; (UTI) Investors Services Ltd., as outsourced by the Income Tax 4. Number of persons employed; Department (National) 5. Other particulars as may be prescribed. Time: 15 days The Inspector shall then register the establishment by entering the name of the establishment in the Register of Establishments and shall issue a Certificate of Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application Registration to the employer. The certificate is required to be prominently displayed form, if not downloaded) at the establishment. Comments: Under the Income Tax Act (1961), each person must quote the The trades in Ludhiana are regulated by the Municipal Corporation of Ludhiana Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit as per Section 343 of the Punjab Municipal Corporation Act (1976). The Municipal alphanumeric number issued on a laminated card by an assessing officer of the Corporation issues licenses under 343(1) (B) for the establishment of certain trades; Income Tax Department. In order to improve PAN-related services, the Income for others no application is needed. Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor Services Ltd., which was authorized to set up and manage IT PAN Service Centers. Procedure 10.* Register for Value-Added Tax (VAT) at the The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made Commercial Tax Office (State) through the abovementioned service centers using Form 49A, with a certified copy Time: 15 days of the Certificate of Registration, issued by the Registrar of Companies, along with Cost: INR 2,175 (INR 2000 registration fee + INR 25 court fee + INR 150 stamp paper) proof of company address and personal identity. A fee of INR 60 (plus applicable Comments: Under the Punjab VAT Act (2005), the application should be filed with taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- the Tax Department using Form VAT-1. The authority shall issue the Registration tation Centers will supply the PAN application form (Form 49A), assist the applicant Certificate within 15 days of the application receipt. The application must be ac- in filling out the form, collect the filled-out form, and issue an acknowledgment slip. companied by a Memorandum of Association, Certificate of Incorporation, and proof After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case of place of business. may be, will print the PAN card and deliver it to the applicant. In addition to the registration fee, it is mandatory for a firm, regardless of size and The application for PAN can also be made online or using the rush process called turnover, to submit two surety bond forms of INR 50,000 each, with the company TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- name, address, and list of immovable property. The purpose of such submission is to ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although indemnify the office in case of any loss to the Tax Department due to any misrepre- the online application would speed up the process to obtain the PAN, applicants are sentation or act of the entrepreneur. not using the online system mostly because the documents must still be physically dropped off for verification with the authorized agent. For more details, see www. Procedure 11.* Register with the Employees' Provident Fund incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. Organization (National) Procedure 8.* Obtain a Tax Account Number (TAN) for income Time: 10 days taxes deducted at the source from an authorized franchise or Cost: No cost agent appointed by the National Securities Depository Ltd. Comments: The Employees Provident Fund Organization (EPFO) is a statutory (NSDL), as outsourced by the Income Tax Department (National) organization under the Ministry of Labor and Employment. The Provident Fund Time: 14 days registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. If a company has more than 20 employees, then it is mandatory to Cost: INR 57 (INR 50 application fee + 12.36% service tax) register with the EPFO and a code number will be allotted to the company. Once the Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number employer is registered with the EPFO, it will register his employees with the office required of anyone responsible for deducting or collecting tax. The provisions of and open Provident Fund accounts in the name of each employee. More information Section 203A of the Income Tax Act require that all persons who deduct or collect is available at www.epfindia.gov.in. tax at the source must apply for a TAN. The application for allotment of a TAN must As per an internal circular, the code number is to be allotted within 3 days of the date be filed using Form 49B and submitted at any TIN Facilitation Center authorized to of submission, if the application is complete in all respects. However, in many cases receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. applicants have received the intimation letter with the code number later: in 12 to It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can 15 days. be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification of the application, the same is sent to the Income Tax Department for validation. Procedure 12.* Register for medical insurance at the regional The department will issue the TAN and communicate it to NSDL online. On the basis of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, office of the Employees' State Insurance Corporation (National) any authorized franchise or agent appointed by the National Securities Depository Time: 15 days Services Limited (NSDL) can accept and process the TAN application. The national Cost: No cost government levies the income tax. Comments: Registration is the process by which every employer and every paid em- The application for a TAN can also be made online. An application (Form 49B) can ployee is identified for health-insurance purposes. The Employees' State Insurance be submitted through TAN online at the NSDL-TIN website. Once the application (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- is submitted online, a unique 14-digit acknowledgment number is generated. tributions is made both by the employer and the employee at the rates prescribed by This acknowledgment number should be printed and sent to NSDL at the address the National Government. mentioned on the NSDL-TIN website along with the processing fee. Payment can be made by check or credit card. Tracking the status of the e-registration at is available at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time 86 DOING BUSINESS IN INDIA 2009

The Employer should register within 15 days after the Act becomes applicable. For Procedure 4. Stamp the company documents at the State this purpose, the employer should submit Form 01 to the ESI regional office. Upon Treasury (State) or authorized bank (Private) receipt of the registration form, the office shall allot an employer's code number Time: 1 day and shall inform the employer of that number through an "intimation letter" sent by post. Cost: INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1) An employee's individual insurance involves a separate process, one which is initiated after employer's registration. The employer should fill out declaration forms for Comments: The request for stamping the incorporation documents should be all coverable employees and submit the same, along with Form 3, to the appropriate accompanied by unsigned copies of the Memorandum, Articles of Association, and regional office within 10 days of the employee's appointment date. The employees' the payment receipt. temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get The company must ensure that the copies submitted to the Superintendent of a permanent ESI card. Stamps or to the authorized bank for stamping are unsigned and that no promoter More information is available at http://www.esic.nic.in. or subscriber has written anything on it by hand. The Superintendent returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. * This procedure can be completed simultaneously with previous procedures The rate of stamp duty varies from state to state. According to Article 10 and Article 39 of the Indian Stamp Act (1899), the stamp duty STARTING A BUSINESS payable on the Memorandum and Articles of Association for company incorporation Mumbai, Maharashtra in Mumbai, Maharashtra, is as follows: Standard company legal form: Private Limited Company a. Articles of Association: INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 50,000,000; Paid-in-minimum capital requirement: none Data as of: February 2009 b. Memorandum of Association: INR 200; c. Form-1 (declaration of compliance): INR 100. Procedure 1. Obtain director identification number (DIN) online Once the memorandum and articles of association have been stamped, they must be from the Ministry of Corporate Affairs portal (National) signed and dated by the company promoters, including the company name and the Time: 1 day description of its activities and purpose, father's name, address, occupation, and the number of shares subscribed. This information must be in the applicant's handwrit- Cost: INR 100 ing and duly witnessed. Comments: The process to obtain the Director Identification Number (DIN) is as follows: Procedure 5. Get the Certificate of Incorporation from the 1. Obtain the provisional DIN by filing application Form DIN-1 online. This form is Registrar of Companies, Ministry of Corporate Affairs (National) on the Ministry of Corporate Affairs 21st Century (MCA 21) portal www.mca.gov. in. The provisional DIN is immediately issued. The application form must then be Time: 5 days printed and signed and sent for approval to the ministry by courier along with Cost: INR 14,133 (see comments) proof of identity and address: Comments: The following forms are required to be electronically filed on the web- a. identity proof (any of the following): Permanent Account Number card, driver's site of the Ministry of Company Affairs: e-form 1; e-form 18; and e-form 32. Along license, passport, or voter card; with these documents, scanned copies of the consent of the initial directors, and also b. residence proof (any of the following): driver's license, passport, voter card, of the signed and stamped form of the Memorandum and Articles of Association, telephone bill, ration card, electricity bill, bank statement. must be attached to Form 1. The fees for registering a company can be paid online by credit card or in cash at certain authorized banks. One copy of the Memorandum 2. The concerned authority verifies all the documents and, upon approval, issues a of Association, Articles of Association, Form 1, Form 32, Form 18, and the original permanent DIN. The process takes about 4 weeks. name approval letter, consent of directors, and stamped power of attorney must be physically submitted to the Registrar of Companies. The certificate of incorporation is Procedure 2. Obtain digital signature certificate online from sent automatically to the registered office of the company by registered or rush mail. private agency authorized by the Ministry of Corporate Affairs The registration fees paid to the Registrar are scaled according to the company's (National) authorized capital (as stated in its memorandum): Time: 3 days a. INR 100,000 or less: INR 4,000. Cost: INR 1,500 If the nominal share capital is over INR 100,000, additional fees based the amount of Comments: To use the new electronic filing system under MCA 21, the applicant nominal capital apply to the base registration fee of INR 4,000: must obtain a Class-II Digital Signature Certificate. The digital signature certificate b. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first can be obtained from one of six private agencies authorized by MCA 21 such as Tata INR 1,00,000, up to INR 500,000: INR 300; Consultancy Services. Company directors submit the prescribed application form c. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first along with proof of identity and address. Each agency has its own fee structure, INR 500,000, up to INR 5,000,000: INR 200; ranging from INR 400 to INR 2650. d. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first Procedure 3. Reserve the company name online with the INR 5,000,000, up to INR 1 10,000,000: INR 100; Registrar of Companies (ROC) (National) e. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 10,000,000: INR 50. Time: 2 days The payment of fees can be made: Cost: INR 500 1. offline: one can upload all incorporation documents and generate the payment Comments: Company name approval must be done electronically. Under e-filing challan. Against this challan, the applicant must obtain a demand draft for filing for name approval, the applicant can check the availability of the desired company fees amount in favor of the Pay and Accounts Office, Ministry of Corporate Affairs, name on the MCA 21 website. New Delhi and this demand draft is payable in Mumbai. The applicant must make The ROC in Mumbai has staff members working full time on name reservations (ap- the payments at specified branches of certain banks. It takes around one week for proximately 3, but more if the demand increases). A maximum of 6 suggested names clearance of payment. Only after clearance does the ROC accept the documents may be submitted. They are then checked by ROC staff for any similarities with all for verification and approvals; other names in India. 2. online: the applicant makes the payment by credit card and the system ac- The MCA receives approximately 50-60 applications a day. After being cleared by the cepts the documents immediately. Please note that in Mumbai, the ROC requests junior officer, the name requests are sent to the senior officer for approval. Once ap- prescrutiny of documents for any corrections before they are uploaded. Once the proved, the selected name appears on the website. Applicants need to keep consult- documents have been uploaded, they can then be approved without any further cor- ing the website to confirm that one of their submitted names was approved. rection. The online filing mechanism requires only one copy of scanned documents In practice, it takes 2 days for obtaining a clearance of the name if the proposed to be filed (including stamped MOA, AOA, and POA). name is available and conforms to the naming standards established by the Com- Schedule of Registrar filing fees for the articles and for the other forms (l, 18, and 32): pany Act (1 day for submission of the name and 1 day for it to appear on the MCA website). LIST OF PROCE%63&4t STARTING A BUSINESS 87 a. INR 200 for a company with authorized share capital of more than INR 100,000 After verification of application, the same is sent to the Income Tax Department but less than INR 500,000; and upon satisfaction the department issues the TAN to the applicant. The national b. INR 300 for a company with nominal share capital of INR 500,000 or more but less government levies the income tax. Since outsourcing, any authorized franchise or than INR 2,500,000; agent appointed by the National Securities Depository Services Limited (NSDL) can accept and process the TAN application. c.INR 500 for a company with nominal share capital of INR 2,500,000 or more. The application for a TAN can be made either online through the NSDL website Procedure 6. Make a seal (Private) (www.tin-nsdl.com) or offline. Upon payment of the fee by credit card, the hard copy of the application must be physically filed with the NSDL. Time: 1 day Cost: INR 350 (cost depends on the number of seals required and the time period Procedure 9.* Register with the Office of Inspector, Shops, and for delivery) Establishment Act (State/ Municipal) Comments: Although making a company seal is not a legal requirement for the Time: 2 days company to be incorporated, companies require a seal to issue share certificates and Cost: INR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges) other documents. The cost depends on the number of words to be engraved, the number of seals required, and the time period for delivery. The cost can range from Comments: A statement containing the employer's and manager's names and the INR 300 to INR 500. establishment's name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees. Procedure 7.* Obtain a Permanent Account Number (PAN) from According to Section 7 of the Bombay Shops and Establishments Act (1948), the an authorized franchise or agent appointed by the National establishment must be registered as follows: Securities Depository Ltd. (NSDL) or the Unit Trust of India - Under Section 7(4), the employer must register the establishment in the prescribed (UTI) Investors Services Ltd., as outsourced by the Income Tax manner within 30 days of the opening of the business. Department (National) - Under Section 7(1), the establishment must submit to the local shop inspector Time: 7 days Form A and the prescribed fees for registering the establishment. Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application - Under Section 7(2), after Form A and the prescribed fees are received and the cor- form, if not downloaded) rectness of the statement on the form is satisfactorily audited, the certificate for the registration of the establishment is issued on Form D, according to the provisions of Comments: Under the Income Tax Act (1961), each person must quote his or her Rule 6 of the Maharashtra Shops and Establishments Rules of 1961. Permanent Account Number (PAN) for tax payment purposes and the Tax Account Number (TAN) for depositing tax deducted at source. The Central Board of Direct Since the amendments in the Maharashtra Shops and Establishment (Amendment) Taxes (CBDT) has instructed banks not to accept any form for tax payment (challan) Rules (2003), dated December 15, 2003, the Schedule for fees for registration and without the PAN or TAN, as applicable. renewal of registration (as per Rule 5) is as follows: The PAN is a 10-digit alphanumeric number issued on a laminated card by an assess- a. 0 employees: INR 100; ing officer of the Income Tax Department. In order to improve PAN-related services, b. 1 to 5 employees: NR 300; the Income Tax department (effective July 2003) outsourced their operations per- c. 6 to 10 employees: INR 600; taining to allotment of PAN and issuance of PAN cards to UTI Investor Services Ltd., d. 11 to 20 employees: INR 1000; which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office. e. 21 to 50 employees: INR 2000; The National Securities Depository Limited (NSDL) has also launched PAN operations f. 51 to 100 employees: INR 3500; effective June 2004, setting up TIN Facilitation Centers. The PAN application is made g. 101 or more employees: INR 4500. through the abovementioned service centers using Form 49A, with a certified copy Hence in the given case the registration fees would be INR 2000, as there are 50 of the certificate of registration, issued by the Registrar of Companies, along with employees. proof of company address and personal identity. A fee of INR 60 (plus applicable In addition, an annual fee (three times the registration and renewal fees) is charged taxes) applies for processing the PAN application. as trade refuse charges (TRC), under the Mumbai Municipal Corporation Act (1888). IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A), assist the applicant in filling out the form, collect filled-out forms, and Procedure 10.* Register for Value-Added Tax (VAT) at the issue an acknowledgment slip. After obtaining PAN from the Income Tax depart- Commercial Tax Office (State) ment, UTIISL or NSDL, as the case may be, will print the PAN card and deliver it to the Time: 12 days applicant. Cost: INR 5,100 (registration fee INR 5000 + stamp duty INR 100) The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details Comments: Beginning April 1, 2005, the sales tax was replaced by the VAT, which see www.incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. requires registration by filing Form 101. The authorized representative signing the application must be available at the Sales-Tax Office on the day of the application Procedure 8.* Obtain a Tax Account Number (TAN) for income verification. The applicant goes to the Sales-Tax Office and up to the registration taxes deducted at the source from the Assessing Office in the counter. The clerk at the counter verifies that the applicant has all the required Mumbai Income Tax Department documents and gives the applicant a token (waiting number). After a short wait, the applicant's number is called and the applicant approaches the desk of a sales-tax Time: 7 days officer. There, all the information on Form 101 is manually entered into the system Cost: INR 57 (INR 50 application fee + 12.36% service tax) by the officer. Within 10 minutes, the system generates a Tax Identification Number Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number (TIN) Thereafter, the company is considered fully registered to pay taxes. However, required of anyone responsible for deducting or collecting tax. The provisions of the applicant must wait between 10 and 15 days to receive the VAT registration Section 203A of the Income Tax Act require that all persons who deduct or collect tax certificate by mail. In addition to Form 101, other accompanying documentation at the source must apply for a TAN. The section also makes it mandatory for the TAN includes: 1) Certified true copy of the memorandum and articles of association of to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) the company; 2) Proof of permanent residential address. At least 2 of the following returns, all TDS/TCS payment challans, and all TDS/TCS certificates issued. Failure to documents must be submitted: copy of passport, copy of driver's license, copy of a apply for a TAN or to comply with any of the other provisions of the section is subject voter registration card, copy of property card or latest receipt of property tax from to a penalty of INR 10,000/-. the Municipal Corporation, copy of latest paid electricity bill in the name of the applicant; 3) Proof of place of business (for an owner, in the case of Doing Business): Proof The application for allotment of a TAN must be filed using Form 49B and submitted of ownership of premises viz. copy of property card, ownership deed, agreement at any TIN Facilitation Center authorized to receive e-TDS returns. Locations of TIN with the builder, or any other relevant documents; 4) One recent passport-sized pho- Facilitation Centers can be found at www.incometaxindia.gov.in and http://tin.nsdl. tograph of the applicant; 5) Copy of Income Tax Assessment Order with PAN or copy com. The processing fee for both applications (a new TAN or a change request) is INR of PAN card; 6) challan on Form No. 210 (original) showing payment of registration 50 (plus applicable taxes). fee at INR 5000 (in case of voluntary RC) and INR 500 (in other cases). 88 DOING BUSINESS IN INDIA 2009

The whole process will be put online by the spring of 2009. This means that rather Comments: The applicant is required to fill out and submit Form DIN-1 to obtain than physically having to go to the office, companies will fill in all their details online the provisional DIN. This form is available online on the Ministry of Corporate Affairs for Form 101 and then go to the office only so that the Sales-Tax Office can verify the 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately above-listed documentation. issued. The applicant is also required to pay an application fee of INR 100, which can be done online. The printed application form must then be signed and sent for Procedure 11.* Register for Profession Tax at the Profession Tax approval to the Ministry of Corporate Affairs by courier, along with proof of payment Office (State) (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of residence within 60 days of the date of generation of the provisional DIN. On receipt Time: 2 days of the DIN application form and attached supporting documents, the concerned Cost: No cost authority verifies all the documents and, upon approval, issues a permanent DIN. Comments: According to Section 5 of the Profession Tax Act, every employer (not The status of the DIN approval process can be checked online on the MCA portal. The being an officer of the government) is liable to taxation and shall obtain a certificate provisional DIN itself is approved as the permanent DIN. of registration from the prescribed authority. The company is required to apply to the registering authority using Form I. The registration authority for the Mumbai Procedure 2. Obtain digital signature certificate online from area is located at Vikarikar Bhavan, Mazgaon in Mumbai. Depending on the nature private agency authorized by the Ministry of Corporate Affairs of the business, the application should be supported with such documents as proof (National) of address, details of company registration number under the Indian Companies Act (1956), details of the head office (if the company is a branch of a company registered Time: 3 days outside the state), company deed, certificates under any other act, and so forth. Cost: INR 1,500 Comments: To use the new electronic filing system under MCA 21, the applicant Procedure 12.* Register with the Employees' Provident Fund must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Organization (National) from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Time: 12 days Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, depending upon various factors such as validity period, delivery time, and cost Cost: No cost structure. Company directors submit the prescribed application form along with Comments: The Employees Provident Funds and Miscellaneous Provisions Act proof of identity and address. After the DSC is obtained, it must be registered on the (1952) applies to an establishment employing 20 or more persons and engaged in MCA portal before it can be affixed on any e-form. Once the Director has obtained any of the 183 industries and classes of business establishments throughout India, the provisional DIN online, DSC may be obtained while the provisional DIN is being excluding the States of Jammu and Kashmir. registered. The applicant fills in an application and is then allotted a social-security number. The Provident Fund registration focuses on delinquent reporting, underreporting, Procedure 3. Reserve the company name online with the or non-reporting of workforce size. Provident Fund registration is optional if the Registrar of Companies (ROC) (National) workforce size is not more than 20. Time: 2 days The employer is required to provide necessary information to the concerned regional Cost: INR 500 Provident Fund Organization (EPFO) in the prescribed manner for allotment of Estab- lishment Code Number. No separate registration is required for the employees. Nev- Comments: Company name approval must be done electronically. Under e-filing ertheless all eligible employees are required to become members of the Fund and an for name approval, the applicant can check the availability of the desired company individual account number is allotted by the employer in the prescribed manner. name on the MCA 21 website. A maximum of 6 suggested names can be submitted; they are then checked by ROC staff for any similarities with all other names in India. As per an internal circular, the code number is to be allotted within 3 days of submis- After being cleared by the junior officer, the name requests are sent to the senior of- sion, if the application is complete in all respects. However, in many cases applicants ficer for approval. Once approved, the Registrar of Companies electronically informs have received the intimation letter with the code number in 12 to 15 days. An online the applicant. In practice, it takes 2 days to obtain a clearance of the name if the application facility is not provided so far. proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the Procedure 13.* Register for medical insurance at the regional MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee office of the Employees' State Insurance Corporation (National) can be made online. Time: 9 days Cost: No cost Procedure 4. Stamp the company documents at the State Comments: Registration is the process by which every employer/factory and every Treasury (State) paid employee is identified for health insurance purposes and their individual Time: 1 day records are set up for them. As per the Employees' State Insurance (General), Form Cost: INR 767 (INR 200 for MOA + INR 556.5 for AOA or 0.15% of authorized share 01 must be submitted by the employer for registration. It takes 3 days to a week capital + INR 10 for stamp paper for declaration on Form 1) for the Employer Code Number to be issued. The "intimation letter" containing the Comments: The request for stamping the incorporation documents should be Code Number is mailed to the employer and that takes an additional couple of days. accompanied by unsigned copies of the memorandum (MOA), articles of association The Employee's individual insurance is a separate process that is initiated upon the (AOA), and the payment receipt. The Superintendent at the State Treasury returns employer's registration. The employer is responsible for submitting the required the copies, one of which is duly stamped, signed, and embossed, showing payment declaration form and employees are responsible for providing correct information to of the requisite stamp duty. Once the memorandum and articles of association have the employer. The employee temporary cards (ESI Cards) are issued on the spot by been stamped, they must be signed and dated by the company promoters, including the local offices in many places. The temporary cards are valid for 13 weeks from the the company name and the description of its activities and purpose, father's name, date of the employees' appointment. It takes about 4 to 5 weeks to get a permanent address, occupation, and the number of shares subscribed. This information must be ESI card. in the applicant's handwriting and duly witnessed. The time involved in engrossing the documents may vary from 1 to 4 days, depend- * This procedure can be completed simultaneously with previous procedures ing upon the mode of payment of the stamp duty charges: if the stamp duty is paid in cash (most common form of payment for small amounts such as these duty STARTING A BUSINESS charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand draft, then engrossing may take 3-4 days. An e-stamping system, for paying stamp New Delhi, Delhi duty electronically, has already been implemented in Delhi. Standard company legal form: Private Limited Company Paid-in-minimum capital requirement: none Procedure 5. Get the Certificate of Incorporation from the Data as of: February 2009 Registrar of Companies, Ministry of Corporate Affairs (National) Time: 5 days Procedure 1. Obtain director identification number (DIN) online Cost: INR 13,300 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing from the Ministry of Corporate Affairs portal (National) fee on Form 1: INR 200 + filing fee on Form 32: INR 200 + filing fee on Form 18: INR Time: 1 day 200 + POA from 5 subscribers: INR 100) Cost: INR 100 LIST OF PROCE%63&4t STARTING A BUSINESS 89

Comments: The following forms are required to be electronically filed on the of the application, the same is sent to the Income Tax Department for validation. website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) The department will issue the TAN and communicate it to NSDL online. On the basis e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, of the Memorandum and Articles of Association (MOA and AOA) and duly executed any authorized franchise or agent appointed by the National Securities Depository Power of Attorney (POA) must be attached to Form 1. Services Limited (NSDL) can accept and process the TAN application. The national The fees for registering a company can be paid online by credit card or in cash at government levies the income tax. certain authorized banks. Paying online reduces the time by 2-3 days compared with The application for a TAN can also be made online. An application (Form 49B) can paying by bank draft. be submitted through TAN online at the NSDL-TIN website. Once the application One copy of the Memorandum of Association, Articles of Association, Form 1, is submitted online, a unique 14-digit acknowledgment number is generated. Form 32, Form 18, and the original name-approval letter, consent of directors, and This acknowledgment number should be printed and sent to NSDL at the address stamped power of attorney must be physically submitted to the Registrar of Com- mentioned on the NSDL-TIN website along with the processing fee. Payment can be panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of made by check or credit card. Tracking the status of the e-registration at is available Incorporation, which is available online on the Ministry of Corporate Affairs website at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the to obtain the TAN by 2-3 days. However, the majority of applicants are not using company office by registered or rush mail. The process takes from 3 to 7 working the online system mainly because the online application has to be followed with days. an offline submission: the hard copy of the application is required to be physically filed with NSDL. A TATKAL facility has also been introduced to make this registration Procedure 6. Make a seal (Private) faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allotted on a priority basis, at an extra cost, in approximately 5 days. Time: 1 day Cost: INR 350 (costs start at INR 350 for a seal, depending on the number of words Procedure 9.* Register for Value-Added Tax (VAT) at the to be engraved) Commercial Tax Office (State) Comments: Although making a company seal is not a legal requirement for the Time: 9 days company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the Cost: INR 525 number of seals required, and the time period for delivery. The cost can range from Comments: For obtaining registration under the Delhi Value-Added Tax Act (2004), INR 300 to INR 500. an application must be made to the Commercial Tax Office of the ward in which the principal place of business is located, accompanied by the following documents: Procedure 7.* Obtain a Permanent Account Number (PAN) from a. Latest rent receipt (if the business premises are leased) or ownership documents, an authorized franchise or agent appointed by the National as the case may be; Securities Depository Ltd. (NSDL) or the Unit Trust of India b. Proof of legal and physical possession of the business premises; (UTI) Investors Services Ltd., as outsourced by the Income Tax c. Four photographs of the authorized signatory and a proof of identification; Department (National) d. List of company directors; Time: 12 days e. Bank statement of the company from the date of incorporation to the application Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application date; form, if not downloaded) f. Copy of first sale and purchase document; Comments: Under the Income Tax Act (1961), each person must quote the g. List of products for which registration is required; Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit h. Copy of the Certificate of Incorporation, Memorandum of Association, and the alphanumeric number issued on a laminated card by an assessing officer of the Articles of Association; Income Tax Department. In order to improve PAN-related services, the Income Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor i. Certified copy of the Board Resolution; Services Ltd., which was authorized to set up and manage IT PAN Service Centers. j. Self-attested copy of the Permanent Account Number of the company; The National Securities Depository Limited (NSDL) has also launched PAN operations k. Bank guarantee for a sum of INR 100,000. However, subject to compliance of effective June 2004, setting up TIN Facilitation Centers. The PAN application is made certain additional requirements (such as proof of ownership of the business through the abovementioned service centers using Form 49A, with a certified copy premises), a bank guarantee of INR 50,000 may also be accepted by the depart- of the Certificate of Registration, issued by the Registrar of Companies, along with ment. Alternatively, in lieu of furnishing a bank guarantee, a surety may also be proof of company address and personal identity. A fee of INR 60 (plus applicable given by an already registered dealer if the said dealer is registered for a period taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- of at least 12 months. Most firms that are seeking registration choose another tation Centers will supply the PAN application form (Form 49A), assist the applicant registered firm to stand as a guarantor. in filling out the form, collect the filled-out form, and issue an acknowledgment slip. After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case may be, will print the PAN card and deliver it to the applicant. After examining the aforesaid documents, the department issues the Registration Certificate within 7 to 15 working days. Generally an inspector pays a visit within The application for PAN can also be made online or using the rush process called 2 to 3 days of the issuance of the Certificate of Registration and a report about the TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- functioning of the company is submitted by the inspector to the department. ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although the online application would speed up the process to obtain the PAN, applicants are The VAT registration can be effective from the date of application only if a bank guar- not using the online system mostly because the documents must still be physically antee is given. In that case, the registration will be immediate. But, as mentioned dropped off for verification with the authorized agent. For more details, see www. earlier, most firms opt for another registered firm to stand as a guarantor. incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. Procedure 10.* Register with the Employees' Provident Fund Procedure 8.* Obtain a Tax Account Number (TAN) for income Organization (National) taxes deducted at the source from an authorized franchise or Time: 13 days agent appointed by the National Securities Depository Ltd. Cost: No cost (NSDL), as outsourced by the Income Tax Department (National) Comments: The Employees Provident Fund Organization (EPFO) is a statutory Time: 12 days organization under the Ministry of Labor and Employment. The Provident Fund Cost: INR 57 (INR 50 application fee + 12.36% service tax) registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. If a company has more than 20 employees, then it is mandatory to Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number register with the EPFO and a code number will be allotted to the company. Once the required of anyone responsible for deducting or collecting tax. The provisions of employer is registered with the EPFO, it will register his employees with the office Section 203A of the Income Tax Act require that all persons who deduct or collect and open Provident Fund accounts in the name of each employee. More information tax at the source must apply for a TAN. The application for allotment of a TAN must is available at www.epfindia.gov.in. be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification 90 DOING BUSINESS IN INDIA 2009

As per an internal circular, the code number is to be allotted within 3 days of the date Cost: INR 500 of submission, if the application is complete in all respects. However, in many cases Comments: Company name approval must be done electronically. Under e-filing applicants have received the intimation letter with the code number later: in 12 to for name approval, the applicant can check the availability of the desired company 15 days. name on the MCA 21 website. A maximum of 6 suggested names can be submitted; they are then checked by ROC staff for any similarities with all other names in India. Procedure 11.* Register for medical insurance at the regional After being cleared by the junior officer, the name requests are sent to the senior of- office of the Employees' State Insurance Corporation (National) ficer for approval. Once approved, the Registrar of Companies electronically informs Time: 15 days the applicant. In practice, it takes 2 days to obtain a clearance of the name if the proposed name is available and conforms to the naming standards established by Cost: No cost the Company Act (1 day for submission of the name and 1 day for it to appear on the Comments: Registration is the process by which every employer and every paid em- MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee ployee is identified for health-insurance purposes. The Employees' State Insurance can be made online. (ESI) Act (1948) provides for a fund administered by the ESI corporation in which contributions is made both by the employer and the employee at the rates prescribed by Procedure 4. Stamp the company documents at the State the National Government. Treasury (State) The Employer should register within 15 days after the Act becomes applicable. For Time: 1 day this purpose, the employer should submit Form 01 to the ESI regional office. Upon receipt of the registration form, the office shall allot an employer's code number Cost: INR 1,010 (INR 500 for MOA + INR 500 for AOA + INR 10 for stamp paper for and shall inform the employer of that number through an "intimation letter" sent declaration on Form 1) by post. Comments: The request for stamping the incorporation documents should be An employee's individual insurance involves a separate process, one which is initi- accompanied by unsigned copies of the memorandum (MOA), articles of association ated after employer's registration. The employer should fill out declaration forms for (AOA), and the payment receipt. The Superintendent at the State Treasury returns all coverable employees and submit the same, along with Form 3, to the appropriate the copies, one of which is duly stamped, signed, and embossed, showing payment regional office within 10 days of the employee's appointment date. The employees' of the requisite stamp duty. Once the memorandum and articles of association have temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get been stamped, they must be signed and dated by the company promoters, including a permanent ESI card. the company name and the description of its activities and purpose, father's name, address, occupation, and the number of shares subscribed. This information must be More information is available at http://www.esic.nic.in. in the applicant's handwriting and duly witnessed. The time involved in engrossing the documents may vary from 1 to 4 days, depend- * This procedure can be completed simultaneously with previous procedures ing upon the mode of payment of the stamp duty charges: if the stamp duty is paid in cash (most common form of payment for small amounts such as these duty STARTING A BUSINESS charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Noida, Uttar Pradesh draft, then engrossing may take 3-4 days. Standard company legal form: Private Limited Company Procedure 5. Get the Certificate of Incorporation from the Paid-in-minimum capital requirement: none Registrar of Companies, Ministry of Corporate Affairs (National) Data as of: February 2009 Time: 5 days Procedure 1. Obtain director identification number (DIN) online Cost: INR 13,250 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing from the Ministry of Corporate Affairs portal (National) fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR 200 + POA from 5 subscribers: INR 50) Time: 1 day Comments: The following forms are required to be electronically filed on the Cost: INR 100 website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) Comments: The applicant is required to fill out and submit Form DIN-1 to obtain e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies the provisional DIN. This form is available online on the Ministry of Corporate Affairs of the Memorandum and Articles of Association (MOA and AOA) and duly executed 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately Power of Attorney (POA) must be attached to Form 1. issued. The applicant is also required to pay an application fee of INR 100, which The fees for registering a company can be paid online by credit card or in cash at can be done online. The printed application form must then be signed and sent for certain authorized banks. Paying online reduces the time by 2-3 days compared with approval to the Ministry of Corporate Affairs by courier, along with proof of payment paying by bank draft. (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of One copy of the Memorandum of Association, Articles of Association, Form 1, residence within 60 days of the date of generation of the provisional DIN. On receipt Form 32, Form 18, and the original name-approval letter, consent of directors, and of the DIN application form and attached supporting documents, the concerned stamped power of attorney must be physically submitted to the Registrar of Com- authority verifies all the documents and, upon approval, issues a permanent DIN. panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of The status of the DIN approval process can be checked online on the MCA portal. The Incorporation, which is available online on the Ministry of Corporate Affairs website provisional DIN itself is approved as the permanent DIN. (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the company office by registered or rush mail. The process takes from 3 to 7 working Procedure 2. Obtain digital signature certificate online from days. private agency authorized by the Ministry of Corporate Affairs (National) Procedure 6. Make a seal (Private) Time: 3 days Time: 1 day Cost: INR 1,500 Cost: INR 350 (costs start at INR 350 for a seal, depending on the number of words Comments: To use the new electronic filing system under MCA 21, the applicant to be engraved) must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Comments: Although making a company seal is not a legal requirement for the from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). company to be incorporated, companies require a seal to issue share certificates and Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, other documents. The cost depends on the number of words to be engraved, the depending upon various factors such as validity period, delivery time, and cost number of seals required, and the time period for delivery. The cost can range from structure. Company directors submit the prescribed application form along with INR 300 to INR 500. proof of identity and address. After the DSC is obtained, it must be registered on the MCA portal before it can be affixed on any e-form. Once the Director has obtained Procedure 7.* Obtain a Permanent Account Number (PAN) from the provisional DIN online, DSC may be obtained while the provisional DIN is being an authorized franchise or agent appointed by the National registered. Securities Depository Ltd. (NSDL) or the Unit Trust of India Procedure 3. Reserve the company name online with the (UTI) Investors Services Ltd., as outsourced by the Income Tax Registrar of Companies (ROC) (National) Department (National) Time: 2 days Time: 10 days LIST OF PROCE%63&4t STARTING A BUSINESS 91

Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application The employer of every establishment shall, within 3 months of the opening of the form, if not downloaded) business, submit to the inspector of the area concerned a statement in the prescribed form along with the applicable fee (depending on the number of employees) Comments: Under the Income Tax Act (1961), each person must quote the for registration of the establishment. The statement shall consist of the following Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit information: alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN-related services, the Income a. The name of the employer and the manager, if any; Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor b. The postal address of the establishment; Services Ltd., which was authorized to set up and manage IT PAN Service Centers. c. Other particulars, as may be prescribed. The National Securities Depository Limited (NSDL) has also launched PAN operations The Inspector shall then register the establishment by entering the name of the effective June 2004, setting up TIN Facilitation Centers. The PAN application is made establishment in the Register of Establishments and shall issue a Certificate of Regis- through the abovementioned service centers using Form 49A, with a certified copy tration to the employer. The Certificate of Registration is required to be prominently of the Certificate of Registration, issued by the Registrar of Companies, along with displayed at the establishment. proof of company address and personal identity. A fee of INR 60 (plus applicable taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- Procedure 10.* Register for Value-Added Tax (VAT) at the tation Centers will supply the PAN application form (Form 49A), assist the applicant Commercial Tax Office (State) in filling out the form, collect the filled-out form, and issue an acknowledgment slip. After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case Time: 1 day may be, will print the PAN card and deliver it to the applicant. Cost: INR 100 The application for PAN can also be made online or using the rush process called Comments: Under the Uttar Pradesh Value-Added Tax Act (2008), every dealer with TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- a turnover of INR 500,000 or above should apply for registration using Form VII, com- ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although pleted in all respects, to the registering authority of the area in which the principal the online application would speed up the process to obtain the PAN, applicants are place of business is located. The application should be accompanied by a proof of not using the online system mostly because the documents must still be physically payment of the registration fee. VAT registration will be effective from the date of dropped off for verification with the authorized agent. For more details, see www. application. Upon submission of the application, an acknowledgment number is incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. issued. The concerned dealer can pay, trade, and collect VAT, using its acknowledgment number, for one month. On satisfaction that the application is in order and the Procedure 8.* Obtain a Tax Account Number (TAN) for income information furnished is correct and complete, the registering authority will issue the taxes deducted at the source from an authorized franchise or registration certificate within one month. agent appointed by the National Securities Depository Ltd. (NSDL), as outsourced by the Income Tax Department (National) Procedure 11.* Register with the Employees' Provident Fund Organization (National) Time: 10 days Cost: INR 57 (INR 50 application fee + 12.36% service tax) Time: 12 days Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Cost: No cost required of anyone responsible for deducting or collecting tax. The provisions of Comments: The Employees Provident Fund Organization (EPFO) is a statutory Section 203A of the Income Tax Act require that all persons who deduct or collect organization under the Ministry of Labor and Employment. The Provident Fund tax at the source must apply for a TAN. The application for allotment of a TAN must registration focuses on delinquent reporting, underreporting, or noneporting of be filed using Form 49B and submitted at any TIN Facilitation Center authorized to workforce size. If a company has more than 20 employees, then it is mandatory to receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. register with the EPFO and a code number will be allotted to the company. Once the It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can employer is registered with the EPFO, it will register his employees with the office be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification and open Provident Fund accounts in the name of each employee. More information of the application, the same is sent to the Income Tax Department for validation. is available at www.epfindia.gov.in. The department will issue the TAN and communicate it to NSDL online. On the basis As per an internal circular, the code number is to be allotted within 3 days of the date of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, of submission, if the application is complete in all respects. However, in many cases any authorized franchise or agent appointed by the National Securities Depository applicants have received the intimation letter with the code number later: in 12 to Services Limited (NSDL) can accept and process the TAN application. The national 15 days. government levies the income tax. The application for a TAN can also be made online. An application (Form 49B) can Procedure 12.* Register for medical insurance at the regional be submitted through TAN online at the NSDL-TIN website. Once the application office of the Employees' State Insurance Corporation (National) is submitted online, a unique 14-digit acknowledgment number is generated. Time: 12 days This acknowledgment number should be printed and sent to NSDL at the address Cost: No cost mentioned on the NSDL-TIN website along with the processing fee. Payment can be made by check or credit card. Tracking the status of the e-registration at is available Comments: Registration is the process by which every employer and every paid em- at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time ployee is identified for health-insurance purposes. The Employees' State Insurance to obtain the TAN by 2-3 days. However, the majority of applicants are not using (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- the online system mainly because the online application has to be followed with tributions is made both by the employer and the employee at the rates prescribed by an offline submission: the hard copy of the application is required to be physically the National Government. filed with NSDL. A TATKAL facility has also been introduced to make this registration The Employer should register within 15 days after the Act becomes applicable. For faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- this purpose, the employer should submit Form 01 to the ESI regional office. Upon ted on a priority basis, at an extra cost, in approximately 5 days. receipt of the registration form, the office shall allot an employer's code number and shall inform the employer of that number through an "intimation letter" sent Procedure 9.* Register with the Office of Inspector, Shops, and by post. Establishment Act (State/ Municipal) An employee's individual insurance involves a separate process, one which is initi- Time: 9 days ated after employer's registration. The employer should fill out declaration forms for all coverable employees and submit the same, along with Form 3, to the appropriate Cost: INR 5,000 (the registration fee depends on the number of employees: regional office within 10 days of the employee's appointment date. The employees' 1. No employee: INR 200; temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get 2. Between 1 and 5 employees: INR 1,000; a permanent ESI card. 3. Between 6 and 10 employees: INR 1,500; More information is available at http://www.esic.nic.in. 4. Between 11 and 25 employees: INR 2,500; 5. 26 employees and above: INR 5,000) * This procedure can be completed simultaneously with previous procedures Comments: The procedure for obtaining the Registration Certificate under the Uttar Pradesh Shops and Commercial Establishments Act is as follows: 92 DOING BUSINESS IN INDIA 2009

STARTING A BUSINESS The time involved in engrossing the documents may vary from 1 to 4 days, depend- Patna, Bihar ing upon the mode of payment of the stamp duty charges: if the stamp duty is paid in cash (most common form of payment for small amounts such as these duty Standard company legal form: Private Limited Company charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Paid-in-minimum capital requirement: none draft, then engrossing may take 3-4 days. Data as of: February 2009 Procedure 5. Get the Certificate of Incorporation from the Procedure 1. Obtain director identification number (DIN) online Registrar of Companies, Ministry of Corporate Affairs (National) from the Ministry of Corporate Affairs portal (National) Time: 6 days Time: 1 day Cost: INR 13,250 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing Cost: INR 100 fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR Comments: The applicant is required to fill out and submit Form DIN-1 to obtain 200 + POA from 5 subscribers: INR 50) the provisional DIN. This form is available online on the Ministry of Corporate Affairs Comments: The following forms are required to be electronically filed on the 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) issued. The applicant is also required to pay an application fee of INR 100, which e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies can be done online. The printed application form must then be signed and sent for of the Memorandum and Articles of Association (MOA and AOA) and duly executed approval to the Ministry of Corporate Affairs by courier, along with proof of payment Power of Attorney (POA) must be attached to Form 1. (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of The fees for registering a company can be paid online by credit card or in cash at residence within 60 days of the date of generation of the provisional DIN. On receipt certain authorized banks. Paying online reduces the time by 2-3 days compared with of the DIN application form and attached supporting documents, the concerned paying by bank draft. authority verifies all the documents and, upon approval, issues a permanent DIN. One copy of the Memorandum of Association, Articles of Association, Form 1, The status of the DIN approval process can be checked online on the MCA portal. The Form 32, Form 18, and the original name-approval letter, consent of directors, and provisional DIN itself is approved as the permanent DIN. stamped power of attorney must be physically submitted to the Registrar of Com- Procedure 2. Obtain digital signature certificate online from panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of Incorporation, which is available online on the Ministry of Corporate Affairs website private agency authorized by the Ministry of Corporate Affairs (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the (National) company office by registered or rush mail. The process takes from 3 to 7 working Time: 3 days days. Cost: INR 1,500 Procedure 6. Make a seal (Private) Comments: To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained Time: 1 day from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Cost: INR 350 (costs start at INR 350 for a seal, depending on number of the words Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, to be engraved) depending upon various factors such as validity period, delivery time, and cost Comments: Although making a company seal is not a legal requirement for the structure. Company directors submit the prescribed application form along with company to be incorporated, companies require a seal to issue share certificates and proof of identity and address. After the DSC is obtained, it must be registered on the other documents. The cost depends on the number of words to be engraved, the MCA portal before it can be affixed on any e-form. Once the Director has obtained number of seals required, and the time period for delivery. The cost can range from the provisional DIN online, DSC may be obtained while the provisional DIN is being INR 300 to INR 500. registered. Procedure 7. Obtain a Permanent Account Number (PAN) from Procedure 3. Reserve the company name online with the an authorized franchise or agent appointed by the National Registrar of Companies (ROC) (National) Securities Depository Ltd. (NSDL) or the Unit Trust of India Time: 2 days (UTI) Investors Services Ltd., as outsourced by the Income Tax Cost: INR 500 Department (National) Comments: Company name approval must be done electronically. Under e-filing Time: 15 days for name approval, the applicant can check the availability of the desired company Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application name on the MCA 21 website. A maximum of 6 suggested names can be submitted; form, if not downloaded) they are then checked by ROC staff for any similarities with all other names in India. After being cleared by the junior officer, the name requests are sent to the senior of- Comments: Under the Income Tax Act (1961), each person must quote the ficer for approval. Once approved, the Registrar of Companies electronically informs Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit the applicant. In practice, it takes 2 days to obtain a clearance of the name if the alphanumeric number issued on a laminated card by an assessing officer of the proposed name is available and conforms to the naming standards established by Income Tax Department. In order to improve PAN-related services, the Income the Company Act (1 day for submission of the name and 1 day for it to appear on the Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee Services Ltd., which was authorized to set up and manage IT PAN Service Centers. can be made online. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made Procedure 4. Stamp the company documents at the State through the abovementioned service centers using Form 49A, with a certified copy Treasury (State) of the Certificate of Registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable Time: 1 day taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- Cost: INR 180 (INR 65 for MOA + INR 105 for AOA + INR 10 for stamp paper for tation Centers will supply the PAN application form (Form 49A), assist the applicant declaration on Form 1) in filling out the form, collect the filled-out form, and issue an acknowledgment slip. Comments: The request for stamping the incorporation documents should be After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case accompanied by unsigned copies of the memorandum (MOA), articles of association may be, will print the PAN card and deliver it to the applicant. (AOA), and the payment receipt. The Superintendent at the State Treasury returns The application for PAN can also be made online or using the rush process called the copies, one of which is duly stamped, signed, and embossed, showing payment TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- of the requisite stamp duty. Once the memorandum and articles of association have ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although been stamped, they must be signed and dated by the company promoters, including the online application would speed up the process to obtain the PAN, applicants are the company name and the description of its activities and purpose, father's name, not using the online system mostly because the documents must still be physically address, occupation, and the number of shares subscribed. This information must be dropped off for verification with the authorized agent. For more details, see www. in the applicant's handwriting and duly witnessed. incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. LIST OF PROCE%63&4t STARTING A BUSINESS 93

Procedure 8.* Obtain a Tax Account Number (TAN) for income Cost: No cost taxes deducted at the source from an authorized franchise or Comments: Registration is the process by which every employer and every paid em- agent appointed by the National Securities Depository Ltd. ployee is identified for health-insurance purposes. The Employees' State Insurance (NSDL), as outsourced by the Income Tax Department (National) (ESI) Act (1948) provides for a fund administered by the ESI corporation in which contributions is made both by the employer and the employee at the rates prescribed by Time: 14 days the National Government. Cost: INR 57 (INR 50 application fee + 12.36% service tax) The Employer should register within 15 days after the Act becomes applicable. For Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number this purpose, the employer should submit Form 01 to the ESI regional office. Upon required of anyone responsible for deducting or collecting tax. The provisions of receipt of the registration form, the office shall allot an employer's code number Section 203A of the Income Tax Act require that all persons who deduct or collect and shall inform the employer of that number through an "intimation letter" sent tax at the source must apply for a TAN. The application for allotment of a TAN must by post. be filed using Form 49B and submitted at any TIN Facilitation Center authorized to An employee's individual insurance involves a separate process, one which is initi- receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. ated after employer's registration. The employer should fill out declaration forms for It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can all coverable employees and submit the same, along with Form 3, to the appropriate be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification regional office within 10 days of the employee's appointment date. The employees' of the application, the same is sent to the Income Tax Department for validation. temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get The department will issue the TAN and communicate it to NSDL online. On the basis a permanent ESI card. of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, any authorized franchise or agent appointed by the National Securities Depository More information is available at http://www.esic.nic.in. Services Limited (NSDL) can accept and process the TAN application. The national government levies the income tax. * This procedure can be completed simultaneously with previous procedures The application for a TAN can also be made online. An application (Form 49B) can be submitted through TAN online at the NSDL-TIN website. Once the application STARTING A BUSINESS is submitted online, a unique 14-digit acknowledgment number is generated. This acknowledgment number should be printed and sent to NSDL at the address Ranchi, Jharkhand mentioned on the NSDL-TIN website along with the processing fee. Payment can be Standard company legal form: Private Limited Company made by check or credit card. Tracking the status of the e-registration at is available Paid-in-minimum capital requirement: none at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time Data as of: February 2009 to obtain the TAN by 2-3 days. However, the majority of applicants are not using the online system mainly because the online application has to be followed with Procedure 1. Obtain director identification number (DIN) online an offline submission: the hard copy of the application is required to be physically from the Ministry of Corporate Affairs portal (National) filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Time: 1 day ted on a priority basis, at an extra cost, in approximately 5 days. Cost: INR 100 Comments: The applicant is required to fill out and submit Form DIN-1 to obtain Procedure 9.* Register for Value-Added Tax (VAT) at the the provisional DIN. This form is available online on the Ministry of Corporate Affairs Commercial Tax Office (State) 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately Time: 1 day issued. The applicant is also required to pay an application fee of INR 100, which can be done online. The printed application form must then be signed and sent for Cost: INR 100 approval to the Ministry of Corporate Affairs by courier, along with proof of payment Comments: Every company that is liable to taxation under the Bihar VAT Act shall (Service Request Number [SRN] of the fee paid online), proof of identity, and proof of apply for registration using Form A-1. The application is to be accompanied by: residence within 60 days of the date of generation of the provisional DIN. On receipt 1. Certificate of Incorporation and Memorandum of Association; of the DIN application form and attached supporting documents, the concerned 2. Proof of identity of authorized signatory signing the application form; authority verifies all the documents and, upon approval, issues a permanent DIN. The status of the DIN approval process can be checked online on the MCA portal. The 3. Proof of ownership of principal place of business; provisional DIN itself is approved as the permanent DIN. 4. Proof of ownership of the company directors' residential property; 5. Proof of identity of the company directors; Procedure 2. Obtain digital signature certificate online from 6. Copy of the company's Permanent Account Number card; private agency authorized by the Ministry of Corporate Affairs 7. Copy of the company's last telephone bill or electricity bill; (National) 8. Proof of immovable property held by the company. Time: 3 days Upon submission of the application, an acknowledgment number is issued. The Cost: INR 1,500 concerned firm can pay, trade, and collect VAT using this acknowledgment number Comments: To use the new electronic filing system under MCA 21, the applicant until the final confirmation is received. must obtain a Class-II Digital Signature Certificate (DSC). The DSC can be obtained from six private agencies authorized by the Ministry of Corporate Affairs (MCA 21). Procedure 10.* Register with the Employees' Provident Fund Each certifying agency has its own fee structure, ranging from INR 400 to INR 2,600, Organization (National) depending upon various factors such as validity period, delivery time, and cost Time: 20 days structure. Company directors submit the prescribed application form along with proof of identity and address. After the DSC is obtained, it must be registered on the Cost: No cost MCA portal before it can be affixed on any e-form. Once the Director has obtained Comments: The Employees Provident Fund Organization (EPFO) is a statutory the provisional DIN online, DSC may be obtained while the provisional DIN is being organization under the Ministry of Labor and Employment. The Provident Fund registered. registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. If a company has more than 20 employees, then it is mandatory to Procedure 3. Reserve the company name online with the register with the EPFO and a code number will be allotted to the company. Once the Registrar of Companies (ROC) (National) employer is registered with the EPFO, it will register his employees with the office and open Provident Fund accounts in the name of each employee. More information Time: 2 days is available at www.epfindia.gov.in. Cost: INR 500 As per an internal circular, the code number is to be allotted within 3 days of the date Comments: Company name approval must be done electronically. Under e-filing of submission, if the application is complete in all respects. However, in many cases for name approval, the applicant can check the availability of the desired company applicants have received the intimation letter with the code number later: in 12 to name on the MCA 21 website. A maximum of 6 suggested names can be submitted; 15 days. they are then checked by ROC staff for any similarities with all other names in India. After being cleared by the junior officer, the name requests are sent to the senior of- Procedure 11.* Register for medical insurance at the regional ficer for approval. Once approved, the Registrar of Companies electronically informs office of the Employees' State Insurance Corporation (National) the applicant. In practice, it takes 2 days to obtain a clearance of the name if the Time: 14 days 94 DOING BUSINESS IN INDIA 2009

proposed name is available and conforms to the naming standards established by Services Ltd., which was authorized to set up and manage IT PAN Service Centers. the Company Act (1 day for submission of the name and 1 day for it to appear on the The National Securities Depository Limited (NSDL) has also launched PAN operations MCA website). As a result of reforms introduced by the MCA, payment of the ROC fee effective June 2004, setting up TIN Facilitation Centers. The PAN application is made can be made online. through the abovementioned service centers using Form 49A, with a certified copy of the Certificate of Registration, issued by the Registrar of Companies, along with Procedure 4. Stamp the company documents at the State proof of company address and personal identity. A fee of INR 60 (plus applicable Treasury (State) taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facili- tation Centers will supply the PAN application form (Form 49A), assist the applicant Time: 1 day in filling out the form, collect the filled-out form, and issue an acknowledgment slip. Cost: INR 180 (INR 65 for MOA + INR 105 for AOA + INR 10 for stamp paper for After obtaining the PAN from the Income Tax Department, UTI or NSDL, as the case declaration on Form 1) may be, will print the PAN card and deliver it to the applicant. Comments: The request for stamping the incorporation documents should be The application for PAN can also be made online or using the rush process called accompanied by unsigned copies of the memorandum (MOA), articles of association TATKAL: (1) TATKAL is used only in emergency cases. Under TATKAL, the PAN is allot- (AOA), and the payment receipt. The Superintendent at the State Treasury returns ted on a priority basis, at an extra cost, in approximately 4 days; (2) ONLINE: although the copies, one of which is duly stamped, signed, and embossed, showing payment the online application would speed up the process to obtain the PAN, applicants are of the requisite stamp duty. Once the memorandum and articles of association have not using the online system mostly because the documents must still be physically been stamped, they must be signed and dated by the company promoters, including dropped off for verification with the authorized agent. For more details, see www. the company name and the description of its activities and purpose, father's name, incometaxindia.gov.in, www.utiisl.co.in, and www.tin.nsdl.co.in. address, occupation, and the number of shares subscribed. This information must be in the applicant's handwriting and duly witnessed. Procedure 8.* Obtain a Tax Account Number (TAN) for income The time involved in engrossing the documents may vary from 1 to 4 days, depend- taxes deducted at the source from an authorized franchise or ing upon the mode of payment of the stamp duty charges: if the stamp duty is agent appointed by the National Securities Depository Ltd. paid in cash (most common form of payment for small amounts such as these duty (NSDL), as outsourced by the Income Tax Department (National) charges), engrossing can be done in 1-2 days; if stamp duty is paid through demand Time: 14 days draft, then engrossing may take 3-4 days. Cost: INR 57 (INR 50 application fee + 12.36% service tax) Procedure 5. Get the Certificate of Incorporation from the Comments: The Tax Account Number (TAN) is a 10-digit alphanumeric number Registrar of Companies, Ministry of Corporate Affairs (National) required of anyone responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect Time: 6 days tax at the source must apply for a TAN. The application for allotment of a TAN must Cost: INR 13,250 (filing fee on MOA: INR 12,400 + filing fee on AOA: INR 200 + filing be filed using Form 49B and submitted at any TIN Facilitation Center authorized to fee on Form 1: INR 200 + filing fee on Form 18: INR 200 + filing fee on Form 32: INR receive e-TDS returns. Form 49B is freely downloadable from the NSDL-TIN website. 200 + POA from 5 subscribers: INR 50) It is also available at TIN-Facilitation Centers. Locations of TIN Facilitation Centers can Comments: The following forms are required to be electronically filed on the be found at www.incometaxindia.gov.in and www.tin-nsdl.com. After verification website of the Ministry of Corporate Affairs using digital signatures: (a) e-form 1; (b) of the application, the same is sent to the Income Tax Department for validation. e-form 18; and (c) e-form 32. Along with these forms, signed and scanned copies The department will issue the TAN and communicate it to NSDL online. On the basis of the Memorandum and Articles of Association (MOA and AOA) and duly executed of this, NSDL will issue the TAN letter to the applicant. Since outsourcing in 2003, Power of Attorney (POA) must be attached to Form 1. any authorized franchise or agent appointed by the National Securities Depository The fees for registering a company can be paid online by credit card or in cash at Services Limited (NSDL) can accept and process the TAN application. The national certain authorized banks. Paying online reduces the time by 2-3 days compared with government levies the income tax. paying by bank draft. The application for a TAN can also be made online. An application (Form 49B) can One copy of the Memorandum of Association, Articles of Association, Form 1, be submitted through TAN online at the NSDL-TIN website. Once the application Form 32, Form 18, and the original name-approval letter, consent of directors, and is submitted online, a unique 14-digit acknowledgment number is generated. stamped power of attorney must be physically submitted to the Registrar of Com- This acknowledgment number should be printed and sent to NSDL at the address panies (ROC). ROC scrutinizes all documents and forms and issues the Certificate of mentioned on the NSDL-TIN website along with the processing fee. Payment can be Incorporation, which is available online on the Ministry of Corporate Affairs website made by check or credit card. Tracking the status of the e-registration at is available (as an e-certificate) after 2-3 days. The physical copy of the certificate is sent to the at https://tin.tin.nsdl.com/tan/StatusTrack.html. Applying online shortens the time company office by registered or rush mail. The process takes from 3 to 7 working to obtain the TAN by 2-3 days. However, the majority of applicants are not using days. the online system mainly because the online application has to be followed with an offline submission: the hard copy of the application is required to be physically Procedure 6. Make a seal (Private) filed with NSDL. A TATKAL facility has also been introduced to make this registration faster. TATKAL is being used only in emergency cases. Under TATKAL, the TAN is allot- Time: 1 day ted on a priority basis, at an extra cost, in approximately 5 days. Cost: INR 350 (cost depends on the number of seals required and the time period for delivery) Procedure 9.* Register with the Office of Inspector, Shops, and Comments: Although making a company seal is not a legal requirement for the Establishment Act (State/ Municipal) company to be incorporated, companies require a seal to issue share certificates and Time: 7 days other documents. The cost depends on the number of words to be engraved, the number of seals required, and the time period for delivery. The cost can range from Cost: INR 5,000 INR 300 to INR 500. Comments: Registration is required under the Jharkhand Shops and Commercial Establishment Act. For this purpose, an application must be submitted to the inspec- Procedure 7.* Obtain a Permanent Account Number (PAN) from tor of the area concerned, along with the applicable fee (depending on the number an authorized franchise or agent appointed by the National of employees) for registration of the establishment. The statement shall consist of Securities Depository Ltd. (NSDL) or the Unit Trust of India the following information: (UTI) Investors Services Ltd., as outsourced by the Income Tax 1. The name of the employer and the manager, if any; Department (National) 2. The postal address of the establishment; Time: 15 days 3. The name, if any, of the establishment; Cost: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application 4. The category of the establishment. form, if not downloaded) Procedure 10.* Register for Value-Added Tax (VAT) at the Comments: Under the Income Tax Act (1961), each person must quote the Permanent Account Number (PAN) for tax payment purposes. The PAN is a 10-digit Commercial Tax Office (State) alphanumeric number issued on a laminated card by an assessing officer of the Time: 20 days Income Tax Department. In order to improve PAN-related services, the Income Cost: INR 500 Tax Department (effective July 2003) outsourced allotment of PAN to UTI Investor LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 95

Comments: Under the Jharkhand VAT Act (2005), an application shall be made using LIST OF PROCEDURES Form JVAT 101, along with Annexure I (containing information about the proprietor, each partner, and the director) and Annexure II (containing details about the place Dealing with construction permits of business), and a fee of INR 500, to the registering authority in whose area the principal place of business is located. The registering authority shall issue a receipt of application. The dealer shall submit such an application within 30 days of becoming Ahmedabad, Gujarat liable to taxation under the Act. Procedures to build a warehouse When satisfied that the information furnished on Form JVAT 101 is complete and Warehouse value: USD 118,331 = INR 5,203,000 correct, the registering authority shall, subject to Rule 5, issue to the dealer a Registration Certificate on Form JVAT 106 within 5 days of receipt of such application, Data as of: February 2009 and allot a Taxpayer Identification Number (TIN). In practice, it takes around 20 days Procedure 1. Obtain a certified copy of approved layout of the for the certificate to be issued. The registering authority thereafter may conduct an enquiry within 45 days of issuance of such certificate, and if, upon enquiry, the infor- final plot from the Ahmedabad Urban Development Authority mation submitted is found to be erroneous, the registering authority may revoke or (Municipal) cancel the Registration Certificate. Time: 14 days Cost: INR 4,645 (INR 5 per square meter of the plot area for commercial buildings) Procedure 11.* Register with the Employees' Provident Fund Comments: According to the General Development Control Regulations of the Organization (National) Ahmedabad Urban Development Authority, the building company must obtain a Time: 20 days certified copy of the approval of the plot layout to be submitted later, along with the Cost: No cost application for the development permit, to the Ahmedabad Municipal Corporation (AMC). The following fees apply: Comments: The Employees Provident Fund Organization (EPFO) is a statutory organization under the Ministry of Labor and Employment. The Provident Fund a. Residential buildings: INR 2 per square meter of the plot area; registration focuses on delinquent reporting, underreporting, or non-reporting of b. Commercial buildings: INR 5 per square meter of the plot area. workforce size. If a company has more than 20 employees, then it is mandatory to register with the EPFO and a code number will be allotted to the company. Once the Procedure 2. Obtain development permission (building permit) employer is registered with the EPFO, it will register his employees with the office from the Ahmedabad Municipal Corporation (Municipal) and open Provident Fund accounts in the name of each employee. More information Time: 55 days is available at www.epfindia.gov.in. Cost: INR 136,563 (scrutiny fee INR 5 per square meter + amenity fee INR 100 per As per an internal circular, the code number is to be allotted within 3 days of the date square meter of total built area) of submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number later: in 12 to Comments: The building company must apply for the development permit (build- 15 days. ing permission) in the prescribed form C(a) and submit it along with the following documents: Procedure 12.* Register for medical insurance at the regional 1. Certified copy of the approved layout; office of the Employees' State Insurance Corporation (National) 2. Certified copy of approved subdivisions/layout of final plot; Time: 14 days 3. Certificate of the licensed/structural engineer/designer; Cost: No cost 4. Site plan; Comments: Registration is the process by which every employer and every paid em- 5. Detailed plan prepared by a registered architect/engineer; ployee is identified for health-insurance purposes. The Employees' State Insurance 6. Certificate of undertaking in the prescribed Form No. 2(a-d) by the registered (ESI) Act (1948) provides for a fund administered by the ESI corporation in which con- architect/engineer/structural designer/clerk of works/developer/owner. tributions is made both by the employer and the employee at the rates prescribed by This is the fee schedule per square meter: the National Government. a. Scrutiny fees: INR 3 for residential buildings, INR 5 for commercial buildings and The Employer should register within 15 days after the Act becomes applicable. For industrial buildings; this purpose, the employer should submit Form 01 to the ESI regional office. Upon receipt of the registration form, the office shall allot an employer's code number b. Security deposit: INR 3 for total built area (maximum INR 2,500) for all buildings and shall inform the employer of that number through an "intimation letter" sent (refundable); by post. c. Service and amenity fees: INR 100 for total built area for all types of buildings. An employee's individual insurance involves a separate process, one which is initi- The application forms, regulations, fee calculator and case tracking system are avail- ated after employer's registration. The employer should fill out declaration forms for able on the AMC e-governance website (www.egovamc.com). AutoDCR (Automating all coverable employees and submit the same, along with Form 3, to the appropriate the Development Control Regulations) based on AutoCAD was introduced in April regional office within 10 days of the employee's appointment date. The employees' 2008. As a result, building plans can be submitted online but hard copies need to be temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get brought to the office later to pay the scrutiny fees. Most people still prefer to do the a permanent ESI card. whole process in person. The Municipality also opened new civic centers. More information is available at http://www.esic.nic.in. Procedure 3. Receive inspection from the Ahmedabad Municipal Corporation (Municipal) * This procedure can be completed simultaneously with previous procedures Time: 1 day Cost: No cost Comments: During construction and prior to completion, the building company must submit progress certificates upon completion of each stage (plinth and first floor in our case) in Forms No. 6a-d signed by the architect, structural designer, and supervising engineer. One inspection on average would occur in the case of low-rise construction that follows the plans.

Procedure 4. Submit a completion notice to the Ahmedabad Municipal Corporation (Municipal) Time: 1 day Cost: No cost 96 DOING BUSINESS IN INDIA 2009

Comments: At the end of the construction, the building company must notify the Cost: No cost AMC about the completion of construction by submitting a completion report in Comments: The inspection takes place within about 10 days of the application Form No. 7 along with a copy of the plans to initiate the final inspection and occu- submission. The inspector gives a connection cost estimate to the building company. pancy permit process. The report and all information must be submitted and signed by the owner and the concerned structural engineer/architect. Procedure 12.* Obtain final electricity inspection and "no- Procedure 5.* Receive final inspection by an engineer from the objection certificate" from the Ahmedabad Electricity Company Ahmedabad Municipal Corporation (Municipal) Ltd., Torrent Group (Private sector) Time: 1 day Time: 1 day Cost: No cost Cost: INR 50 (flat inspection fee) Comments: AMC engineers inspect within 21 days from the date of receipt of the Comments: When the installation work is finished, an electrical inspector completes notice of completion. the final inspection and hands over a final no-objection certificate along with the "test report." The test report costs INR 50. Procedure 6. Obtain the occupancy certificate (building-use Procedure 13.* Obtain permanent electricity connection from the permission) from the Ahmedabad Municipal Corporation Ahmedabad Electricity Company (Private sector) upon payment (Municipal) of final fees Time: 21 days Time: 45 days Cost: INR 6,803 (INR 5 per square meter + INR 300 scrutiny fee) Cost: INR 140,000 (INR 4,000 per kW; approximately 25% of the sum is connection Comments: The Municipal Corporation should grant the Building Use Permission fees, 75% covers the cost of labor and material) (occupancy permit) after a necessary inspection within 21 days of receipt of the completion report. Before issuing the occupancy certificate, the Municipal Corpora- Comments: To receive the electricity connection, the building company pays tion should ensure that trees are planted on the site or take suitable deposits for tree connection charges of approximately INR 140,000 (excluding the cost of labor and planting. material) as well as a security deposit of INR 750 per kW.

Procedure 7. Apply for permanent power connection to the Procedure 14.* Obtain permanent water and sewerage Ahmedabad Electricity Company (Private sector) connection upon payment of final fees from the Gujarat Water and Sewerage Board (State) Time: 1 day Time: 30 days Cost: INR 19,600 (registration fee INR 140 per kW) Cost: INR 3,500 (INR 2,500 water connection fee + INR 1,000 sewerage connection Comments: The Ahmedabad Electricity Company Limited is a private utility compa- fee) ny. The application is available online on the company's website: www.torrentpower. com. The building company must submit the application along with evidence of land Comments: To receive the connection, the building company pays charges as estab- ownership, a copy of the extract of relevant revenue records for property card, and a lished by the Gujarat Water and Sewerage Board's inspectors. The total time taken tax bill at the AEC kiosks or consumer-care mobile vans. The building company must includes waiting time to obtain the inspection (that lasts only 1 day) and additional pay registration fees. 5 days to make a payment and receive the actual connection. The building company also pays refundable meter deposit INR 4,000 for water and INR 2,000 for sewerage. Procedure 8.* Apply for permanent water and sewerage connection to the Gujarat Water and Sewerage Board (State) Procedure 15.* Obtain phone connection (with inspection) from the BSNL (National) Time: 1 day Time: 5 days Cost: INR 20 (application-form fee) Cost: No cost Comments: The Gujarat Water and Sewerage Board is an undertaking of the government of Gujarat. The application form is available at the zonal office. The building company must sign the application and submit it along with the property-tax receipt * This procedure can be completed simultaneously with previous procedures and building-use permission (in case of new buildings). There are no application fees; the form costs INR 20. DEALING WITH CONSTRUCTION PERMITS Procedure 9.* Apply for permanent phone connection at Bharat Bengaluru, Karnataka Sanchar Nigam Limited (BSNL) (National) Procedures to build a warehouse Time: 1 day Warehouse value: USD 118,331 = INR 5,203,000 Cost: INR 500 (installation charge) Data as of: February 2009 Comments: The building company must apply for the telephone connection at the Procedure 1. Obtain attested copy of approved layout by the local BSNL office. To obtain a commercial connection, the building company must Bengaluru Development Authority (Municipal) submit the application along with a proof of ownership of the business and the Permanent Account Number (PAN) card. The same tariff applies across the country Time: 3 days with minor differences due to local demand. The following charges must be paid: Cost: INR 10,000 INR 500, in case there is a waiting list for registration charges; INR 300 in installation Comments: According to the Karnataka Town and Planning Act (1961) under section charges (if fewer than 500 lines); or INR 500 (if more than 500 lines) and a refundable 17, and the Bengaluru Development Authority Act (1976) under section 15, any security deposit of INR 2,000. layout plan must be approved by the Bengaluru Development Authority.

Procedure 10.* Receive an on-site inspection by the Ahmedabad Procedure 2.* Obtain no-due-tax receipt at the House Tax Electricity Company (Private sector) Department (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: INR 100 (flat fee) Comments: The Ahmedabad Electricity Company (AEC) carries out the site Comments: The building company must submit up-to-date tax receipt to apply for inspection to estimate the labor and cost of the connection within 15 days of the the building permit. application and receipt of the registration fee. The inspection engineer issues a letter with work description and rate quotes. The building company also has to set up a Procedure 3. Obtain drawing plan/building permit approval transformer at its site. from the Commissioner of the Bengaluru Mahanagara Palike (Municipal) Procedure 11.* Receive an on-site inspection by the Gujarat Water and Sewerage Board (State) Time: 25 days Time: 1 day LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 97

Cost: INR 81,938 (license fee INR 60 per square meter of built-up area + scrutiny fee Procedure 6. Receive inspection from electricity utility provider at 5% of the license fee) BESCOM (State) Comments: The Bengaluru Mahanagara Palike Building bylaws refer to the warehouse being built as a low-rise storage building for nonhazardous goods. The Time: 1 day building company must obtain a building license (building-plan approval) from the Cost: No cost Commissioner, Bengaluru Mahanagara Palike, or an officer authorized by the Com- Comments: An inspection is carried out by a BESCOM engineer. After the inspection, missioner. The building company has to submit the application for the building-plan the building company receives an inspection letter stating the estimated cost and approval along with the following documents: describing all work to be carried out. a. Title deed/ownership documents (certified copy); b. Property card and latest assessment book; Procedure 7. File a completion certificate and apply for an c. Attested copy of approved layout by BDA or city-survey sketch issued by the occupancy permit at the Bengaluru Mahanagara Palike Department of Survey and Settlement; (Municipal) d. Up-to-date tax receipt; Time: 1 day e. Drawings; Cost: INR 2,500 (flat fee) f. Key plan; Comments: The building company must notify the Commissioner, Bengaluru Mah- anagara Palike, about completion of the construction within a month. It must attach g. Site plan; to the notice a certified application prepared by a registered architect/engineer/ h. Building plan; supervisor in Schedule VIII to apply for permission to occupy the building. i. License-fee receipt; j. Indemnity bond; Procedure 8. Receive final inspection of the construction by the k. Foundation certificate issued by a registered architect/engineer; Bengaluru Mahanagara Palike (Municipal) l. Other certificates and NOCs (if required); Time: 1 day m. Supervision certificate from the registered architect/engineer who will be under- Cost: No cost taking the supervision. Comments: The authority decides after a physical inspection whether to approve The Authority shall communicate its decision to the applicant within 30 days. While the building. During the inspection, the authority checks whether the owner had granting the building license, the Authority may impose a condition that at least two obtained the commencement certificate and submitted all required documents. trees shall be planted on sites larger than 200 square meters. The following fees apply based on the area and structure of the building: Procedure 9. Obtain the occupancy permit from the Bengaluru Mahanagara Palike (Municipal) a. Building-license fee for nonresidential property: INR 60 per square meter of the built area; Time: 30 days b. Scrutiny fees: 5% of the license fee and subject to a minimum of INR 50; Cost: No cost c. Ground rent for stocking of building materials on public land: INR 100 per square Comments: The authority should inform the applicant whether the application for meter (for small plots only); occupancy certificate is accepted or rejected within 30 days of receipt of the comple- d. Fee for additional copies of the plan: INR 400 for first 5 copies and INR 600 for tion notice. In case the application is accepted, the occupancy certificate is issued in more than 5 copies; the Form Schedule IX. e. Refundable security deposit: INR 100 per square meter. Procedure 10. Apply for permanent water and sewerage Building bylaws, building-approval application forms, and fees are available on the connection with Bengaluru Water and Sewerage Board (BWSB) website www.bmponline.org. Furthermore, a single-window clearance system has (Municipal) been introduced. Time: 1 day Procedure 4. Obtain commencement certificate (with inspection) Cost: INR 30 (flat application fee) from the Bengaluru Mahanagara Palike (Municipal) Comments: To get a new water supply and sanitary connection, the building com- Time: 2 days pany applies to BWSSB through a licensed plumber. Application forms are available for INR 30 at all BWSSB service stations and offices. New simplified joint applications Cost: INR 52,024 (INR 40 per square meter of built-up area) are available for water and sewerage connections. The prorata and other charges Comments: The authority inspects the site within 15 days of receipt of the notice to be levied are available on the BWSSB website www.bwssb.org. The website also about commencement of construction to verify that the positioning of the building features details on procedures and processing times. is according to approved plans. If the site passes the inspection, the Commissioner will issue a commencement certificate in the form prescribed in Schedule VII. The fee Procedure 11.* Apply for permanent phone connection at Bharat for the commencement certificate is INR 40 per square meter. Sanchar Nigam Limited (National) Procedure 5. Apply for permanent electricity connection with the Time: 1 day Bengaluru Electricity Supply Board (BESCOM) (State) Cost: INR 500 (flat registration fee) Time: 1 day Comments: The building company must apply for the telephone connection at the local BSNL office. To obtain a commercial connection, the building company must Cost: INR 250 (registration fee) submit the application along with a proof of ownership of the business and the Comments: BESCOM was created in 2002 as a limited-liability company wholly Permanent Account Number (PAN) card. The same tariff applies across the country owned by the Government of Karnataka. The application is available in the BESCOM with minor differences due to local demand. The following charges must be paid: office or online, together with the tariff schedule, at www.bescom.org. The building INR 500, in case there is a waiting list for registration charges; INR 300 in installation company must submit the application along with the following documents: charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable 1. Copy of the sanctioned plan of the building; security deposit of INR 2,000. 2. Memorandum and Articles of Association and Certificate of Incorporation; 3. Indemnity bond; Procedure 12.* Receive inspection from the Bengaluru Water and Sewerage Board (Municipal) 4. Permanent Account Number (PAN) number. Time: 1 day The building company shall indicate in the application the name and address of the licensed electrical contractor who will provide the interior wiring and transformer Cost: INR 5,000 (flat inspection charge) work. For all buildings over 500 square feet, the registration fee is INR 250. Comments: Inspection assesses the cost of connection and work. The inspector issues a demand notice. The following inspection-charge schedule applies: a. Areas up to 1,000 square feet: INR 500; b. Areas up to 2,000 square feet: INR 2,000; c. Areas up to 4,000 square feet: INR 4,000; d. Areas above 4,000 square feet: INR 5,000. 98 DOING BUSINESS IN INDIA 2009

Procedure 13.* Obtain permanent electricity connection (with d. Evidence in support of deposit of additional charges proportionate to the floor inspection) from BESCOM (Private sector) area and to be notified and decided by the authority in advance; Time: 30 days e. Refundable fee for the likely cost of public nuisance payable to the urban local bodies; Cost: INR 122,400 (provision for load break) f. Structural stability certificate in the prescribed Form VII signed jointly by the Comments: To obtain the connection, the building company has to install an own engineer/structural engineer and the owner; transformer. BESCOM only supervises the work. Payment and connection would take place 1 day after the work is finished. The building company has to pay provision g. Supervision certificate in Form I prepared by a registered architect/engineer. for load break (INR 122,400) and a refundable security deposit (INR 1,100 per kW for For storage and other special buildings with an area larger than 500 square meters, residential buildings and INR 1,350 per kW for commercial buildings). the building plans need to provide fire-safety specifications. The application fee is INR 400 and the following scrutiny fees apply for every applica- Procedure 14.* Obtain permanent water and sewerage tion for a building permission: connection upon final payment from BWSB (Municipal) a. Fees for residential buildings: up to 100 square meters INR 150; 100-150 square Time: 18 days meters INR 225; 150-300 square meters INR 300; for every additional 50 square Cost: INR 209,296 (water charge INR 80 per square meter of built-up area + sanitary meters or part thereof INR 300; charge INR 80 per square meter + 10 sanitary-point charge of INR 120) b. Fees for commercial building (including warehouses): up to 20 square meters, INR Comments: The following pro-rata rates apply for commercial building connections: 250; 20-50 square meters, INR 375; for every additional 50 square meters or part thereof, INR 500. a. INR 80 per square meter of built area for water supply connection; b. INR 80 per square meter of built area for sanitary connection; Procedure 3. Receive a field visit from the Bhubaneshwar c. Sanitary-point charges at INR 120 per point (minimum 5 points per floor). Development Authority (Municipal) The pro-rata charges for residential building are INR 70 per square meter. Time: 1 day Cost: No cost Procedure 15.* Obtain phone connection (with inspection) from the BSNL (National) Comments: The BDA will approve plans after a detailed scrutiny of submitted documents and an inspection that takes place within 3 days of the application. Time: 5 days Cost: No cost Procedure 4. Obtain building permit from the Bhubaneshwar Development Authority and pay final fees (Municipal) * This procedure can be completed simultaneously with previous procedures Time: 75 days Cost: INR 42,000 (sanction fee INR 3 per square foot for commercial buildings) DEALING WITH CONSTRUCTION PERMITS Comments: The BDA shall communicate either approval of the building plans in Bhubaneshwar, Orissa Form II or refusal in Form IX within 60 days of receipt of the application. The building plan that is approved by BDA remains valid for 3 years. In the case of approval, Procedures to build a warehouse the building company must deposit a sanction fee of INR 3 per square foot for Warehouse value: USD 118,331 = INR 5,203,000 commercial buildings (the rate for residential buildings is INR 1.5 per square foot). Data as of: February 2009 In addition, for commercial buildings larger than 300 square meters (including warehouses), the building company must pay a refundable security deposit of INR Procedure 1. Obtain land-use permission from the Geo- 100 per square meter of floor area. The security deposit shall be refunded within 60 Information System (G.I.S.) counter at the Bhubaneshwar days of the completion certificate. If the construction is not as per the approved plan, Development Authority (Municipal) the deposit is forfeited and a separate action is initiated against the builder. Time: 1 day Procedure 5. Obtain commencement certificate (with inspection) Cost: INR 100 (challan) from the Bhubaneshwar Development Authority (Municipal) Comments: According to the Comprehensive Development Plan (1994) the building company must apply for and obtain a land-use permission from the Bhubaneshwar Time: 7 days Development Authority (BDA) to ensure that the building adheres to the allocated Cost: No cost zone use. The Comprehensive Development Plan for Bhubaneshwar as well as all the Comments: According to the BDA Regulations (2008), the building company must site maps are available on the BDA website www.bdabbsr.in. Permission is accorded notify the BDA about the intention to start work in Form V. The notification must be outright for principal use earmarked in the different zones at the G.I.S. counter of the accompanied by the approved plan. Inspection shall happen within 7 days of receipt BDA after a payment of INR 100. The building company has to bring along the plot of notification. At the first inspection, the authority shall determine to the best of its number and a map. ability that the construction is according to the approved site plans.

Procedure 2. Apply for drawing plan/building-plan approval from Procedure 6. Receive an inspection of the construction site from the Bhubaneshwar Development Authority and pay scrutiny fees the BDA (Municipal) (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: INR 13,275 (application fee INR 400 + scrutiny fee INR 375 for first 50 square Comments: The building company must notify the BDA about completion of each meters of built-up area and additional INR 500 for each of the next 50 square meters) floor in Form VIII. According to the regulations, the Secretary of BDA may decide to Comments: The Bhubaneshwar Development Authority (Planning and Building conduct an inspection of the construction site at any stage. For a low-rise storage Standards) Regulations (2008) refer to the warehouse being built as a storage build- building, one inspection would typically suffice. ing. The building company must submit application Form I to the Bhubaneshwar Development Authority along with the following documents: Procedure 7. Apply for permanent electricity connection with the a. Four copies of plans duly signed by the applicant showing key plan, layout plan Central Electricity Supply Utility of Orissa (CESU) (Private sector) with roads, plan of all floors, four side elevations, sections, area statement, and Time: 1 day plan for sewerage and drainage disposal. All the plans shall be prepared and duly Cost: INR 500 (flat processing fee) signed by a registered technical person and builder; Comments: The building company can apply for the electricity at a subdivisional b. Evidence such as the record of rights (ROR) or a civil-court decree as regards title office of the Central Electricity Supply Utility of Orissa (CESU). The application form and possession of the land; is available at the office free of charge. It has to be submitted along with ownership c. Evidence in support of deposit of cost of public utility services if applicable; documents, building plans approved by BDA, and a processing fee of INR 500. LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 99

Procedure 8.* Apply for permanent water and sewerage Procedure 14.* Obtain permanent water and sewerage connection at the Public Health and Engineering Department connections (with inspection) from PHED (Municipal) (PHED) (Municipal) Time: 30 days Time: 1 day Cost: INR 9,000 (connection fees INR 6,000 for water + INR 3,000 for sewerage) Cost: No cost Comments: Upon receipt of the intimation letter, the building company must go Comments: To apply for water and sewerage, the building company submits two back to the PHED office to pay connection fees. The security deposit is INR 60. The separate applications at the same window at the Public Health and Engineering building company notifies the Public Health and Engineering Department once Department along with the approved building plan, receipt of property tax, and all work is finished and the final inspection takes place for an engineer to provide pipeline layout drawings. Printed application forms are available in the PHED subdi- connection. vision office for free. Procedure 15.* Obtain phone connection (with inspection) from Procedure 9.* Apply for permanent phone connection to Bharat the BSNL (National) Sanchar Nigam Limited (BSNL) (National) Time: 7 days Time: 1 day Cost: No cost Cost: INR 500 (flat installation charges) Comments: The building company must apply for the telephone connection at the local BSNL office. To obtain a commercial connection, the building company must Procedure 16. Request final inspection from the Bhubaneshwar submit the application along with a proof of ownership of the business and the Development Authority (Municipal) Permanent Account Number (PAN) card. The same tariff applies across the country, Time: 1 day with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation Cost: No cost charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable Comments: The building company's architect/structural engineer should send a security deposit of INR 2,000. notice of completion certificate in Form VI to the BDA that the building has been completed in all respects as per the approved plan. Procedure 10.* Receive on-site inspection from the Central Electricity Supply Utility of Orissa (CESU) (Private sector) Procedure 17. Receive final inspection by an engineer from the BDA (Municipal) Time: 1 day Cost: No cost Time: 1 day Comments: The building company receives an inspection from CESU and later Cost: No cost receives a "permission letter" that grants the connection, and enumerates the fixed Comments: A team of building officials shall visit the site to issue the occupancy charges and fees to be paid and works to be undertaken by the building company or certificate within 21 days. a private contractor. Procedure 18. Obtain occupancy certificate (with inspection) Procedure 11.* Receive an inspection by an assistant field from the Bhubaneshwar Development Authority (Municipal) engineer from the Public Health and Engineering Department Time: 15 days (PHED) (Municipal) Cost: INR 1,000 (flat fee) Time: 1 day Comments: The occupancy certificate is issued in Form X only after all utility ser- Cost: No cost vices for the entire building have been physically provided. The certificate states the Comments: An assistant engineer of PHED visits the construction site to carry out a use/type of occupancy of the building. feasibility study. Later, an executive engineer of PHED processes the feasibility study and sends an intimation letter to the building company, specifying all fees and work DEALING WITH CONSTRUCTION PERMITS to be carried out. Chennai, Tamil Nadu Procedure 12.* Receive inspection by the Chief Electrical Procedures to build a warehouse Inspector of Orissa State (State) Warehouse value: USD 118,331 = INR 5,203,000 Time: 1 day Data as of: February 2009 Cost: INR 5,000 (flat inspection charge) Procedure 1. Obtain planning permission for laying out of Comments: The building company carries out installation of a transformer and other land from the Chennai Metropolitan Development Authority wiring on its own following the specifications in the CESU "permission letter." CESU (Municipal) only provides supervision. Once the work is finalized, the building company must receive a final inspection by the Chief Electrical Inspector of the state, who issues Time: 30 days an "inspection report." The inspection report has to be submitted together with a Cost: INR 1,394 (scrutiny charges of INR 1.5 per square meter of the land area) "notification about completion of installation work" to CESU to obtain connection. Comments: According to the Development Control Rules (DCR) for Chennai Metropolitan Area (2004), the Chennai Metropolitan Development Authority (CMDA) Procedure 13.* Obtain electricity connection from Central carries out necessary studies and prepares a master plan of the area. To obtain a Electricity Supply Utility of Orissa and pay final fees (CESU) planning permission, the applicant submits an application in Form A accompanied (Private sector) by plans and specifications showing the laying out of land for building purposes, and an application in Form B accompanied by detailed site plan and other specifica- Time: 40 days tions to know whether the particular type of development is permissible or not. Cost: INR 51,744 (load factor charge 30,249 + supervision charges by CESU equal to Application will be scrutinized with reference to the land use for which the site has 6% of total costs = 200*140 kW + 300,000 + 30,249) been designated under the master plan. If the application satisfies the Development Comments: The building company submits the completion certificate of the electri- Control Rules, planning permission will be issued, and if not, planning permission cal installations and the "inspection letter" to CESU and pays the following fees: will be refused by CMDA within 30 days. A single window ("green channel") was 1. Security deposit INR 200 per kW (refundable); introduced for building proposals. 2. Load factor charge = 216 units per month* 140 kW + INR 4.5*2 months = INR 30,249; Procedure 2.* Notarize the affidavit/undertaking (Private sector) 3. Supervision charges by CESU, 6% of the total cost of utility connections (the total Time: 1 day also includes the transformer installation cost of INR 300,000); Cost: INR 100 (flat charge) Upon payment, an agreement is signed and electricity is released. The total time Comments: The building company must submit an affidavit/undertaking on nonju- includes waiting time for the inspections and the "inspection letter." dicial stamp paper attested by the Oath Commissioner. 100 DOING BUSINESS IN INDIA 2009

Procedure 3. Obtain building permission from the Chennai Comments: The building company must apply for the telephone connection at the Municipal Corporation (Municipal) local BSNL office. To obtain a commercial connection, the building company must submit the application along with a proof of ownership of the business and the Time: 45 days Permanent Account Number (PAN) card. The same tariff applies across the country, Cost: INR 150,459 (building permit fee of INR 1,150 per 10 square meters + INR 600 with minor differences due to local demand. The following charges must be paid: registration fee + INR 280 scrutiny fee + building plan application INR 10) INR 500, in case there is a waiting list for registration charges; INR 300 in installation Comments: The building company must submit a planning permission and build- charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable ing-plan application with the signatures of the landowner and licensed surveyor to security deposit of INR 2,000. the respective zonal office along with the following documents: a. Detailed site plan; Procedure 8.* Receive inspection and a sanction of water and b. Plans, elevations, and sectional details of the structure proposed. The construction sewerage connections from the CMWSSB (Municipal) plan has to be prepared by the licensed surveyor with his registration document Time: 1 day (725 such surveyors received their license from the Corporation of Chennai); Cost: No cost c. Key map showing the location of the site; Comments: The area engineer inspects the site and issues a sanction order to the d. Affidavit and indemnity bond; building company within 7 days. e. Clearance from the competent authority if necessary; Procedure 9.* Obtain permanent electricity connection (with f. Registered sale deed and land-ownership documents. inspection) from the Tamil Nadu State Electricity Board (State) The following fees apply: Time: 45 days 1. Building-permit fee: Cost: INR 42,000 (connection fee INR 300 per kW) a. Build-up area of 0-40 square meters: INR 105 per 10 square meters; Comments: After receiving the estimate of necessary work and final fees, the b. Build-up area of 41-100 square meters: INR 185 per 10 square meters; building company has 15 days to comply with the estimate and make the necessary c. Build-up area of 101-400 square meters: INR 460 per 10 square meters; payment. The connection fees are approximately INR 300 per kW. d. Build-up area greater than 400 square meters: INR 1,150 per 10 square meters. 2. Registration fee INR 600; Procedure 10.* Obtain permanent water connection from 3. Scrutiny fee INR 280. Chennai Metropolitan Water division (Municipal) A single window for simple categories of buildings has been introduced. Further- Time: 30 days more, the sanctioning process has been decentralized to the zonal offices. Finally, Cost: No cost the whole process has been computerized. The computerized acknowledgment of Comments: Water and sewerage connections are guaranteed within 30 days of the application is issued immediately and applications can be tracked online. The advice registration of application. to pay the fees is also available online so that the building company can make the payment and receive the permit at once. Copies of the sanctioned plans are stored to Procedure 11.* Obtain phone connection (with inspection) from be re-issued later and statistics are available online. the BSNL (National) Procedure 4. Receive an on-site inspection by an engineer from Time: 7 days the Chennai Municipal Corporation (Municipal) Cost: No cost Time: 1 day Procedure 12. Submit notice of completion to receive final Cost: No cost inspection by the Chennai Metropolitan Development Authority Comments: Once the building plan is approved, the building company can proceed (Municipal) with the construction. One inspection on average would take place for a similar type of construction. The inspections usually happen when there is a deviation and this is Time: 1 day brought to the notice of the authorities by a third party. Cost: INR 2,500 (flat fee) Comments: The applicant shall not put the buildings to use without obtaining the Procedure 5.* Apply for permanent electricity connection at completion certificate from the Chennai Metropolitan Development Authority. The Tamil Nadu State Electricity Board (State) structural engineer must file a completion report to obtain occupancy permit along with a flat fee of INR 2,500. Time: 1 day Cost: INR 500 (flat registration fee) Procedure 13.* Receive "no-objection certificate" NOC (with Comments: The building company must submit an application to the engineer's inspection) from the Tamil Nadu Fire and Rescue Service office stating the load requirements. The process is explained on the website www. Department (State) tneb.in but no forms are available online. Along with the paper application, the building company pays a registration fee of INR 500. Time: 1 day Cost: No cost Procedure 6.* Apply for permanent water and sewerage Comments: Large warehouse may be inspected by the Fire Department after the connections to the Chennai Metropolitan Water Supply and applicant applies for the final inspection. Sewerage Board (CMWSSB) (Municipal) Time: 1 day Procedure 14. Receive inspection of the completed construction by the Chennai Metropolitan Development Authority (Municipal) Cost: INR 150,000 (water and sewerage connection fees of INR 7,500 per unit of 100 square meters of plot area) Time: 1 day Comments: The building company can download the application form from the Cost: No cost CMWSSB website www.chennaimetrowater.tn.nic.in, which also explains the applica- Comments: Inspection takes place to ensure the building is technically sound and tion process. The application has to be submitted at the registration counter in the has been constructed in accordance with the laws and provisions. CMWSSB office along with sanctioned plans and proof of paid connection charges (challan). For nonresidential buildings of category "A" including the warehouse, the Procedure 15. Obtain the completion certificate from the Chennai fee is INR 7,500 for water and INR 7,500 for sewerage per a unit of 100 square meters. Metropolitan Development Authority (Municipal) After submitting the challan confirming the payment and the form, the building Time: 15 days company receives an acknowledgment with a registration number. Cost: No cost Procedure 7.* Apply for permanent phone connection at Bharat Comments: The authority shall issue the completion report within 21 days after Sanchar Nigam Limited (BSNL) (National) receiving the completion notification from the owner and after the final inspection. Time: 1 day Cost: INR 500 (flat installation charge) * This procedure can be completed simultaneously with previous procedures LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 101

DEALING WITH CONSTRUCTION PERMITS c. Attested copy of the building plan sanctioned by the Estate HUDA Officer show- Gurgaon, Haryana ing position of internal water supply lines/arrangement; d. Signatures of the licensed plumber in charge of the plumbing work. Procedures to build a warehouse Warehouse value: USD 118,331 = INR 5,203,000 Procedure 5. Receive an on-site inspection by the Water Data as of: February 2009 Department (HUDA) (Municipal) Procedure 1. Submit intent to construct to obtain physical Time: 1 day possession certificate at the Haryana Urban Development Cost: No cost Authority (Municipal) Comments: The zonal engineer of the Water Department carries out an inspection Time: 1 day within 3 days after application. Cost: No cost Procedure 6. Request and receive an inspection from HUDA Comments: The building company expresses its intention to construct a building by (Municipal) filing the Form Brs 0. The authority issues a map detailing the zoning of the plot indicating buildable and nonbuildable zones, north direction, external plot dimensions, Time: 14 days gate location, etc. The authority also provides the building company with a checklist Cost: No cost of documents to be submitted at each stage of the construction, along with the fee Comments: The owner and the architect are required to jointly submit progress structure and a copy of building bylaws. The building company applies simultane- certificates in the prescribed Form Brs-VIII at the following stages: a. damp proof ously for the building-plan approval at a single window. course level; b. roof level. While the damp proof course progress certificate is being processed, construction must be put on hold for a period of two weeks in order to Procedure 2. Obtain drawing plan approval/ building permit allow the officers to conduct the inspection. No inspection happens at the roof level. from the Haryana Urban Development Authority (Municipal) Time: 30 days Procedure 7. Apply for approval of completed construction from Cost: INR 14,006 (scrutiny fee of INR 10 per square meter of floor area + malba (con- the Fire Department (State) struction waste)/security fee of INR 2,000 with a 50% refund after the construction) Time: 1 day Comments: According to the Haryana Urban Development Authority (HUDA, Erec- Cost: No cost tion of Buildings) Second Amendment Regulations (2006) the building company Comments: An NOC from the Fire Department is required to apply for the oc- must apply for the building permit to the Estate Officer at HUDA. It must submit cupancy certificate. application in Form Brs-I, along with the following documents duly signed by a registered architect/engineer/structural engineer and a proof consultant: Procedure 8. Receive no-objection certificate (with inspection) a. Site plan; from the Fire Department (State) b. Building plans; Time: 10 days c. Details of specifications of the work to be executed in the prescribed form; Cost: No cost d. Certificate of conformity to regulations and structural safety in the prescribed Comments: The building company has to notarize an affidavit stating that no provi- form; sion of the Haryana Urban Development Authority bylaws has been violated. e. Certificate in the form of an affidavit stating that the owner and the architect have understood the provisions of the zoning sheet fully and shall not deviate from the Procedure 9. Apply for occupancy permit at the Haryana Urban prescribed norms; Development Authority (Municipal) f. Heating, ventilation, air conditioning, (HVAC) service plan, wherever required. Time: 1 day Building plans have to be prepared by architects nominated by HUDA/Municipal Cost: No cost Authority. The approval of the application is valid for 2 years. Comments: Upon completion of the construction, the building company and the The applicant pays a scrutiny fee of INR 10 per square of the floor area, and a malba/ architect must submit final completion drawings, along with Form Brs III A/B and the security fee of INR 1,000 if the plot surface is under one kanal (505 square meters) following documents: and INR 2,000 if it exceeds it. Fifty percent of the security fee amount shall be depos- a. Self-assessment of building violations, jointly signed by the owner and architect; ited as nonrefundable security. b. Affidavit that no provision of the Haryana Urban Development Authority bylaws HUDA has introduced a single-window system, which allows applicants to submit all has been violated; applications at the same counter. c. Photographs of front, side, rear setbacks, front and rear elevation of the building Procedure 3.* Receive the demarcation of a plot by the Junior along with photographs of essential areas, such as cut-outs and shafts from the roof top. A CD containing all photographs must also be submitted. Engineer of HUDA (Municipal) Time: 10 days Procedure 10. Receive final inspection of the construction by the Cost: No cost Haryana Urban Development Authority (Municipal) Comments: After the building plans have been approved, the building company Time: 1 day requests a demarcation of the plot from HUDA Authorities at the single window, Cost: No cost either in writing or in person. This procedure is known as "plot-handing-over." A junior engineer comes to the plot to demarcate the plot physically, then hands over Comments: The chief engineer inspects the construction site and imposes fines in a document certifying that "physical possession has been granted." case of violations.

Procedure 4. Apply for permanent water connection to the Procedure 11. Obtain the occupancy permit from the Haryana Water Department of Haryana Urban Development Authority Urban Development Authority (Municipal) (Municipal) Time: 20 days Time: 1 day Cost: No cost Cost: INR 1,000 (flat connection fee of INR 1,000 + refundable security deposit) Comments: The authority shall issue the occupancy certificate in Form Brs VI. Comments: The building company applies for water connection after receiving approval of the building plan. The application form is available at the HUDA office or Procedure 12. Apply for permanent electricity connection to can be downloaded online at http://huda.nic.in/policy.html. The building company Dakshin Haryana Bijli Vitran Nigam (DHBVN) (State) submits the application at a single window along with the following documents: Time: 1 day a. Attested copy of the certificate of the Estate Officer HUDA about handing over Cost: INR 3,500 (processing charge of INR 25 per kW-maximum INR 10,000) possession of plot; b. Attested copy of letter of Estate HUDA Officer which grants permission to erect the building; 102 DOING BUSINESS IN INDIA 2009

Comments: The building company applies for industrial supply. The application Procedure 19.* Obtain phone connection (with inspection) from form is available free of cost at the local office of the Nigam or online at www.dhbvn. the BSNL (National) com. Along with the application, the building company submits the ownership Time: 5 days documents, articles of association, and a copy of the layout plan. The submitted application is scrutinized by a consumer clerk and omissions are immediately rectified Cost: No cost with the applicant. The completed file is then passed to the concerned joint engineer to assess the technical feasibility and cost of the connection. The file is returned to * This procedure can be completed simultaneously with previous procedures the consumer clerk, who, if the file is accepted, asks the consumer to pay the following fees: DEALING WITH CONSTRUCTION PERMITS a. Advance consumption deposit INR 1000 per kW (refundable); Guwahati, Assam b. Processing charge of INR 25 per kW (and maximum of INR 10,000). Procedures to build a warehouse Procedure 13.* Apply for permanent sewerage connection to the Warehouse value: USD 118,331 = INR 5,203,000 water department of Haryana Urban Development Authority Data as of: February 2009 (Municipal) Procedure 1. Obtain land-use permit from the Guwahati Time: 1 day Metropolitan Development Authority (Municipal) Cost: INR 500 (flat connection fee) Time: 30 days Comments: The building company submits the following documents to apply for the sewerage connection at the HUDA Water Department: Cost: INR 500 (flat fee) a. Attested copy of permission of HUDA to cut the road; Comments: According to the building bylaws for Guwahati Metropolitan Area (2006), the building company has to obtain a land-use certificate from the Guwahati b. Attested copy of occupation certificate for the building issued from Estate Officer, Metropolitan Development Authority (GMDA). All layout plans must be signed by HUDA; the owner before being submitted to the GMDA. To obtain a land-use certificate, the c. Copy of the building plan clearly showing the positions of the main sewer line following fees apply: and internal sewer manholes/sewer lines; a. Residential: INR 250; d. Completion certificate, drafted by a licensed plumber, of the sanitary installations. b. Nonresidential: INR 500; In addition to the INR 500 connection fee, there is a refundable deposit of INR 2,000. c. Filling station/medium industry: INR 1,000; The application with information on rates is available online at www.huda.nic.in/ d. Cinema/theater: INR 1,500. policy.html. The building company must pick up all documents regarding land-sale permission Procedure 14.* Apply for telephone connection from Bharat and other documents, such as building permission, at the reception counter of the Sanchar Nigam Limited (BSNL) (National) GMDA. Time: 1 day Procedure 2. Apply for building permit approval from Guwahati Cost: INR 500 (flat installation fee) Metropolitan Development Authority (Municipal) Comments: The building company must apply for the telephone connection at the Time: 1 day local BSNL office. To obtain a commercial connection, the building company must Cost: No cost submit the application along with a proof of ownership of the business and the Permanent Account Number (PAN) card. The same tariff applies across the country, Comments: The newly revised building bylaws for the Guwahati Metropolitan Area with minor differences due to local demand. The following charges must be paid: (2006) refer to the warehouse being built as "godown/industrial building." According INR 500, in case there is a waiting list for registration charges; INR 300 in installation to Article 5, if the building company intends to erect, re-erect or make material charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable alterations in a building located within the jurisdiction of the Guwahati Metropolitan security deposit of INR 2,000. Development Authority, it is required to notify, in writing, the Chairman of the GMDA and apply for a building permit by submitting the following documents: Procedure 15.* Receive electricity sanction letter and make the a. Application form; final payment to DHBVN (State) b. Plans of the site and the building and service plan in triplicate in blue or white Time: 1 day prints; Cost: INR 105,000 (line charge INR 750 per kW) c. Supervision certificate of the licensed architect/structural engineer; Comments: DHBVN sends a demand notice to the building company by email or d. Ownership documents. mail to pay final line charges of INR 750 per kW. DHBVN inspects and releases the All forms are available online on the GMDA website www.gmda.co.in. connection. Procedure 3. Receive inspection from the Guwahati Metropolitan Procedure 16.* Receive an on-site inspection for the sewerage Development Authority (Municipal) connection by HUDA (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: According to the bylaws, the inspection shall be made within 10 days. GMDA determines whether the submitted plans comply with the requirements of the building bylaws. Procedure 17.* Obtain permanent electricity connection (with inspection) from Dakshin Haryana Bijli Vitran Nigam (DHBVN) Procedure 4. Obtain building permission from GMDA and pay (State) final fees (Municipal) Time: 25 days Time: 60 days Cost: No cost Cost: INR 26,012 (application fee of INR 20 per square meter of built-up area) Comments: The GMDA issues the building permission once the building company pays fees as per the following schedule: Procedure 18.* Obtain permanent water and sewerage a. Assam-type, pitched-roof framed structure with Ekra or spilt bamboo walls with connections from HUDA (Municipal) plaster: INR 1 per square meter; Time: 15 days b. Pitched-roof brick with cement plaster wall: INR 2 per square meter; Cost: No cost c. Residential building: INR 5 per square meter of plinth area for ground floor and subsequent floors;

d. General commercial building: 3 times the rate of new residential buildings; e. Industrial and godowns: 4 times the rate of new residential buildings. LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 103

According to the bylaws, the GMDA shall issue the building permission within 60 a. INR 5,000 for residential buildings; days. b. INR 7,000 for industrial buildings; c. INR 10,000 for commercial buildings. Procedure 5. Request and receive inspection from GMDA (Municipal) Time: 14 days Procedure 11.* Apply for permanent phone connection at Bharat Cost: No cost Sanchar Nigam Limited (National) Comments: According to Article 16 of the bylaws, the building company must Time: 1 day notify the GMDA upon commencement of the work. The GMDA has 14 days to verify Cost: INR 1,000 (installation fee INR 500 + registration fee INR 500) the building is being constructed in accordance with the sanctioned plans and the construction must be held up. If the authority fails to make the inspection within the Comments: The building company must apply for the telephone connection at the specified period, then it shall be presumed that the authority has no objection. The local BSNL office. To obtain a commercial connection, the building company must construction engineer also informs the GMDA about the completion of work up to submit the application along with a proof of ownership of the business and the plinth level, 1st floor, and upper floor. After being notified, the GMDA may inspect, Permanent Account Number (PAN) card. The same tariff applies across the country, but in practice, it rarely does. with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation Procedure 6. File a completion certificate and apply for an charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable security deposit of INR 2,000. occupancy permit by the Guwahati Metropolitan Development Authority (Municipal) Procedure 12.* Receive inspection from the electricity provider Time: 1 day (LAEDCL) (State) Cost: No cost Time: 1 day Comments: The building company must notify the GMDA about completion Cost: No cost through the licensed architect, engineer, or structural engineer. The building com- Comments: LAEDCL conducts an inspection, after which the electricity provider will pany must submit the completion certificate, four sets of completion plans, and the send the applicant a demand note detailing the estimated charges for the connec- relevant NOCs, if required (no fire NOC is required in Guwahati for buildings lower tion. than 15.8 m). Procedure 13.* Receive inspection from the Water Works Procedure 7. Receive final inspection of the construction by the Department at the GMC (Municipal) Guwahati Metropolitan Development Authority (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: No cost

Procedure 8. Obtain occupancy permit from the Guwahati Metropolitan Development Authority (Municipal) Procedure 14.* Obtain permanent electricity connection from LAEDCL (State) Time: 21 days Time: 45 days Cost: No cost Cost: INR 100,000 (nonrefundable meter security deposit of INR 100,000 + refund- Comments: After receiving the completion certificate, the GMDA has 21 days to able security deposit ) sanction or refuse to issue the occupancy certificate. After 21 days, the building is assumed to have been approved by GMDA for occupancy if the warehouse has been Comments: The building company has up to 7 days to pay all charges specified constructed as per the sanctioned plans. in the demand note. The payment is done at the LAEDCL's SDO office. The other charges for a 140 kW connection are as follows: Procedure 9. Apply for electricity connection at Low Assam a. Load security deposit to be returned once the service is discontinued. The sum to Electricity Distribution Company Limited (LAEDCL) (State) be paid amounts to two-months' charges (energy charge of INR 4.5 per kWh (140 x 120 = 16,800 x 4.50 = 139,440); Time: 1 day b. Meter security deposit (nonrefundable) INR 100,000. Cost: INR 10,000 (flat application fee) Comments: The building company applies for electricity connection using the form Procedure 15.* Obtain permanent water and sewerage available online at www.laedcl.gov.in. The building company has to pay an applica- connections from the GMC (Municipal) tion fee of INR 10 and submit the application along with the following documents at the LAEDL's subdivision office: Time: 35 days a. Proof of ownership of the premises; Cost: No cost b. Map with the proposed location of the plant/office, etc.; c. Memorandum and Articles of Association and Certificate of Incorporation; Procedure 16.* Obtain phone connection (with inspection) from d. Proof of permanent residential address of the consumer; the BSNL (National) e. Test report from an electrical contractor. Time: 7 days A transformer is mandatory for all connections above 25 kW. For a 3-phase connec- Cost: No cost tion with 140 kW, a 250 kW transformer is required, keeping in mind future load enhancements. The approximate cost for installing the transformer is INR 250,000. Doing Business assumes that the installation costs do not count toward the admin- * This procedure can be completed simultaneously with previous procedures istrative costs. DEALING WITH CONSTRUCTION PERMITS Procedure 10.* Apply for water and sewerage connections at Guwahati Municipal Corporation (Municipal) Hyderabad, Andhra Pradesh Time: 1 day Procedures to build a warehouse Cost: INR 10,000 (standard application fee for commercial buildings) Warehouse value: USD 118,331 = INR 5,203,000 Data as of: February 2009 Comments: In those parts of Guwahati where a GMC water supply network exists, the building company may apply for a water connection using the form available Procedure 1. Obtain a sanctioned land-use permission (layout) of online at www.guwahatimunicipalcorporation.com. The form can also be collected the plot from Greater Hyderabad Municipal Corporation (GHMC) from the Commissioner's office of the Guwahati Water Supply Department free of cost. (Municipal) Following standard fees are paid at the time of application: Time: 2 days Cost: INR 600 (flat fee up to 2 acres) 104 DOING BUSINESS IN INDIA 2009

Comments: According to the Layout Rules, the building company must obtain sanc- Procedure 5. Apply for permanent electricity connection with A.P. tioned layout plans from the GHMC. To apply, the building company submits Form Central Power Distribution Company (State) A, along with ownership details and drawing plans to the Planning Department. The Time: 1 day fees for this procedure are as per the schedule of town-planning charges and fees effective 01-07-08: Cost: INR 25 (flat application fee) a. Up to 2 acres, INR 600 per copy; Comments: To apply for the electricity connection, the building company submits an application form to the executive engineer of A.P. Central Power Distribution b. For every additional acre of land, INR 150 per copy. Company along with the following documents: Procedure 2. Apply for building permit and pay initial fee at the a. Site plan; Greater Hyderabad Municipal Corporation (GHMC) (Municipal) b. Certificate of incorporation; Time: 1 day c. MOA and AOA. Cost: INR 3,121 (2% of the building-permit fee of INR 120 per square meter) The application form is available for INR 25 either online at www.aptransco.gov.in or at the designated customer-service center for the warehouse's location. Comments: When applying for the building permit, the building company must submit the following documents to the Greater Hyderabad Municipal Corporation: The building company has to pay a refundable security deposit of INR 1,000 per kW. Fifty percent of these charges are payable when applying. a. Building application duly signed by the owner, builder, architect, and engineer; b. Declaration forms duly signed by the owner and attested by the Gazette Officer; Procedure 6.* Apply for water and sewerage connections from c. Copy of architect or engineer's license; Hyderabad Metropolitan Water Supply and Sewerage Board d. Town survey record from MRO or approved layout; (HMWSSB) (Municipal) e. Previous sanctioned plan (if applicable); Time: 1 day f. Urban Land Ceiling (ULC) clearance for above 1,000 square meters land plot (does Cost: INR 500 (flat application fee) not apply in our case); Comments: The building company can apply for the water and sewerage connec- g. ULC affidavit (below 1000 square meters); tions at the "Single-Window Cell" at the Hyderabad Metropolitan Water and Sewer- h. Ownership documents (two sets attested by the Gazette Officer); age Board. It submits the application form along with a fee of INR 500, ownership i. Up-to-date property tax receipt; documents, land details, copy of property tax, and the building-plan approval. j. Nonjudicial stamp paper; Procedure 7.* Apply for telephone connection from Bharat k. Building plans (1+5 copies) duly signed by owner, architect, structural engineer. Sanchar Nigam Limited (BSNL) (National) Fire NOC is required for buildings higher than 15 meters. Time: 1 day Building permit fees for commercial, institutional, industrial, and other buildings are Cost: INR 500 (flat installation charge) as per the following schedule: Comments: The building company must apply for the telephone connection at the a. up to 200 square meters of plot area: INR 50 per square meter of built-up area; local BSNL office. To obtain a commercial connection, the building company must b. 201-500 square meters of plot area: INR 90 per square meter of built-up area; submit the application along with a proof of ownership of the business and the c. 501-750 square meters of plot area: INR 100 per square meter of built-up area; Permanent Account Number (PAN) card. The same tariff applies across the country, d. above 750 square meters: INR 120 per square meter of built-up area; with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation e. High-rise buildings: INR 150 per square meter or built-up area. charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable 2% of the building-permit fees shall be paid along with the building application, security deposit of INR 2,000. subject to a maximum of INR 10,000 as initial fees. The balance of the building- permit fee together with other fees shall be levied and collected before the issuance Procedure 8.* Receive inspection from the electricity provider of permission/sanction. A.P. Central Power Distribution Company (State) The GHMC website www.ghmc.gov.in provides all relevant information online: Time: 1 day building-permission-process details, building-fee schedule, status of the application, approved plans, application forms, list of licensed architects, as well as all relevant Cost: No cost laws. The authority has also posted a model building plan that provides guidelines Comments: During the inspection, the A.P. Central Power Distribution Company for other applicants. conducts a feasibility study and assesses all the charges.

Procedure 3. Obtain approval of plans (building permit) and Procedure 9.* Receive inspection from Hyderabad Metropolitan pay final fees at the Greater Hyderabad Municipal Corporation Water Supply and Sewerage Board (Municipal) (GHMC) (Municipal) Time: 1 day Time: 28 days Cost: No cost Cost: INR 390,960 (98% of the building-permit fees of INR 120 per square meter + Comments: Within 1 week, HMWSB prepares a feasibility report based on an inspec- betterment charges of INR 175 per square meter + water-harvesting fee INR 8 per tion of the site and sends a demand notice to the applicant enumerating the charges square meter of built-up area) to be paid. Comments: After the application has been approved, the GHMC informs the building company of the remaining charges to be paid, which include the remaining Procedure 10.* Receive inspection and permission from the state balance of the building-permit fee (98%) and the following other charges: Electrical Inspector (State) a. Betterment charges for internal and external amenities for commercial, institu- Time: 1 day tional, industrial, and other buildings of INR 175 per square meter of plot area; Cost: No cost b. Rainwater harvesting charges of INR 8 per square meter of built-up area for all Comments: The building company must obtain permission from the Electrical categories of buildings. Inspector of the Government of Andhra Pradesh in Hyderabad, which takes about 14 Payment occurs when the permit is issued. days. The building company then submits a copy of this permission along with the structural and service line charges to obtain the final connection. Procedure 4. Receive inspection from the Greater Hyderabad Municipal Corporation (GHMC) (Municipal) Procedure 11.* Obtain permanent electricity connection with Time: 1 day inspection from A.P. Central Power Distribution Company (State) Cost: No cost Time: 20 days Comments: The building company must notify the Greater Hyderabad Municipal Cost: INR 150,000 (service and connection charges) Corporation about commencement of foundation, basement, and roof work. After Comments: The building company pays the remaining 50% of the refundable being notified, engineers from the GHMC inspect the site on several occasions. In the security deposit and service and connection charges as established during the case of a low-rise construction of buildings below 15 m in height, one inspection will inspection: approximately INR 150,000. usually take place during the construction. LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 105

Procedure 12.* Obtain permanent water and sewerage 3. Proposal information about the building and its use, along with the endorsement connections from Hyderabad Metropolitan Water Supply and of the architect and the fee. Sewerage Board (Municipal) The fees are set by the Madhya Pradesh Bhumi Vikas Rules (1984) and vary depend- Time: 15 days ing on the type of building. Cost: INR 3,300 (flat charge) Procedure 3. Receive an inspection from the Indore Municipal Comments: After receiving an estimate of the costs, the building company goes to Corporation (Municipal) the office and pays connection charges of between INR 2,500-4,000 and a refundable security deposit of INR 250. Once the payment is completed, it takes another week Time: 1 day for the utility provider to finalize the water connection. Cost: No cost Comments: Once the Municipal Corporation receives the application, it inspects the Procedure 13.* Obtain phone connection (with inspection) from site and scrutinizes the maps before sanctioning the building plan. the BSNL (National) Time: 5 days Procedure 4. Obtain building permit from the Indore Municipal Cost: No cost Corporation after paying final fees (Municipal) Time: 40 days Procedure 14. Apply for occupancy permit at the Greater Cost: No cost Hyderabad Municipal Commissioner's offices (Municipal) Comments: The Indore Municipal Corporation shall sanction the plan within 30 days Time: 1 day of receiving the building-permit application. Cost: No cost Procedure 5. Receive an on-site inspection by an engineer from Comments: The building company must submit a notice of completion through the registered architect and licensed builder/developer along with prescribed docu- the Indore Municipal Corporation (Municipal) ments and plans to the sanctioning authority to apply for the occupancy certificate Time: 1 day that is mandatory for all buildings. Cost: No cost Comments: The registered engineer or architect or any other officer designated by Procedure 15. Receive final inspection of the construction by the the Indore Municipal Corporation may at any time during the construction of the GHMC (Municipal) building inspect the site to ensure that the building adheres to the building bylaws Time: 1 day and regulations. The inspections are random. Usually one inspection takes place Cost: No cost during the construction of a low-rise building (below 15 m in height). Comments: The authority inspects whether the building is as per the approved plan, Procedure 6. Request final inspection and apply for service e.g., with regard to the number of floors, external setbacks, parking space provision, and abutting road width. certificate at the Indore Municipal Corporation (Municipal) Time: 1 day Procedure 16. Obtain occupancy permit from the GHMC Cost: No cost (Municipal) Comments: The building company must notify the Indore Municipal Corporation of Time: 20 days the completion of the civil work in the building and apply for the service certificate Cost: No cost necessary to obtain service connections, especially water, sewerage, and electricity. Comments: The authority shall communicate the approval or refusal of the oc- Procedure 7. Receive inspection of the completed civil work in cupancy certificate within 15 days. the building from the Indore Municipal Corporation (Municipal) Time: 1 day * This procedure can be completed simultaneously with previous procedures Cost: No cost

DEALING WITH CONSTRUCTION PERMITS Procedure 8. Obtain service certificate from the Indore Municipal Indore, Madhya Pradesh Corporation to apply for utility connections (Municipal) Procedures to build a warehouse Time: 15 days Warehouse value: USD 118,331 = INR 5,203,000 Cost: No cost Data as of: February 2009 Comments: If the authority does not reply within 15 days of the notification date, the service certificate is deemed granted. Procedure 1. Obtain land-use permission from the Indore Development Authority (Municipal) Procedure 9. Obtain "no-objection certificate" from the Pollution Time: 30 days Board of the District Industries Centre in Indore (Municipal) Cost: INR 50 (INR 50 per hectare) Time: 4 days Cost: INR 200 Procedure 2. Apply for the building permission and pay initial fee Comments: Before applying for an electricity connection, the building company at the Indore Municipal Corporation (Municipal) must obtain a "no-objection certificate" from the Pollution Board of the District Time: 1 day Industries Centre in Indore, for a nominal fee of INR 200. The warehouse falls in the Cost: INR 65,030 (building-permit fee INR 50 per square meter) category of industrial buildings according to the bylaws in Madhya Pradesh. Comments: According to Rule 17 of the Madhya Pradesh Bhumi Vikas Rules (1984), the building company must submit a "Form for first application to develop, erect, Procedure 10. Apply for a permanent power connection to the re-erect or to make alteration in any place in a building" to the Indore Municipal Madhya Pradesh Paschim Kshetra Vidyut Vitran Company Limited Corporation, along with the following plans and specifications: (State) 1. Set of plans (key plans, site plans, layout plans, building plans, and service plan) in Time: 1 day quadruplicate, duly signed by the architect/structural engineer/supervisor/town Cost: INR 2,500 (flat application fee) planner; Comments: The application form for electricity connection is available at the Divi- 2. Proof of ownership; sional Office or Circle office. There is an application fee of INR 2,500. The applicant submits the form with ownership documents and a "Certificate from the Pollution Board," issued by the District Industries Centre in Indore. 106 DOING BUSINESS IN INDIA 2009

Procedure 11.* Apply for permanent water and sewerage Procedure 18.* Obtain phone connection (with inspection) from connections to the Water Department (Municipal) the BSNL (National) Time: 1 day Time: 3 days Cost: INR 10 Cost: No cost Comments: The building company must apply for water and sewerage connections at the zonal office under whose jurisdiction the warehouse is located. The building Procedure 19. Apply for an completion certificate and occupancy company must submit the application form, available in the office for INR 10, along permit at the Indore Municipal Corporation (Municipal) with proof of ownership and address. Time: 1 day Cost: No cost Procedure 12.* Apply for permanent phone connection at Bharat Sanchar Nigam Limited (National) Comments: Before the building can be legally occupied, the building company must apply for a completion certificate to certify that the building conforms to the Time: 1 day sanctioned plan. Cost: INR 1,000 (INR 500 installation charge +INR 500 registration charge) Comments: The building company must apply for the telephone connection at the Procedure 20. Receive final inspection of the construction by the local BSNL office. To obtain a commercial connection, the building company must Indore Municipal Corporation (Municipal) submit the application along with a proof of ownership of the business and the Time: 1 day Permanent Account Number (PAN) card. The same tariff applies across the country, Cost: No cost with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation Comments: Any engineer/architect/supervisor from the Indore Municipal Corpora- charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable tion may inspect the construction site for the final inspection without prior notice. security deposit of INR 2,000. Procedure 21. Obtain an occupancy permit (Municipal) Procedure 13.* Receive an on-site inspection by the Madhya Time: 30 days Pradesh Paschim Kshetra Vidyut Vitran Company Limited (State) Cost: No cost Time: 1 day Comments: The occupancy permit shall be issued within 30 days. Cost: No cost Comments: An electrical engineer visits the site and prepares an estimate of the * This procedure can be completed simultaneously with previous procedures connection costs for the applicant. DEALING WITH CONSTRUCTION PERMITS Procedure 14.* Receive an on-site inspection from the Water Department (Municipal) Jaipur, Rajasthan Time: 1 day Procedures to build a warehouse Cost: No cost Warehouse value: USD 118,331 = INR 5,203,000 Comments: The Water Department conducts an on-site inspection within 3 days Data as of: February 2009 of receipt of the application. The building company receives an inspection report in Procedure 1. Obtain land-use permission from Jaipur which the connection costs are detailed. Development Authority (Municipal) Procedure 15.* Obtain permission (with inspection) from the Time: 25 days Electrical Inspector of Madhya Pradesh (State) Cost: INR 3,010 (application charge INR 10 + flat fee INR 3,000 when no conversion Time: 7 days is necessary) Cost: INR 200 (flat inspection fee) Comments: Before starting a new construction, the building company must obtain a land-use permit. The building company has to fill out the application available for INR Comments: In addition to the feasibility inspection, the building company must 10 in one of the Citizen Care Centers and submit it along with ownership documents obtain a clearance from the state electrical inspector of Madhya Pradesh. The permis- and a map of the area. The conversion charges (if applicable) are immediately paid. sion is prepared in about a week for a nominal fee of INR 200. The final land-use permit can be picked up in the Center as well. The approval is faster when the commercial approval already exists, i.e., the building company is construct- Procedure 16.* Obtain permanent electricity connection from MP ing in a zone where warehouses are permitted and no conversion is necessary. Paschim Kshetra Vidyut Vitran Company Limited upon payment of final fees (State) Procedure 2.* Notarize affidavits (Private sector) Time: 30 days Time: 1 day Cost: INR 14,000 (service connection charge INR 100 per kW) Cost: INR 100 (flat fee) Comments: The building company signs an agreement and makes the following Comments: The building company has to submit a notarized affidavit on a stamp payments at the office: paper when applying for the building permit. a. Service connection charge of INR 100 per kW; b. Refundable security deposit equal to 45 days of consumption, or approximately Procedure 3. Apply for building-plan approval at the Jaipur INR 300,000. Development Authority (Municipal) The building company is also requested to install a distribution transformer sub- Time: 1 day station at its own cost of approximately INR 200,000. Cost: INR 300 (flat application fee) Comments: According to the Jaipur Development Authority Building Rules (2000), Procedure 17.* Obtain permanent water and sewerage the building company must submit an application form to the Jaipur Development connections from the Water Department upon payment of final Authority along with the following documents: fees (Municipal) a. Ownership documents; Time: 30 days b. Ownership certificate; Cost: INR 2,750 (flat connection charge) c. Original site map and a map in case of subdivision and reconstitution; Comments: The building company must pay connection charges of INR 2,750 and d. Building plan required to be approved (ammonia print in 3 copies); make an advanced payment equal to 12 months of water consumption, or INR 180 e. 2 copies of affidavit on nonjudicial stamp paper duly notarized; per month at the zonal office. After payment is made, the building company and the municipality sign an agreement and within 7 days connection is completed by a f. NOC of neighbor and indemnity bond in case of basement; licensed plumber sent by the Municipality. g. Affidavit of the architect; h. House tax receipt; LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 107 i. Lease receipt (if applicable). Procedure 11.* Apply for sewerage connection to the Jaipur A flat application fee of INR 300 applies for commercial buildings and INR 100 for Municipal Corporation (Municipal) residential buildings. A no-objection certificate from the Fire Department is required Time: 1 day for buildings with a plot area larger than 1,000 square meters and height above 15 Cost: INR 37,332 (sewerage connection charge INR 24 per square yard) meters, but Doing Business assumes a smaller warehouse and plot. Comments: The building company applies for sewerage connection to the Jaipur Procedure 4. Receive inspection by the Jaipur Development Municipal Corporation and pays the following fees: Authority (JDA) (Municipal) a. Residential buildings: INR 12.5 per square yard; Time: 1 day b. Commercial buildings: INR 24 per square yard. Cost: No cost Procedure 12.* Apply for water connection from Public Health Comments: Application and site are scrutinized. If the application is fit to be ap- Engineering Department (State) proved, the Municipality sends a demand letter to the building company stating the applicable building-permit fees and development charges. The rate depends on the Time: 1 day proposed uses and the floor area. Cost: INR 750 (water connection INR 100 + water meter INR 650) Comments: The building company applies for the water connection to the PHED by Procedure 5. Obtain building plan approval from the Jaipur submitting an application along with a copy of the site plan, sale deed, and a photo- Development Authority and pay final fees (Municipal) graph of the applicant along with his authorization. Information on the application Time: 60 days process is available online at www.rajwater.gov.in. Cost: INR 26,200 (building-plan approval fee INR 2,000 for 100 square meters + INR 1,000 for every additional 50 square meters) Procedure 13.* Apply for permanent phone connection at Bharat Sanchar Nigam Limited (National) Comments: The building company pays the building-permit fees for commercial buildings according to the following formula: Time: 1 day a. Up to 100 square meters of built up area: INR 2,000; Cost: INR 500 (INR 500 installation charges) b. INR 1,000 for every additional 50 square meters. Comments: The building company must apply for the telephone connection at the local BSNL office. To obtain a commercial connection, the building company must Furthermore, the building company deposits a refundable malba (construction submit the application along with a proof of ownership of the business and the waste) fee according to the following schedule: Permanent Account Number (PAN) card. The same tariff applies across the country, a. Up to 500 square meters: INR 1,000; with minor differences due to local demand. The following charges must be paid: b. 500-1000 square meters: INR 5,000; INR 500, in case there is a waiting list for registration charges,; INR 300 in installation c. Above 1,000 square meters: INR 10,000. charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable security deposit of INR 2,000. Procedure 6. Receive on-site inspection by the Jaipur Development Authority (Municipal) Procedure 14.* Receive inspection from electricity provider and receive sanction (JVVNL) (Municipal) Time: 1 day 1 day Cost: No cost Time: No cost Comments: The building company can begin construction without further notifica- Cost: tion. During construction, there is approximately one ad-hoc inspection by the JDA. Comments: The inspection happens within a couple of days of receipt of the application. Procedure 7. File completion certificate and apply for occupancy permit at the JDA (Municipal) Procedure 15.* Receive inspection from the Public Health Engineering Department (Municipal) Time: 1 day 1 day Cost: No cost Time: No cost Comments: The building company must notify the authorities about the completion Cost: of construction. The final inspection happens within a week.

Procedure 8. Receive final inspection of the construction by the Procedure 16.* Obtain permanent electricity connection from JDA (Municipal) Jaipur Vidhyut Vitran Nigam Limited (JVVNL) (Municipal) Time: 1 day Time: 35 days Cost: No cost Cost: No cost

Procedure 9. Obtain occupancy permit from the JDA (Municipal) Time: 20 days Procedure 17.* Obtain permanent sewerage connection from the Cost: No cost Jaipur Municipal Corporation (Municipal) Comments: After obtaining the occupancy certificate, the building company can Time: 30 days reclaim the malba (construction waste) security fee deposited at the time of the Cost: No cost building-plan approval. Procedure 18.* Obtain permanent water connection from PHED Procedure 10. Apply for sanction of power connection at Jaipur (Municipal) Vidhyut Vitran Nigam Limited (JVVNL) (Municipal) Time: 10 days Time: 1 day Cost: No cost Cost: INR 105,000 (registration fee INR 5,000 + INR 100,000 for connection/inspection) Procedure 19.* Obtain phone connection (with inspection) from Comments: The building company applies to the JVVNL along with an affidavit the BSNL (National) and the load request form. When applying, the building company pays registration Time: 5 days charges of INR 5,000 and the cost of inspection and connection of INR 100,000. The Cost: No cost building company will also have to install a transformer of their own. The installation of the transformer will cost up to INR 500,000 and the related cabling INR 100,000. The application should soon be available online. * This procedure can be completed simultaneously with previous procedures 108 DOING BUSINESS IN INDIA 2009

DEALING WITH CONSTRUCTION PERMITS 2. Building of the built area of 100-150 square meters: Kochi, Kerala a. Cellar or basement floor and ground floor: INR 2.5 per square meter; Procedures to build a warehouse b. First floor: INR 2.5 per square meter; Warehouse value: USD 118,331 = INR 5,203,000 c. Second floor and above: INR 4 per square meter. Data as of: February 2009 3. Building of the built area exceeding 150 square meters: a. Cellar or basement and ground floor: INR 7 per square meter; Procedure 1. Apply for layout approval and location approval b. First floor: INR 10 per square meter; certificate to the Municipal Corporation of Kochi (Municipal) c. Second floor: INR 15 per square meter. Time: 1 day Cost: INR 1,100 (application fee of INR 400 + INR 100 for every 50 m2 over 1000 m2) Procedure 8. Receive an on-site inspection by the Chief Engineer Comments: The building company must obtain layout approval according to Sec- of the Municipal Corporation (Municipal) tion 387.a. of the Kerala Municipality Act (1994). For the usage of any plot exceeding Time: 1 day 0.5 hectares and a layout of buildings exceeding 500 square meters, approval of the site has to be obtained from the Chief Town Planner. The form is available online at Cost: No cost http://www.kerala.gov.in/dept_municipal/municipal.htm. Comments: The building company can start construction without further notice. Usually one inspection takes place during the construction. Procedure 2.* Apply for a "no-objection certificate" (NOC) from the Thiruvanthapuram Fire and Rescue Services (State) Procedure 9. Apply for final NOC from the Kerala Fire and Rescue Time: 1 day Service (State) Cost: INR 9,290 (INR 10 per square meter for both Fire NOCs, INR 10,000 paid at time Time: 1 day of applying for the first NOC) Cost: INR 3,006 Comments: According to Rule 58, Chapter VII of the Special Provision for Certain Comments: Upon application for the final NOC from Fire and Rescue Services as Occupancy Buildings of the Kerala Municipal Building Rules (1999), all storage or required for all storage and warehouse buildings, the building company pays the rest warehousing occupancy buildings, irrespective of the number of floors, require a of the fee. certificate of approval from the Director of Fire Force or an officer authorized by him for issuing building and occupancy permit-. The building company has to apply, sub- Procedure 10.* Submit a completion report to the Municipal mit provisional fire safety drawings, and make a payment at the Directorate of Fire in Corporation of Kochi (Municipal) Kochi. The fee is INR 10 per square meter for initial and final inspections. Time: 1 day Procedure 3. Receive inspection by the Chief Town Planner of the Cost: No cost Municipal Corporation of Kochi (Municipal) Comments: The building company shall, upon completion of the work for which the building permit was issued, submit a completion report in the Form Appendix E to Time: 1 day the Secretary of the Kochi Municipal Corporation to apply for the occupancy permit. Cost: No cost The completion report should be prepared by the approved engineer working on the Comments: Upon submission, an inspection on site is undertaken within the two project stating that all the work has been done in accordance to the plans. following weeks. The verified documents are sent to the Chief Town Planner's office in Trivandrum and the Chief Town Planner approves the layout. Procedure 11. Receive final "no-objection certificate" (NOC) with inspection from the Kerala Fire and Rescue Services (State) Procedure 4. Receive inspection from the Fire and Rescue Time: 45 days Services (State) Cost: No cost Time: 1 day Cost: No cost Procedure 12.* Receive final inspection of the construction by the Comments: The fire inspection usually takes place two weeks after the submission. Municipal Corporation of Kochi (Municipal) Time: 1 day Procedure 5. Obtain layout approval and location approval Cost: No cost certificate from the Municipal Corporation of Kochi (Municipal) Time: 60 days Procedure 13. Obtain the occupancy permit from the Municipal Cost: No cost Corporation of Kochi (Municipal) Comments: The Secretary of the Corporation of Kochi shall-after inspection of Time: 15 days the site and verification that the site plan, all documents, and specifications are in Cost: No cost conformity-approve the site. A copy of the layout approval is sent to the building Comments: The Secretary of the Municipal Corporation of Kochi shall issue the company by post. The approval is also sent to the Secretary of the Corporation of occupancy permit in the Form in Appendix H no later than fifteen days from the date Kochi for them to issue the building-permit approval. of receipt of the completion certificate, after verifying that the construction has been carried out in conformity with the given permit. Provided that no such occupancy Procedure 6.* Receive a "no-objection certificate" (NOC) from the certificate is issued within the fifteen days, the owner may proceed as if such oc- Fire and Rescue Services (State) cupancy certificate has been issued. Time: 60 days Cost: No cost Procedure 14. Hire an independent plumber to prepare and approve plumbing plans (Municipal) Procedure 7. Obtain building permit from the Municipal Time: 1 day Corporation of Kochi (Municipal) Cost: INR 1,000 (flat fee) Time: 45 days Comments: The building company has to hire an independent licensed plumber Cost: INR 11,055 (permit fee INR 7 per square meter of ground floor + INR 10 per from the Municipality to handle the application for water and sewerage connection. square meter of the first floor) His approval is obtained the same day and his services cost around INR 1,000. A list Comments: Under Section 387b of the Kerala Municipality Act (1994) the building of the registered plumbers is available at the municipal office. company has to submit the drawing plans for approval to the Kochi Municipal Corporation that issues the building permit upon clearance and receipt of the layout Procedure 15.* Apply for permanent electricity connection to approval and fire NOC. The permit is valid for 3 years. The permit fee is according to Kerala State Electricity Board (State) the Schedule 2 of the Kerala Building Rules: Time: 1 day 1. Single-storied concrete buildings up to 100 square meters: INR 2 per square Cost: INR 5,500 (application fee INR 500 + processing fee INR 5,000) meter; LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 109

Comments: The building company submits an application to request power al- Comments: After receiving the provisional approval, the building company is asked location and pays an application fee of INR 500 and processing fee of INR 5,000. The to sign two separate agreements with the KWA for sewerage and water connections process is explained online at www.kseboard.com. on INR 50 stamp papers and pay the connection charges of INR 1,000 as well as the cost for a sound water meter for water connection. Upon receipt of the final pay- Procedure 16.* Apply for permanent water and sewerage ment, the authority provides connection. connections to the Kerala Water Authority (KWA) (State) Time: 1 day Procedure 22.* Obtain phone connection (with inspection) from the BSNL (National) Cost: INR 15 (flat application fee) Time: 7 days Comments: The licensed plumber applies on the building company's behalf for the permanent connection with the Kerala Water Authority. Documents to be submitted Cost: No cost include: 1. Application; * This procedure can be completed simultaneously with previous procedures 2. Ownership certificate from the local body; 3. A copy of the building permit; DEALING WITH CONSTRUCTION PERMITS 4. Three copies of the plumber-vetted plumbing plans; Kolkata, West Bengal 5. Necessary stamps attached to the acknowledgement card. Procedures to build a warehouse The information on the process and tariffs is available online at www.keralawater. Warehouse value: USD 118,331 = INR 5,203,000 org. Data as of: February 2009 Procedure 17.* Apply for permanent phone connection at Bharat Procedure 1. Obtain land-use permission from Kolkata Sanchar Nigam Limited (National) Metropolitan Development Authority (KMDA) (Municipal) Time: 1 day Time: 55 days Cost: INR 1,000 (INR 500 registration charge + INR 500 installation charge) Cost: INR 1,000 Comments: The building company must apply for the telephone connection at the Comments: According to the Kolkata Gazette, extraordinary, February 14, 2007, be- local BSNL office. To obtain a commercial connection, the building company must fore submission of the building plan, the building company must obtain an approval submit the application along with a proof of ownership of the business and the of the building site. Every application submitted in Form A shall state the proposed Permanent Account Number (PAN) card. The same tariff applies across the country, use of the land. The application should be accompanied by a site-plan in triplicate with minor differences due to local demand. The following charges must be paid: and a fee may be determined by the Municipality subject to the following: INR 500, in case there is a waiting list for registration charges; INR 300 in installation a. For site plan up to 200 square meters of area: INR 200; charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable security deposit of INR 2,000. b. For every additional 100 square meters of area or part thereof beyond the first 200 square meters: INR 100. Procedure 18.* Receive an on-site inspection by the Kerala State Procedure 2.* Obtain a "no-objection certificate" (NOC) from the Electricity Board (State) Observation of Survey and Valuation Department (Municipal) Time: 1 day Time: 21 days Cost: No cost Cost: INR 12,000 (flat fee) Comments: Following the application, KSEB takes approximately a month to inspect the site and prepare a feasibility study. An assistant engineer from the section office Comments: The NOC is required in order to check the alignment with road width conducts a field study, and then the executive engineer reviews the files in the Circle and to fix the floor-area ratio (FAR) and the height. Office and sends them to the Deputy Chief Engineer of KSEB for the final approval. Procedure 3.* Obtain a "no-objection certificate" (NOC) from the Procedure 19.* Receive an on-site inspection by the Kerala Water Kolkata Improvement Trust (Municipal) Authority (State) Time: 15 days Time: 1 day Cost: INR 5,000 (flat fee) Cost: No cost Comments: The NOC is required in order to check compliance with the Kolkata Comments: A site inspection happens one week after the application to the Kerala Improvement Trust. Water Authority. After visiting the site, the assistant engineer submits the application to the assistant executive engineer with the feasibility report and any observations. Procedure 4.* Obtain a provisional "no-objection certificate" If all connections are in place and if no additional clearances are necessary (e.g., (NOC) from the West Bengal Fire Service (State) with regard to road cutting), a temporary sanction is given to the building company Time: 7 days within a week as well as an assessment of all charges. Cost: INR 8,400 (INR 0.60 per square feet) Procedure 20.* Obtain permanent electricity connection after the Comments: According to the Kolkata Municipal Corporation Building Rules (1990), all storage buildings require fire NOC. payment of final fees from KSEB (State) Time: 45 days Procedure 5.* Obtain tax-clearance certificate from the House Tax Cost: INR 63,000 (service-connection charge INR 450 per kW + security deposit Department (Municipal) toward consumption) Time: 2 days Comments: The building company receives an intimation letter to make a payment Cost: INR 100 of connection fee of INR 450 per kW at the KSEB office to obtain the final connection. Comments: The NOC is required to check that all taxes have been paid. The certifi- The building company also has to make an initial cash deposit of 10% of the prob- cate must be up to date. able monthly charges toward consumption. Upon payment, the connection is given.

Procedure 21.* Obtain permanent water and sewerage Procedure 6. Apply for the building permit to the Kolkata connections upon payment of final fees from the KWA (State) Municipal Corporation (KMC) (Municipal) Time: 1 day Time: 30 days Cost: No cost Cost: INR 2,700 (two stamp papers INR 50 + INR 50 + meter fee INR 600 + commercial connection fees INR 1,000 for water and INR 1,000 for sewerage) Comments: According to the Kolkata Municipal Corporation Building Rules (1990), the building company must submit two copies of form notice under subrule 1 along with copies of the following documents to the Building Department: a. Approved layout of the site; b. 3 sets of plans; 110 DOING BUSINESS IN INDIA 2009

c. Application notice; Comments: To obtain the water supply and drainage connection, the building d. Current paid tax receipt/tax-clearance certificate; company must apply through a licensed plumber of KMC at the borough office. The list of plumbers is available in the office. e. Observation from Kolkata Improvement Trust; f. Observation from Chief Valuer and Surveyor's Department (KMC); Procedure 11.* Apply for sanction of power connection to the g. Clearance certificate from ULC department if applicable; Calcutta Electric Supply Corporation (Municipal) h. Observation of West Bengal Fire Service Department; Time: 1 day i. Indemnity bond; Cost: No cost j. Copy of deed; Comments: The building company must fill out an application form and submit it at k. Registered boundary declaration; one of the CESCO offices. l. Registered power of attorney; m. FAR calculation sheet; Procedure 12.* Apply for sewerage connection and deposit inspection fees at the Sewerage and Drainage Department n. Soil-investigation report; (Municipal) o. Structural-design calculation, etc. Time: 1 day The building company also has to submit two declarations: in one of them it promises to plant trees as per the Municipal Corporation's guidelines in the front Cost: INR 17,607 (multiplication factor 2 * [inspection fee INR 4,400 per first 500 and other open spaces of the premises. All forms and fees schedules are available square meters + INR 550 per every additional 100 square meter]) and the process is explained online on the Kolkata Municipality website http://www. Comments: To apply for sewerage connection, the building company must submit kolkatamycity.com. an application along with the sanctioned building plan, plumber, "Niyog Patra" or letter of engagement, certificate of the independent plumber, and layout of the Procedure 7. Obtain inspection and observation of the Municipal proposed internal house drainage at the borough office. The building company must Building Committee (Municipal) also deposit the inspection fees, which vary according to the size of the building. For one- and two-story buildings the inspection fees are as follows: Time: 1 day a. Total covered area of up to 50 square meters: INR 605; Cost: No cost b. Total covered area 51-100 square meters: INR 825; Comments: Sanction from the Municipal Building Committee is required in the following cases: c. Total covered area 101-200 square meters: INR 1,100; a. Land area exceeding 500 square meters; d. Total covered area 201-300 square meters: INR 1,650; b. Building exceeding a height of 14.5 meters; e. Total covered area 301-400 square meters: INR 4,400; c. Corner plot whose means of access is more than 10 meters wide; f. Total covered area 401-500 square meters: INR 4,400; d. Buildings other than for residential use; g. Above 500 for every 100 square meters to be added INR 550. e. Plot situated within 500 meters from flyover or bridge. In case of storage buildings, there is a multiplication factor 2 times. The municipal website www.kolkatamycity.com provides information on the process, Procedure 8. Obtain building permit from Kolkata Municipal tariffs, and all forms. Corporation (KMC) Procedure 13.* Apply for water connection at the Water Supply Time: 90 days Department (Municipal) Cost: INR 708,000: sanction fee of INR 22,000 (for first 500 square meters) + INR 96,000 (800 square meters at INR 12,000 per each 100 square meters) * 6 (multiply- Time: 1 day ing factor) Cost: No cost Comments: Following the verification of the report by the Municipal Building Comments: To obtain a water connection, the building company must apply Committee, the Building Department issues a demand for payment, and a building through a licensed plumber of KMC at the local ward office of the Water Supply De- permit (sanctioning the building plan) once payment is received. Two tables of basic partment. The application is available at the KMC website and the building company scale of sanction fees in INR apply in Kolkata, using the total covered area in all floors must submit it along with a copy of sanctioned building plans, proof of ownership, in square meters in table I and width of mean of access with the total covered area in and a property-tax clearance certificate. The municipal website www.kolkatamycity. all floors in table II. The total sanction fee would be calculated as follows (assuming a com provides information on the application process, tariffs, and all forms. width of access of up to 3 m): a. Under table I: up to 500 square meters: INR 22,000 + above 500 square meters for Procedure 14.* Apply for permanent phone connection at Bharat every 100 square meters INR 12,000 to be added; Sanchar Nigam Limited (National) b. Under table II: storage buildings have a multiplying factor on scale of fees as per Time: 1 day table 1: 6 times (residential buildings have multiplying factor 1: 2 times, etc.). Cost: INR 500 (flat installation charge) The construction has to be started within 2 years and completed within 5 years of Comments: The building company must apply for the telephone connection at the sanctioning of the building plan. local BSNL office. To obtain a commercial connection, the building company must submit the application along with a proof of ownership of the business and the Procedure 9. Receive on-site inspection by the KMC during Permanent Account Number (PAN) card. The same tariff applies across the country, construction (Municipal) with minor differences due to local demand. The following charges must be paid: Time: 1 day INR 500, in case there is a waiting list for registration charges; INR 300 in installation charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable Cost: No cost security deposit of INR 2,000. Comments: During the construction, the building company has to send forms of notice of commencement and of completion of work up to plinth level to the Procedure 15.* Receive inspection from electricity provider Municipal Commissioner. The KMC will undertake inspections of the site phase-wise CESCO (Municipal) as per the application submitted by the structural engineer appointed by the owner or developer. Typically, one inspection would take place during the construction of a Time: 1 day two-story building. Cost: No cost Comments: An inspection is made by CESCO engineers to establish a cost and work Procedure 10. Hire an authorized independent plumber at the estimate. Kolkata Municipal Corporation to apply for water and sewerage connections (Municipal) Procedure 16.* Receive inspection from the Sewerage and Time: 1 day Drainage Department (Municipal) Cost: INR 1,000 (flat fee) Time: 1 day Cost: No cost LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 111

Comments: After receiving the application, an assistant engineer or executive en- Procedure 25. Receive final inspection of the construction by the gineer inspects the premises and asks the building company to submit the internal Kolkata Municipal Corporation (Municipal) drainage plan. At the end of the inspection, a "demand note" is handed over to the Time: 1 day plumber for the building company to pay drainage charges. The Sewerage Depart- ment also officially approves the internal drainage plan. Cost: No cost Comments: Engineers and subengineers of the Municipal Corporation inspect the Procedure 17.* Receive on-site inspection from the Water Supply site and prepare inspection reports. Department (Municipal) Time: 1 day Procedure 26. Obtain occupancy permit from the Kolkata Municipal Corporation (Municipal) Cost: No cost Time: 30 days Comments: The Water Supply Department prepares a feasibility study with details on charges after a site inspection. Cost: INR 50,000 (flat fee) Comments: The Chief Engineer, Department of Building, Kolkata Municipal Corpora- Procedure 18.* Receive second inspection and "house-drainage tion issues the occupancy permit based on inspection reports. The fees for issuing completion certificate" from the Sewerage and Drainage completion certificate/occupancy permit for commercial buildings is as follows: Department (Municipal) a. Up to 500 square meters: INR 25,000; Time: 1 day b. Above 500 square meters: INR 50,000. Cost: No cost Procedure 27. Obtain permanent sewerage connection from the Comments: Once the work is finished, the Sewerage and Drainage Department inspects the site for the second time. Sewerage and Drainage Department (Municipal) Time: 3 days Procedure 19.* Obtain permanent electricity connection from the Cost: INR 7,500 CESCO and pay final fees (Municipal) Comments: The house drainage connection is given 3 days after the occupancy Time: 45 days permit. Cost: INR 250,000 (1/3 of the average cost to get the electricity connection, 2/3 to cover the labor and material cost) * This procedure can be completed simultaneously with previous procedures Comments: The building company receives a cost and service estimate and must go to the CESCO office to accept the "offer." It must submit a "test" report prepared DEALING WITH CONSTRUCTION PERMITS by a licensed electrical contractor along with the Memorandum of Association and ownership documents. Once the building company accepts the offer and submits Ludhiana, Punjab all documents, a final bill is generated and the building company must make the Procedures to build a warehouse final payment. The connection costs about INR 700,000 out of which 2/3 covers labor Warehouse value: USD 118,331 = INR 5,203,000 costs and materials. Data as of: February 2009 Procedure 20.* Obtain permanent water connection from the Procedure 1. Obtain land-use certificate from the Chief Town Water Supply Department (Municipal) Planner's Office in Ludhiana (Municipal) Time: 30 days Time: 15 days Cost: INR 4,000 (flat water-connection charge INR 4,000) Cost: INR 20,165 (fees for the certificate of INR 1,815 per 100 square yards) Comments: The building company fills in the application form available at the Chief Procedure 21.* Obtain phone connection (with inspection) from Town Planner's office in Ludhiana. The building company submits the form, along the BSNL (National) with the proof of ownership of the land, and pays the following fees: Time: 7 days a. Buildings with height up to 38' 6": INR 1,500 per 100 square yards; Cost: No cost b. Buildings higher than 38' 6": INR 3,000 per 100 square yards. The rates were established by the Government in 2006 with the condition that a 10% Procedure 22. Apply for a final "no-objection certificate" (NOC) increase in the above mentioned rates shall be made every year. The rate applicable from the West Bengal Fire Service (State) in 2008/9 is INR 1,815 per 100 square yards of the plot. Time: 1 day Cost: No cost Procedure 2. Obtain building-plan approval from Ludhiana Municipal Corporation (Municipal) Procedure 23. Obtain a "no-objection certificate" (NOC) with Time: 40 days inspection from the West Bengal Fire Service (State) Cost: INR 70,000 (INR 5 per square foot) Time: 20 days Comments: According to the Ludhiana Municipal Corporation's Building Bylaws Cost: No cost (1997), the building company must apply for building-plan approval by submitting Comments: Fire Department of Kolkata Municipal Corporation undertakes inspec- an application in Form A along with the ownership documents and four sets of ferro tion of the construction site to ensure the safety of the building as well as of adjoin- prints. The building company shall at the same time submit: ing buildings. a. Location plan and site plan of the land on which it intends to build; b. Plans of all the floors; Procedure 24. File a completion certificate and apply for c. Details of specifications of the work to be executed in Form B. occupancy permit at the Kolkata Municipal Corporation The building company must appoint an architect or a supervisor to draw up the (Municipal) plans and supervise the construction. The application, plans, and specifications must Time: 1 day be signed by the applicant and the licensed architect. Cost: No cost Scrutiny and approval of building plans is carried out by the Town Planning Depart- Comments: The building company must send a notice of completion to the Kolkata ment. The application shall be either approved or rejected within a period of 60 days. Municipal Corporation as per Annex B of the Building Rules within a month after the completion and attach the following documents: Procedure 3. Receive inspection by the Ludhiana Municipal a. Structural-stability certificate, duly certified by a structural engineer; Corporation during construction of foundation (Municipal) b. Photo copy of plans; Time: 1 day c. NOC from the West Bengal Fire Service; Cost: No cost d. Internal sewerage sanction plan (sanctioned by the Drainage Department). 112 DOING BUSINESS IN INDIA 2009

Comments: The Ludhiana Municipal Corporation reserves the right to visit and INR 500, in case there is a waiting list for registration charges; INR 300 in installation inspect the construction site at any time during the construction and even after the charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable construction is complete, without giving any prior notice. To ensure enforcement security deposit of INR 2,000. of execution of works as per sanctioned building plans, the building company must notify the authority at the stage of excavation, construction of foundation, plinth, Procedure 13.* Obtain a test report by an electricity contractor first story, and each subsequent story. Typically, two inspections would be made. listed with PSEB (State) Time: 1 day Procedure 4. Receive inspection by the Ludhiana Municipal Corporation during the construction of plinth (Municipal) Cost: No cost Comments: The building company has to obtain a test report by an independent Time: 1 day electricity contractor listed with PSEB. Cost: No cost Procedure 14.* Receive an on-site inspection by water and Procedure 5. Apply for a "no-objection certificate" (NOC) from the sewerage provider (PWSSB) (State) Fire Department (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: The building company receives an inspection and "test report" by an approved electrical contractor. Procedure 6. Receive a "no-objection certificate" (NOC) from the Fire department (with inspection) (Municipal) Procedure 15.* Obtain permanent electricity connection from Time: 3 days PSEB (State) Cost: No cost Time: 45 days Cost: INR 168,500 (connection fee of INR 1,000 per kW + metering equipment INR Procedure 7. File a completion certificate and apply for an 28,500) occupancy permit at Ludhiana Municipal Corporation (Municipal) Comments: After the inspection, the building company receives a demand notice Time: 1 day from the Punjab State Electricity Board to deposit all charges and to submit the "test Cost: No cost report" by an approved electrical contractor. The service charges are INR 1,000 per Comments: The building company must notify the authority about completion in kW. There are other fees, such as INR 65,800 deposit for advance consumption, INR Form F and apply for the occupancy permit in Form D. The building company also 28,500 toward metering equipment, and INR 5,250 as refundable meter-security has to submit a structural certificate in Form E, duly signed by a licensed architect or deposit. For the purposes of the study, only the connection fee and nonrefundable supervisor. charges are counted.

Procedure 8. Receive Inspection from the Ludhiana Municipal Procedure 16.* Obtain permanent water and sewerage Corporation (Municipal) connections from PWSSB (State) Time: 1 day Time: 30 days Cost: No cost Cost: No cost

Procedure 9. Obtain occupancy permit from the Ludhiana Procedure 17.* Obtain phone connection (with inspection) from Municipal Corporation (Municipal) the BSNL (National) Time: 30 days Time: 5 days Cost: No cost Cost: No cost

Procedure 10. Apply for permanent electricity connection at * This procedure can be completed simultaneously with previous procedures Punjab State Electricity Board (PSEB) (State) Time: 1 day DEALING WITH CONSTRUCTION PERMITS Cost: INR 50 (application form INR 50) Mumbai, Maharashtra Comments: The building company must collect a form known as the A & E Form Procedures to build a warehouse from the designated subdivisional office for INR 50. This form is submitted on an INR 3 stamp paper, so that it becomes a legal document, along with proof of ownership Warehouse value: USD 118,331 = INR 5,203,000 of the property. The PSEB website www.psebindia.org provides information on the Data as of: February 2009 application process and tariff. Procedure 1. Submit application and design plans at the Building Procedure 11.* Apply for permanent water and sewerage Proposal Office of BMC and pay scrutiny fee (Municipal) connections at the Punjab Water Supply and Sewerage Board Time: 1 day (PWSSB) (State) Cost: INR 36,417 (application fee INR 28 per square meter of plot/built-up area, Time: 1 day whichever is larger) Cost: INR 1,000 (connection fee of INR 500 for water + INR 500 for sewerage) Comments: The building company submits an application form with plans and all required documents, as prescribed by Section 373 of the BMC Act, at the Andhuri Comments: The building company can apply for sewerage and water connections Building Proposal Office of the BMC. If all documents are in order and the file is online. complete, the building company can proceed to payment of the scrutiny fees. Fees are paid in the same building by cash or bank draft. Once the fees have been paid, Procedure 12.* Apply for phone connection at Bharat Sanchar the application file is forwarded to the concerned officer in the Building Proposal De- Nigam Limited (BSNL) (National) partment. Then the file is forwarded to the Survey Office, which will make its remarks Time: 1 day on the application file and check the remarks from the Development Plan office Cost: INR 500 (flat installation charge) (obtained during the design stage of the project). If the Survey Office is satisfied with its review, it will send the application file back to the Building Proposal Department Comments: The building company must apply for the telephone connection at the within one week. local BSNL office. To obtain a commercial connection, the building company must submit the application along with a proof of ownership of the business and the The cost for this procedure is INR 28 per square meter of the built-up area/plot area, Permanent Account Number (PAN) card. The same tariff applies across the country, whichever is larger. with minor differences due to local demand. The following charges must be paid: LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 113

Procedure 2. Receive site inspection from the Building Proposal Procedure 6.* Receive inspection from the Tree Authority (Municipal) Office of the BMC (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: Inspectors from the Tree Authority visit the site to check if there are any Comments: A subengineer from the Building Proposal Office will conduct a site trees located on the premises. inspection within 3 to 4 days of receiving the file from the survey office. The date and time of the site inspection are arranged by the company's architect. The building Procedure 7.* Obtain a "no-objection certificate" (NOC) from the company must be on-site when the inspection takes place. Tree Authority (Municipal) Time: 30 days Procedure 3. Obtain "intimation of disapproval" (building permit) Cost: 4,500 (flat fee) from the Building Proposal Office and pay fees (Municipal) Time: 60 days Procedure 8.* Request and obtain a "no-objection certificate" Cost: INR 1,301 (intimation of disapproval fee 1 INR per square meter + 2 INR per (NOC) from the Storm Water and Drain Department (Municipal) square meter [or a maximum of INR 45,000] as a refundable deposit for debris clear- Time: 7 days ance) Cost: No cost Comments: After the site inspection, the application file returns to the Building Pro- posal Office to receive an intimation of disapproval (authorization). The concerned Procedure 9.* Request and obtain a "no-objection certificate" subengineer scrutinizes the proposal and forwards the report to the assistant engi- (NOC) from the Sewerage Department (Municipal) neer and executive engineers. The proposal is approved at the executive engineer's level if no concessions are involved. There are 3 executive engineers in the main BMC Time: 7 days office and 2 in the Andhuri office (the latter is the office considered for the purposes Cost: 77,306 (pro-rata charges are recovered at the rate 25% of INR 23,250 per run- of this study). ning meter + 33% contingencies, supervision, sewerage charges, etc., if the plot is Complete applications that do not require concessions (i.e., claiming of areas free of abutting D. P. Road) FSI as per provision in DCR 1991, deficiency in open spaces, etc.) can be approved within a week. However, a majority of applications require some concessions and Procedure 10.* Request and obtain a "no-objection certificate" further scrutiny so must be forwarded to the competent authorities. This latter (NOC) from the Brihanmumbai Electric Supply and Transport process may take 30-90 days to complete. (BEST) Undertaking (Municipal) The intimation of disapproval is issued with a list of "no-objection certificates" Time: 7 days (NOCs), which the applicant must obtain separately from various departments and Cost: No cost government authorities. Final clearance to build will only be given once the company obtains all NOCs. The NOCs assigned to the intimation of disapproval are case Comments: The building company has to inform BEST of the project's power specific. For the purpose of this study, Doing Business has determined 7 basic NOCs requirements along with a copy of application submitted for building-plan approval. that are required for almost all projects: BEST will assess whether an electrical substation up-grade is required at this stage. 1. Tree Authority; Procedure 11.* Request and obtain a "no-objection certificate" 2. Storm Water and Drain Department; (NOC) from the Environmental Department (Municipal) 3. Sewerage Department; Time: 7 days 4. Hydraulic Department; Cost: No cost 5. Environmental Department (concerned with debris management); 6. Traffic and Coordination Department; Procedure 12.* Request and obtain a "no-objection certificate" 7. CFO (fire clearance). (NOC) from the Traffic and Coordination Department (Municipal) The company's architect must take the Intimation of Disapproval and the design Time: 7 days plans to each clearance office separately. NOCs can be applied for simultaneously, Cost: No cost but NOC offices are spread out, so the submission for these 7 NOCs is likely to take some time. Procedure 13.* Request and obtain a "no-objection certificate" The cost for this procedure is INR 1 per square meter for Intimation of Disapproval (NOC) from the CFO (Municipal) + INR 2 per square meter (or a maximum of INR 45,000) as a deposit for debris Time: 7 days clearance. The latter is returned after the completion of construction if the BMC has deemed all debris cleared. Cost: 13,006 (INR 10 per square meter) Comments: All commercial structures require fire-safety clearance. Procedure 4. Submit structural plans approved by a structural engineer to the BMC (Municipal) Procedure 14. Obtain commencement certificate from the Time: 1 day Building Proposal Office and pay development charges (Municipal) Cost: No cost Time: 10 days Comments: The Intimation of Disapproval (IOD) is only an approval of the civil plans. Review of the structural plans is done in parallel with the NOC process. No approval Cost: 836,100 (200 INR per square meter [land component] + 500 INR per square to this plan is required from the Municipal Corporation but copies are required to be meter [building component]) submitted. Time required for submitting theses structural plans is one day. Comments: On submission of all required NOCs mentioned in the IOD and on compliance of the IOD conditions, the applicant may submit request for the commence- Procedure 5.* Apply for a "no-objection certificate" (NOC) from ment certificate (CC). The documents and NOCs submitted by the applicants are the Tree Authority (Municipal) verified by the staff and the necessary commencement certificate is approved. After payment of development charges and other applicable premium the commence- Time: 1 day ment certificate is issued within 7 to 15 days. Cost: No cost The cost for the CC is INR 200 per square meter of land + INR 500 per square meter Comments: Due to stringent environmental regulations, the building company of building area. must receive clearance from the Tree Authority set up under the Maharashtra (urban areas) Preservation of Trees Act (1975). The Tree Authority Commission only meets Procedure 15. Request and receive inspection of plinth once a month. The Tree Authority must ascertain what trees (if any) will be cut down (Municipal) as a result of construction. If trees are to be cut down, the building company will have to plant trees to replace them. Time: 1 day Cost: No cost 114 DOING BUSINESS IN INDIA 2009

Procedure 16. Submit completion notice to obtain occupancy Procedure 27. Apply for permanent water connection at the certificate and certificate of completion (Municipal) Water Supply Department of the BMC (Municipal) Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: The company's architect must submit a formal letter stating that con- Comments: The building company must apply for the permanent water connection struction has been completed according to the standards set forth in the IOD and CC. at the nearest Citizen Facilitation Center (CFC) established by the Municipal Corpora- tion of Greater Mumbai and submit Form A along with the following documents: Procedure 17.* Request and obtain completion a "no-objection a. Copy of valid IOD; certificate" (NOC) from the Tree Authority (Municipal) b. Set of approved plan (certified copy); Time: 3 days c. Appointment letter of the licensed plumber: Cost: No cost d. Estimated cost of construction; e. Paid bills of all existing CCMS; Procedure 18.* Request and obtain completion of a "no-objection certificate" (NOC) from the Storm Water and Drain Department f. Completion certificate; (Municipal) g. Tanker water challans. Time: 3 days Procedure 28. Apply for permanent sewerage connection at the Cost: No cost Sewerage Department of BMC (Municipal) Procedure 19.* Request and obtain completion of a "no-objection Time: 1 day certificate" (NOC) from the Sewerage Department (Municipal) Cost: No cost Time: 3 days Comments: An application is made to the Municipal Corporation for approval of permanent sewerage connection. Cost: No cost Procedure 29. Apply for permanent power connection and pay Procedure 20.* Request and obtain completion of a "no-objection fees at Brihanmumbai Electric Supply and Transport (Municipal) certificate" (NOC) from the Electric Department (Municipal) Time: 1 day Time: 3 days Cost: No cost Cost: No cost Comments: The building company can download the application or collect it from Procedure 21.* Request and obtain completion of a "no- one of the 9 zonal offices. The building company submits the form along with a registration fee of INR 50. On submission, a receipt of the same is given along with a objection certificate" (NOC) from the Environmental Department requisition number. Within one week (statutory time limit), an inspection takes place (Municipal) to verify if the structure is permanent and to account for the number of connections Time: 3 days required, etc. Within a week, a requirement letter from BEST authorities is mailed Cost: No cost to the applicant. This letter lists the documents and payment to obtain a power connection Procedure 22.* Request and obtain completion of a "no-objection a. Proof of ownership; certificate" (NOC) from the Traffic and Coordination Department b. Availability of meter space, (Municipal) c. Test report" by licensed electrical engineer; Time: 3 days d. Payment of necessary fees. Cost: No cost Procedure 30. Apply for permanent phone connection at Bharat Procedure 23.* Request and obtain completion of a "no-objection Sanchar Nigam Limited (National) certificate" (NOC) from the CFO (Municipal) Time: 1 day Time: 3 days Cost: INR 500 Cost: 70,000 (INR 5 per square foot) Comments: The building company must apply for the telephone connection at the Comments: All commercial structures require a fire-safety clearance according to local BSNL office. To obtain a commercial connection, the building company must fire and safety rules and regulations stipulated in the Development Control Rule submit the application along with a proof of ownership of the business and the (1991) and the National Building Code. The fee for low-rise commercial buildings is Permanent Account Number (PAN) card. The same tariff applies across the country, INR 5 per square foot. with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation Procedure 24. Receive completion inspection from the BMC charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable (Municipal) security deposit of INR 2,000. Time: 1 day Procedure 31. Receive on-site inspection for connection to water Cost: No cost by the Water Supply Department (Municipal) Procedure 25. Obtain occupancy certificate from the BMC (Municipal) Time: 1 day Cost: No cost Time: 1 day Comments: The assistant engineer of the Municipal Corporation makes the inspec- Cost: No cost tion. There are two inspections: one before the water connection is completed, and Comments: The occupancy certificate allows the building company to occupy the another after completion. The inspection should not take more than a day. An officer building but is not considered a final document because the building company still of the Water Department of the Municipal Corporation inspects the premises and requires the certificate of completion. prepares a report on the connection.

Procedure 26. Obtain completion certificate from the BMC Procedure 32. Receive on-site inspection for connection to (Municipal) sewage by the Sewerage Department (Municipal) Time: 30 days Time: 1 day Cost: No cost Cost: No cost Comments: The completion certificate is considered to be the ultimate document that the building company requires to fully occupy the building and connect it to utilities. LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 115

Procedure 33. Receive on-site inspection from BEST (Municipal) Procedure 4. Apply for building permit at the Municipal Time: 1 day Corporation of Delhi (Municipal) Cost: No cost Time: 1 day Comments: A licensed electrical engineer employed by the building company must Cost: INR 54,130 (building permit fee of INR 600 for the ground floor + INR 1,500 for assess the internal wiring. On gathering these documents, the building company the second floor + 1% cess (tax) on the total cost of construction [INR 5,203,000]) must return to the zonal office and submit them along with payment. After this, Comments: The building company applies for the building permit by giving a notice connection is given within a month's time in a majority of cases. Approximately 5% in writing in the prescribed Form No. I, along with the following documents: of cases receive connection in less than 24 hours, and another 5 % of applicants 1. Copies of plan and statements: - six copies; report connection times of up to 3 months. These long delays are due to cable laying. If cable laying is done through private land, than the owner must get permission 2. Proof of ownership; from them and give it to BEST. But if the underground cabling is done through 3. Specifications of the proposed construction; government land, BEST must get permission from the Bombay Municipal Corpora- 4. Supervision certificate signed by the licensed architect/engineer, supervisor, and tion (BMC), and said permission takes some time to be granted. Also BMC only gives plumber; permission for underground cabling, during the dry season (April to October). 5. Structural- stability certificate from a structural engineer along with a copy of registration certificate; Procedure 34. Obtain permanent water connection (with 6. Rain water- harvesting certificate in case of plot size more than 100 square meters inspection) (Municipal) (certificate signed by the owner and architect in the form in annexure B); Time: 45 days 7. No nuisance/malba certificate (annexure C); Cost: INR 1,200 (connetion fee) 8. Declarations in the form of affidavits (annexure E-I); Comments: An application is made to the Municipal Corporation for approval of the 9. NOC/No-dues certificate from the House Tax Department. permanent water and sewerage connection. 10. Recommendations of Chief Fire Officer in case of industrial, institutional, and Procedure 35. Obtain permanent sewerage connection at BMC multi-story buildings. (Municipal) All the plans must be signed by the owner and licensed architect and architects registered with the Council of Architects and shall indicate their names, addresses, Time: 30 days and license and enrollment numbers. Cost: INR 50,000 The building company must pay the building application (tax on building application) according to the following schedule: Procedure 36. Obtain permanent electricity connection from S. No ----Area ---- For the first storey (INR) ----- For the second story or any subse- BEST (Municipal) quent story (INR) Time: 10 days 1. For a ground area up to 100 square yards: INR 20 and INR 40; Cost: INR 45,000 2. For a ground area of more than 100 square yards, but not exceeding 250 square yards: INR 60 and INR 120; Procedure 37. Receive on-site inspection and connection to 3. For a ground area of more than 250 square yards, but not exceeding 500 square telephone by the utility provider (National) yards: INR 150 and INR 300; Time: 2 days 4. For a ground area of more than 500 square yards, but not exceeding 1,000 square Cost: No cost yards: INR 300 and INR 600; 5. For a ground area of more than 1000 sq. yards: INR 600 and INR 1,500. * This procedure can be completed simultaneously with previous procedures In addition, the municipality collects 1% cess (tax) on the total cost of construction (INR 5,203,000). DEALING WITH CONSTRUCTION PERMITS A single-window concept has been introduced for approval of building-plan ap- New Delhi, Delhi plications. Instant approval is available for residential plots up to 500 square meters. The Engineering Department of the Municipal Corporation of Delhi has also issued a Procedures to build a warehouse detailed guide, "Build your House with a Valid Building Permit." Warehouse value: USD 118,331 = INR 5,203,000 Data as of: February 2009 Procedure 5. Receive inspection of the site by the Municipal Corporation of Delhi (Municipal) Procedure 1. Obtain no-due-tax certificate from the House Tax Time: 1 day Department (Municipal) Cost: No cost Time: 2 days Comments: The inspection takes place within 10 days of the receipt of application. Cost: INR 1,500 Comments: The building company must submit an up-to-date certificate of no due Procedure 6. Obtain building permit from the Commissioner of tax and a "no-objection certificate" from the House Tax Department when applying the Municipal Corporation of Delhi (Municipal) for the building permit. Time: 65 days Procedure 2. Obtain a "no-objection certificate" (NOC) regarding Cost: No cost land use as per Master Plan/Zonal Plan (Municipal) Comments: The building permit shall be issued within 60 day from the date of submission and after the inspection. It remains valid for 5 years. Time: 15 days Cost: INR 10,000 (submission fee for the approval of layout) Procedure 7. Hire an independent electricity contractor and obtain load approval (Private) Time: 1 day Procedure 3.* Notarize the affidavit/undertaking (Private sector) Cost: INR 50 Time: 1 day Cost: INR 100 Procedure 8.* Apply for permanent electricity connection with Comments: The building company must submit an affidavit/undertaking on non- the BSES (Private) judicial paper of INR 10, duly attested by the Oath Commissioner when applying for Time: 1 day the building permit. In the affidavit, the building company acknowledges that during the course of construction, no building material will be stacked on public land. Cost: No cost Comments: To apply for a new connection, one must visit the divisional/subdivisional office of BSES, where the building company completes the requisition form for a new connection. A copy of the following documents is required: 116 DOING BUSINESS IN INDIA 2009

a. Ownership sale agreement; Procedure 14. Apply for permanent water and sewerage b. Election ID; connections to Delhi Jal Board (Municipal) c. Ration ID; Time: 1 day d. Latest monthly maintenance receipt of registered society; Cost: No cost e. Copy of passport; Comments: Application for water and sewerage is made to the Delhi Jal Board. E- f. Passport photographs; forms to apply for new connections are available on the website www.delhijalboard. nic.in or can be obtained from the office of Zonal Engineer for INR 10 each. The build- g. Possession letter. ing company must submit the application along with a copy of registration, proof of The BSES website www.bsesdelhi.com contains information on the application ownership, affidavit, and other documents as required by the Zonal Engineer. process and application form. Procedure 15.* Apply for permanent phone connection at Bharat Procedure 9.* Receive on-site inspection by BSES (Private) Sanchar Nigam Limited (National) 1 day Time: Time: 1 day No cost Cost: Cost: INR 500 (flat installation charge) BSES undertakes a technical feasibility study and a commercial Comments: Comments: The building company must apply for the telephone connection at the feasibility study and in about 7 days generates a demand notice, which the building local BSNL office. To obtain a commercial connection, the building company must company can pick up at the BSES office. submit the application along with a proof of ownership of the business and the Permanent Account Number (PAN) card. The same tariff applies across the country, Procedure 10. Request and receive inspection by an engineer with minor differences due to local demand. The following charges must be paid: from the Municipal Corporation of Delhi at the plinth level INR 500, in case there is a waiting list for registration charges; INR 300 in installation (Municipal) charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable Time: 1 day security deposit of INR 2,000. Cost: INR 15 Procedure 16.* Receive an initial on-site inspection from Delhi Jal Comments: The building company has to notify the MCD at each stage of construction through its licensed architect. First, the building company notifies the MCD 7 Board (Municipal) days before the start of construction. Next, the building company sends a notice of Time: 1 day completion of work up to plinth level accompanied by a fee of INR 15 and a copy of a Cost: No cost valid certificate of licensed architect- and building plans. MCD inspects the construc- Comments: A Delhi Jal Board official inspects the site. There are two inspections. tion and submits objections, if any, to the owner and architect/engineer within First, when the building company applies for the connection and another when the 30 days of receipt of such notice in Form B-2. The Municipal Corporation further connection is given. The inspections should not take more than a day. An officer of "reserves the right to inspect the premises before, during and after the construction." the Delhi Jal Board inspects the premises and prepares a report on the connection.

Procedure 11. File completion certificate and apply for occupancy Procedure 17.* Obtain permanent water and sewerage permit at the Municipal Corporation of Delhi (Municipal) connections from the Delhi Jal Board (with inspection) Time: 1 day (Municipal) Cost: INR 1,321 (application fee of INR 20 + INR 1 per square meter of covered area) Time: 20 days Comments: The building company must submit a notice of completion in the pro Cost: INR 8,335 (INR 5000 for water connection + INR 3335 for sewerage connection) forma given in the Building Bylaws (1983) along with a completion application cost- Comments: The zonal revenue officer prepares a demand note and sends it to the ing INR 20 and an application fee of INR 1 per square meter of built-up area. It has to building company, which must pay the connection charges to receive connection. submit the notice of completion through the licensed architect/engineer/supervisor who has supervised the construction, accompanied by the following documents: Procedure 18.* Obtain permanent electricity connection from a. Copy of lease-deed/sale deed; BSES (Private) b. Three copies of the completion plan; Time: 20 days c. Three copies of photographs taken from different angles so as to show the overall Cost: INR 31,000 (flat connection fee) view of the building; Comments: The building company pays the following charges mentioned in the d. Original sanctioned building plan (to be returned to the building company along demand notice at the BSES office: with the completion certificate); a. Connection fees: INR 31,000; e. Copy of sewer-connection permission; b. Refundable security deposit at INR 1,500 per kW (INR 210,000). f. Structural stability certificate signed by the licensed architect/engineer; g. Form for certificate of licensed architect/engineer/supervisor; Procedure 19.* Obtain phone connection (with inspection) from h. Extension of time from the lessor if required; the BSNL (National) i. Water-harvesting certificate; Time: 2 days j. Affidavit/undertaking of architect/engineer/supervisor/group (as the case may Cost: No cost be);

k. Affidavit of applicant/owner; * This procedure can be completed simultaneously with previous procedures l. A statement indicating deviations that are carried out and compounding fee payable. DEALING WITH CONSTRUCTION PERMITS Procedure 12. Receive final inspection of the construction by the Noida, Uttar Pradesh Municipal Corporation of Delhi (Municipal) Procedures to build a warehouse Time: 1 day Warehouse value: USD 118,331 = INR 5,203,000 Cost: No cost Data as of: February 2009

Procedure 13. Obtain occupancy permit from the Municipal Procedure 1. Obtain a "no-objection certificate" (NOC) from the Corporation of Delhi (Municipal) Fire Service of the State of Uttar Pradesh (State) Time: 30 days Time: 3 days Cost: No cost Cost: No cost Comments: MCD must grant or refuse the occupancy permit within 30 days of Comments: All buildings taller than 15 meters or larger than 400 square meters receiving the completion notice along with all mandatory documents. require a no-objection certificate from the Fire Service of the State of Uttar Pradesh. LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 117

Procedure 2.* Obtain drawing plan approval/building permit from Procedure 7. Obtain clearance from the Uttar Pradesh Power the New Okhla Industrial Development Authority (Municipal) Corporation to use a transformer (State) Time: 45 days Time: 1 day Cost: INR 39,018 (building-permit fee INR 30 per square meter) Cost: No cost Comments: The New Okhla Industrial Development Area Building Regulations and Comments: A clearance from the Uttar Pradesh Power Corporation to use a trans- Directions (2006) refer to a warehouse as a storage building. The building company former is required to apply for the occupancy permit. applies in writing to the Chief Executive Officer and submits a building plan prepared by a licensed architect at the reception counter, along with structural and service Procedure 8. File completion certificate and apply for occupancy plans, ownership documents, and other statements in triplicate. The Chief Executive permit at the New Okhla Industrial Development Authority Officer shall verify the facts given in the permit application. If, within 60 days of t (Municipal) receipt of the application for the building permit, the order for refusal or sanction of the building plan is not issued by the Chief Executive Officer, the application with Time: 1 day its annexure shall be deemed approved and the permit approved provided such Cost: INR 7,503 (INR 1,000 for the application fee + INR 7 per square meter of the fact is immediately brought to the notice of Chief Executive Officer in writing by the plot) applicant within 21 days after the expiry of the 60-day period. The building permit is Comments: Upon completion of construction, the building company is required issued for a period of 2 years. to submit a notice to the Chief Executive Officer (CEO) of the Noida Authority along The scale of fees for a building permit is the following: with clearances and permissions from various departments such as the Fire Depart- a. Residential buildings including group housing: INR 10 per square meter covered ment. The application is made with the form available in appendix 6 of the Noida area on all floors; building bylaws, along with the required payment and the following documents: b. Industrial buildings: INR 20 per square meter covered area on all floors; a. A copy of the building permit; c. Mercantile or business buildings: INR 30 per square meter covered area on all b. 2 forms available in appendix 16 and 17 of the Noida building bylaws; floors; c. NOC from the fire-safety officer; d. Institutional buildings: INR 30 per square meter covered area on all floors. d. A clearance from the Uttar Pradesh Power corporation to use a transformer; e. A certificate of registration of the architect; Procedure 3. Request and receive approval of drain/sanitary f. A CD with all drawings of the building; work (with inspection) by the Chief Executive Officer of the New g. Photos of the building from the front, rear, and side; Okhla Industrial Development Authority (Municipal) h. A certificate by the architect on his letterhead noting that the construction is Time: 5 days complete. Cost: No cost The building company must pay INR 1,000 flat fee for the inspection and a Comments: According to Appendix 5 of the Noida Building Regulations and Direc- completion-certificate fee according to the following schedule: tions (2006), the building company must inform the CEO of the New Okhla Industrial a. Residential buildings: INR 3 per square meter of plot size; Development Authority that the construction work is starting. If no notification is re- b. Industrial buildings: INR 6 per square meter of plot size; ceived in the following 15 days, the construction can proceed. The building company must also notify the Authority of completion of drains, sanitation, and water-supply c. Commercial buildings: INR 7 per square meter of plot size. work. At this stage an inspection is compulsory and is carried out by the municipal authorities at their own discretion. Procedure 9. Receive final inspection of the construction by the New Okhla Industrial Development Authority (Municipal) Procedure 4.* Receive inspection by an engineer from the New Time: 1 day Okhla Industrial Development Authority (Municipal) Cost: No cost Time: 1 day Comments: Cost: No cost Comments: The subengineer, planning assistant, and other junior engineers may at Procedure 10. Obtain occupancy permit from the New Okhla any time during construction conduct an inspection without prior notice, on behalf Industrial Development Authority (Municipal) of the CEO of the New Okhla Industrial Development Authority. One more inspection Time: 50 days would typically be made in the case of a low-rise building. Cost: No cost Procedure 5. Apply for final approval of the completed Comments: The CEO is required to issue the occupancy certificate within 60 days of the date-of-completion notice. construction from the Fire Service of the State of Uttar Pradesh (State) Procedure 11. Apply for a permanent power connection at the Time: 1 day Noida Power Company Limited (Municipal) Cost: No cost Time: 1 day Comments: When the construction is complete, the building company must notify Cost: INR 1,000 (flat application fee) the authorities and undergo inspection by the Fire Department. Only after the final Comments: The building company collects the application form from the Circle NOC has been issued by the Fire Department-usually the day of the inspection-can Office in Noida and submits it along with the following documents: the company apply for the occupancy certificate. a. Plot allotment letter; Procedure 6. Obtain approval of completed construction (with b. Possession letter; inspection) from the Fire Service of the State of Uttar Pradesh c. Completion letter. (State) The load is sanctioned and an estimate is prepared as part of the internal process. Time: 3 days The building company receives a copy of the "terms and conditions letter" in ap- Cost: No cost proximately 15 days to make the final payment. Comments: After completion, the new warehouse will be inspected by the Noida's Procedure 12.* Apply for permanent water and sewerage Chief Fire Officer or any person delegated by him. After the inspection, a clearance connections at the Noida Water Department (Municipal) certificate will be issued to the occupant. Only after the certificate is issued by the Chief Fire Officer will the occupants will be permitted to occupy the premises. The Time: 1 day inspection must be done within the 60 days mentioned in the application for the Cost: No cost occupancy certificate. Comments: The building company applies for permanent water and sewerage connections at the local Jal division. The form is available free of cost at the project engineer's office. Along with the form, the building company submits: a. Plot allotment letter; 118 DOING BUSINESS IN INDIA 2009

b. Ownership documents; DEALING WITH CONSTRUCTION PERMITS c. Completion certificate. Patna, Bihar A junior engineer of the Waterworks Department carries out inspection within 3 days Procedures to build a warehouse of application. Warehouse value: USD 118,331 = INR 5,203,000 Procedure 13.* Apply for permanent phone connection at Bharat Data as of: February 2009 Sanchar Nigam Limited (National) Procedure 1. Obtain "planning report" (land-use permit) from the Time: 1 day Patna Municipal Corporation (Municipal) Cost: INR 500 (INR 500 installation charge) Time: 2 days Comments: The building company must apply for the telephone connection at the Cost: No cost local BSNL office. To obtain a commercial connection, the building company must submit the application along with a proof of ownership of the business and the Procedure 2. Apply for drawing-plan approval/building permit Permanent Account Number (PAN) card. The same tariff applies across the country, from the Patna Municipal Corporation (Municipal) with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation Time: 1 day charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable Cost: INR 7,432 (commercial building permit fee of INR 8 per square meter of plot security deposit of INR 2,000. area) Comments: According to the Bihar Municipal Act (2007), the building company Procedure 14.* Receive sanction of electricity connection and pay must submit an application along with the following documents to the Chief Munici- final fees at a bank (Municipal) pal Officer, Patna Nagar Nigam, to obtain approval of the building construction plan: Time: 1 day a. Copies of the building plans approved by a certified architect; Cost: INR 236,000 (service-connection charge INR 96,000 + loading charge INR 1,000 b. Memorandum and Articles of Association, and Certificate of Incorporation; per kW) c. Certificate from a structural architect or engineer. Comments: The building company receives the "terms and conditions letter" and PMC sends a copy of the plans to the Fire Department internally to ensure that they deposits the following fees in a bank: are adhering to the safety norms. A separate fire NOC is only required for hazardous a. INR 1,000 per kW as refundable security deposit (INR 175,000): not included in the and industrial storage. cost; b. Systems-loading charge INR 1,000 per kW; Procedure 3. Receive site inspection from the Patna Municipal c. Service-connection charge of INR 96,000. The building company also installed its Corporation (Municipal) own transformer for approximately INR 150,000. Time: 1 day Cost: No cost Procedure 15.* Receive an on-site inspection by the Noida Water Comments: The Municipal Corporation scrutinizes the plans and visits the site. Works Department (Municipal) The plans are also internally reviewed by the Drainage Department to obtain their Time: 1 day approval. Cost: No cost Procedure 4. Obtain building permit from the Patna Municipal Comments: Noida Water Works Department officers inspect the construction site to assess the locations of future water and sewerage pipes and to establish the cost. In Corporation (Municipal) approximately 7 days, the building company can pick up the estimate. Time: 105 days Cost: No cost Procedure 16.* Obtain electrical safety certificate from the Uttar Pradesh State Government Electrical Safety Office (State) Procedure 5. Receive inspection by the executive/assistant Time: 1 day engineer by the Patna Municipal Corporation (Municipal) Cost: INR 560 (INR 4 per kW) Time: 1 day Comments: Before obtaining the final electricity connection, the building company Cost: No cost also must obtain an electrical safety certificate from the Uttar Pradesh State Govern- Comments: Inspections are made on average twice during construction to ensure ment Electrical Safety Office. The application fee is INR 4 per kW. that the building is being erected in accordance with the sanctioned plans and there are no deviations. Procedure 17.* Obtain power connection from Noida Power Company Limited (Municipal) Procedure 6. Receive inspection during construction of the Time: 25 days ground level by the Patna Municipal Corporation (Municipal) Cost: No cost Time: 1 day Cost: No cost

Procedure 18.* Obtain permanent water and sewerage Procedure 7. Apply for electricity connection to the Bihar State connections (Municipal) Electricity Board (BSEB) (State) Time: 15 days Time: 1 day Cost: INR 6,200 (flat connection fee) Cost: INR 200 (flat application fee) Comments: The payment consists of: Comments: To get a new connection from the BSES, the building company must a. Connection charge of INR 6,200; first get the requisition form from the nearest supply subdivision BSES office. The form must be submitted in duplicate to the assistant electrical engineer along with b. Refundable security deposit of INR 4,500. ownership documents and payment of the application fee of INR 200 as specified in Upon the payment, the building company receives a challan to present at the Water the BSEB Patna tariff effective from 1. September 2008. Works Department to obtain the connection. Procedure 8.* Apply for permanent water and sewerage Procedure 19.* Obtain phone connection (with inspection) from connections to the Patna Water Board (Municipal) the BSNL (National) Time: 1 day Time: 7 days Cost: No cost Cost: No cost Comments: The building company applies for a water connection by filing the application form available at the Patna Water Board office. * This procedure can be completed simultaneously with previous procedures LIST OF PROCE%63&4t DEALING WITH CONSTRUCTION PERMITS 119

Procedure 9.* Apply for permanent phone connection at Bharat Procedure 19. Obtain approval of completion certificate Sanchar Nigam Limited (National) (occupancy permit) from the Patna Municipal Corporation Time: 1 day (Municipal) Cost: INR 500 (flat installation charge) Time: 20 days Comments: The building company must apply for the telephone connection at the Cost: No cost local BSNL office. The building company must submit the application along with Comments: The occupancy permit shall be issued within 30 days. a proof of ownership of the business and the Permanent Account Number (PAN) card. The same tariff applies across the country, with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list * This procedure can be completed simultaneously with previous procedures for registration charges; INR 300 in installation charges (if fewer than 500 lines) or INR 500 (if more than 500 lines); and a refundable security deposit of INR 2,000. DEALING WITH CONSTRUCTION PERMITS Ranchi, Jharkhand Procedure 10.* Hire a licensed electrical contractor to certify the wiring (Private) Procedures to build a warehouse Warehouse value: USD 118,331 = INR 5,203,000 Time: 1 day Data as of: February 2009 Cost: No cost Comments: BSES requires a test report on the wiring at the site along with details of Procedure 1. Obtain a "no-objection certificate" (NOC) from the load by an independent licensed electrical contractor. Fire Service Directorate (State) Time: 7 days Procedure 11.* Receive on-site inspection by the BSES (Municipal) Cost: No cost Comments: According to the RRDA Bylaw No. 5.3.2, all applications for building Time: 1 day permits for all buildings higher than 16 meters and larger than 500 square meters re- Cost: No cost quire the consent of the Director of Fire Services before the building permit is issued. Comments: BSES inspects the site to grant approval for a specific load and to determine the final connection fees. Procedure 2.* Obtain soil test (Private) Time: 3 days Procedure 12.* Receive on-site inspection by the Patna Water Cost: INR 5,000 (flat fee) Board (Municipal) Comments: According to the RRDA Bylaw No. 5.3.2, all applications for building Time: 1 day permits for all buildings higher than 16 meters and larger than 500 square meters Cost: No cost require a soil investigation report before the building permit is issued. Comments: Patna Water Board undertakes inspection of the premises to establish a cost estimate. Procedure 3. Apply for building and development permit to the Ranchi Regional Development Authority (Municipal) Procedure 13.* Obtain permanent electricity connection upon Time: 1 day payment of final fees (Municipal) Cost: INR 78,036 (building fee INR 60 per square meter) Time: 45 days Comments: According to the Ranchi Regional Development Authority Bylaws No. Cost: INR 75,000 4.1 and 4.2, the building company must submit an application for a building permit Comments: The building company must pay the final fees to obtain the connection. to the Office of Vice Chairman, Ranchi Regional Development Authority (RRDA) along with the following documents: Procedure 14.* Obtain permanent water and sewerage a. Four copies of plans with specifications; connections from the Patna Water Board (Municipal) b. Certificate of Incorporation; Time: 15 days c. Certificate from architect or engineer; Cost: INR 2,275 (flat connection fee) d. Ownership title. The land use is internally checked and approved as part of the procedure. The junior Procedure 15.* Obtain phone connection (with inspection) from engineer checks the zoning when he processes the application. It can take up to 3 the BSNL (National) months to obtain approval of the map by the RRDA but takes 30 days on average. Time: 7 days Cost: No cost Procedure 4. Receive inspection from the Ranchi Regional Development Authority (Municipal) Procedure 16. File completion certificate and apply for occupancy Time: 1 day permit at the Patna Municipal Corporation (Municipal) Cost: No cost Time: 1 day Cost: No cost Procedure 5. Obtain drawing-plan approval/building permit from the Ranchi Regional Development Authority (Municipal) Comments: The occupancy permit is required in Patna under the Bihar Municipal Act of 2007. Upon completion of the construction, a completion application is Time: 75 days prepared by the architect or the owner stating that the construction has been com- Cost: No cost pleted in accordance with the regulations, and an occupancy certificate is issued. Comments: Development and building permits should be issued within 60 days. If the RRDA does not notify the building company about the decision in the given Procedure 17. Obtain a "no objection certificate" NOC (with period, the building company has to notify the authority about this delay and the inspection) from the Fire Service Directorate (State) application is deemed approved if the building company receives no notice/reply Time: 1 day within an additional 30 days. Cost: No cost Procedure 6. Receive inspection by an RRDA engineer during Comments: All buildings higher than 15 meters or larger than 500 square meters of construction (Municipal) built-up area require inspection and NOC by the Fire Service Directorate. Time: 1 day Procedure 18.* Receive final inspection of the construction by the Cost: No cost Patna Municipal Corporation (Municipal) Comments: Inspections during the construction process happen on an ad-hoc basis. Time: 1 day Cost: No cost 120 DOING BUSINESS IN INDIA 2009

Procedure 7. Apply for electricity connection Jharkhand State Procedure 16. Obtain a "no-objection certificate" (NOC) from the Electricity Board (State) Fire Department (with inspection) (State) Time: 1 day Time: 7 days Cost: INR 50 Cost: No cost Comments: The application form is available online at www.jseb.in or can be collected for free from the superintendent engineer's office. The building company Procedure 17. File completion certificate and apply for submits this form along with ownership documents and an application fee of INR 50. occupancy permit at the Ranchi Regional Development Authority (Municipal) Procedure 8.* Apply for permanent water and sewerage Time: 1 day connections to the Ranchi Water Board (Municipal) Cost: No cost Time: 1 day Comments: On filing of the completion report with the Ranchi Regional Development Cost: No cost Authority, the officer usually takes 30 days to grant or refuse the occupancy permit. Comments: The application for new water and sewerage connections must be submitted to the Ranchi Water Board, under the Ranchi Municipal Corporation. The Procedure 18. Receive final inspection of the construction by the building company can download the prescribed form online at www.ranchimunici- Ranchi Regional Development Authority (Municipal) pal.com. The building company must submit the form along with ownership docu- Time: 1 day ments, tax number, and a plumbing diagram prepared by a licensed plumber. Cost: No cost Procedure 9.* Apply for permanent phone connection at Bharat Procedure 19. Obtain occupancy permit from the Ranchi Regional Sanchar Nigam Limited (National) Development Authority (Municipal) Time: 1 day Time: 30 days Cost: INR 500 (flat installation charge) Cost: No cost Comments: The building company must apply for the telephone connection at the local BSNL office. The building company must submit the application along with a proof of ownership of the business and the Permanent Account Number (PAN) * This procedure can be completed simultaneously with previous procedures card. The same tariff applies across the country, with minor differences due to local demand. The following charges must be paid: INR 500, in case there is a waiting list for registration charges; INR 300 in installation charges (if fewer than 500 lines) or LIST OF PROCEDURES INR 500 (if more than 500 lines); and a refundable security deposit of INR 2,000. Registering property Procedure 10.* Receive inspection and demand note from the Jharkhand State Electricity Board (State) Time: 1 day Ahmedabad, Gujarat Cost: No cost Property value: USD 47,505 = INR 2,088,776 Comments: The building company will receive the demand note and the load sanc- Data as of: February 2009 tion letter in approximately 7 days. Procedure 1. Check for encumbrances at the office of the Procedure 11.* Receive inspection from the Ranchi Water Board Subregistrar of Assurance (State) (Municipal) Time: 2 days Time: 1 day Cost: INR 4,100 (INR 100 in research fee + INR 5 per year of enquiry + lawyer fees) Cost: No cost Comments: The buyer should conduct a search of the property in the Subregistrar's Comments: The building company will receive an inspection and technical sanction Office, noting the location details of the property and the time period to be checked. in about a week. The building company is requested to make the required payment. While investigating the title, it should be verified that: a. The legal document is in the name of the owner, issued by the Revenue Record Procedure 12.* Obtain permanent electricity connection (State) Department under the seal of the Tahsildar; Time: 40 days b. On the date of purchase the title of the owner for the preceding 30 years (prefer- Cost: INR 5,000 (flat service-connection charge) ably) shows no mortgage or other encumbrance; Comments: The building company must pay a service-connection charge of maxi- c. The property is transferable and heritable; mum INR 5,000 as stated in the sanction. It must also have pay a refundable security d. The transferor is competent and/or authorized to transfer the property; deposit of INR 825 per kW (INR 144,375) and get a transformer and cabling done at e. The transferee is qualified to be a transferee; its own expense. The building companies often use an electrical inspector to carry f. The object of consideration for the transfer is lawful; out all the formalities for INR 25,000. g. The transfer has been made and completed in the manner prescribed by law. Procedure 13.* Obtain permanent water and sewerage Following a 1999 reform of the ULC Act in the state of Gujarat, one must no longer connections upon final payment (Municipal) obtain a Clearance Certificate from the Urban Land Ceiling authorities. Time: 30 days Subregistrar Offices have started computerizing records, but not all of the records. As there is often a line, and the same officer is often on duty in a couple of offices, it Cost: INR 6,000 (flat connection charge) usually takes 2 days to complete this procedure. Comments: The connection is given once the plumber goes to the office and pays connection charges of INR 6,000. Procedure 2. Check for secondary claims at the Mamlatdar's Revenue Office (State) Procedure 14.* Obtain phone connection (with inspection) from Time: 2 days the BSNL (National) Cost: INR 4,100 (includes official fee [INR 100] and lawyer fees) Time: 7 days Comments: The buyer should also conduct research at the Mamlatdar's Office Cost: No cost (Revenue Office) to check whether secondary claims, such as tenant claims or family claims, are attached to the land. For this procedure, the buyer should submit: Procedure 15. Apply for a "no-objection certificate" (NOC) from a. The sale deed (or "agreement to sell" if the sale deed has not been finalized yet); the Fire Department (State) b. The registration index. Time: 1 day All land records at the Revenue Office have been computerized. Cost: No cost LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 121121

Procedure 3. The final sale deed is prepared by the buyer or his Comments: The buyer should conduct a search of the property in the Subregistrar's lawyer (Private) Office, noting the location details of the property and the time period to be checked (ideally 30 years). While investigating the title, it should be verified that: Time: 1 day a. The property is in the name of the owner, issued by the Revenue Department Cost: INR 12,500 (lawyer fees) under the Seal of the Tahsildar; Comments: Though not mandatory, it is common practice for a lawyer to draft the b. The property is transferable and heritable; final sale deed. c. The transferor is competent and/or authorized to transfer the property; Procedure 4. Stamp, execute, and register the final sale deed at d. The transferee is qualified to be a transferee; the Subregistrar's Office (State) e. The object or consideration for the transfer is lawful; Time: 2 days f. The transfer has been made and completed in the manner prescribed by law. Cost: INR 123,238 (4.9% of the property value for stamp duty + 1% of the property All papers with regard to payment of taxes, electricity bills, and water bills may value for registration fees) need to be checked, especially in the case of high-consumption properties such as Comments: The documents are submitted to the office of the Subregistrar of Assur- factories. For a warehouse, it might not be necessary. ances within whose jurisdiction the property is located. The authorized signatories Due to the bifurcation of the jurisdiction in Bengaluru, the buyer must often search of the seller and buyer are required to be present along with two witnesses and the in two separate offices of the Subregistrar of Assurance. As jurisdictions have following documents: changed, the relevant land records pertaining to earlier and later years are usually a. Document required to be registered (in duplicate); located in two different offices. Land records are currently being computerized in the various Subregistrar Offices. b. Two passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses (i.e. voter's identify card, Procedure 2. Obtain proof of compliance with zoning and building passport, identity card issued by the government of India, semi-government and regulations at the Bengaluru Development Authority (Municipal) autonomous bodies, or identification by a Gazette Officer); Time: 3 days d. Certified true copy of the resolution of the Board of Directors of both seller and buyer; Cost: No cost e. Certified true copies of certificate of incorporation of both seller and buyer; Comments: The buyer must conduct a search at the Bengaluru Development Au- thority (Planning Authority for the city of Bengaluru) and Karnataka Industrial Areas f. Copy of the Municipal Tax bill to indicate the year in which the building was Development Board to ascertain whether any land acquisition proceedings have constructed; been notified/initiated in respect of the concerned property, as well as the authentic- g. Copy of Permanent Account Number card issued under the Income Tax Act if the ity and validity of the layout/building plan sanctioned by the Bengaluru Develop- value of the property exceeds INR 500,000; ment Authority/Corporation/Municipal Council where the property is situated. h. Copies of Nonagricultural Use Permission and of Extract of Land Revenue Record If the property falls within the Bengaluru Development Authority limits, searches on Village Forms 7 and 12; must be conducted at the Town and Country Planning Department, BDA. If the i. Copies of Development Permission and Building-Use Permission. property falls within the Bengaluru Metropolitan Regional Development Authority The documents are submitted to the Reader of the Subregistrar of Assurances for or Bengaluru International Airport Area Planning Authority, searches must be con- scrutiny. After scrutiny, the Reader indicates the registration fee required on the ducted at the respective offices. document itself. The registration fee is to be deposited with the cashier against a receipt. After depositing the fees, the documents are presented to the Subregistrar in Procedure 3.* The final sale deed is prepared by the buyer or his accordance with Section 32 of the Registration Act (1908). Normally, the seller hands lawyer (Private) over the peaceful vacant and physical possession of the property to the buyer at Time: 3 days the same time the deed is presented for registration. Upon payment of the required Cost: INR 9,000 (lawyer fees) registration fees and computer service charges in cash, the document is returned. Comments: Normally, the sale deed and transfer deed are drafted by a deed writer In 2006, the stamp duty in Ahmedabad was reduced from 14% to 4.9% of the or a lawyer on a green paper, on which the adhesive stamp for stamp duty is affixed. property value. However, since a 2004 amendment of the Karnataka Stamp Act, stamp paper is no longer used in Karnataka. Accordingly, the stamp duty is payable at the time of the Procedure 5. Apply to the Revenue City Survey Department for registration of the document. mutation of the property title (State) Time: 35 days Procedure 4. Stamp, execute, and register the final sale deed at Cost: INR 1,500 (including lawyer fees) the Subregistrar's Office (State) Comments: After receiving the registered title deed, the buyer applies to the Time: 1 day Revenue City Survey Department to mutate the title of the property under his name. Cost: INR 177,546 (8.5% of the property value for stamp duty) The authorized signatory must submit the duly signed application along with the Comments: According to the Karnataka Act No. 7 of 2006, stamp duty rate was affidavit, the indemnity bond, and a certified/notarized copy of the registered title reduced from 8% to 7.5%. deed. After the assessment of the request for mutation, the municipal authority determines the value of the property tax to be levied, and then issues a letter of Endorsements are made on the document under Sections 52, 58, and 60 of the mutation in favor of the buyer. The buyer must also fill out and submit the form for Registration Act after completion of procedures at the Subregistrar's Office. The e-Dhara (scheme for computerization of revenue records) along with the aforemen- document is copied into the register book, copies of the document are pasted onto tioned documents. Land records have been completely computerized for all talukas 2 indexes, one titled "name and property," the other titled "accounts and reports." in the Ahmedabad district. As the Subregistrar's Office has been computerized, the registered document is returned the same day, or the following one. Parties obtain a token number in order to come back later to obtain the actual certifi- * This procedure can be completed simultaneously with previous procedures cate. If one obtains a token by 1:00 pm, one can come back later that same afternoon to be registered. To register the final sale deed, the following documents are required: REGISTERING PROPERTY a. Document required to be registered (in duplicate); Bengaluru, Kamataka b. Photo identification of each party, such as a voters' identity card, passport, iden- Property value: USD 47,505 = INR 2,088,776 tity card issued by the government of India, semi-government and autonomous Data as of: February 2009 bodies, or identification by a Gazette Officer; c. Certified true copy of the Resolution of the Board of Directors' of both seller and Procedure 1. Check for encumbrances at the office of Subregistrar buyer (already in possession of seller); of Assurance (State) d. Certified true copies of Certificate of Incorporation of both seller and buyer Time: 3 days (already in possession of seller); Cost: INR 3,250 (INR 30 for the first year of research + INR 10 per additional year + e. Sale deed; rest in lawyer fees) f. Conversion order, if any; 122 DOING BUSINESS IN INDIA 2009

g. Approved layout plan; All papers with regard to payment of taxes, electricity bills, and water bills must be h. Khata certificated and Khata extract; checked. If the seller is a company incorporated under the provisions of the Compa- nies Act (1956) then it is prudent to check at the office of the Registrar of Companies i. Latest tax paid. to verify whether there is any charge on the property registered under the provisions The Certificate of Registration can be retrieved the following day. of Section 125 of the Companies Act (1956). In Bengaluru, offices of the Subregistrar have been computerized. As such, passport- sized photographs are not required with the application. Instead, digital pictures of Procedure 3. Obtain stamp paper after payment of stamp duty the respective parties are taken in situ. (State) Procedure 5. Apply to the Circle Revenue Office for mutation of Time: 1 day the property title (State) Cost: INR 104,439 (5% of the property value for stamp duty) Comments: Stamp paper can be obtained from authorized stamp vendors present Time: 20 days in the office of the Subregistrar of Assurances. Cost: INR 3,354 (INR 200 for document charges + 2% of stamp duty for transfer fee) The state of Bhubaneshwar cut the stamp duty to a flat rate of 5% of property value Comments: After obtaining the registered title deed, the buyer applies to the Circle on August 5th, 2008. Revenue Office to mutate the title of the property under his name. The authorized signatory must submit the duly signed application along with the affidavit and a cer- Procedure 4.* The final sale deed is prepared by the buyer or his tified/notarized copy of the registered title deed. The fees for the application amount lawyer (Private) to 2% of the stamp duty on the transfer of the property, paid by demand draft to the Commissioner of the Municipality. No indemnity bond is required. Time: 3 days After assessing the request for mutation, the municipal authority determines the Cost: INR 6,300 (lawyer fee) value of the property tax to be levied, and then issues a letter of mutation in favor Comments: Though not mandatory, it is common practice for a lawyer to draft the of the buyer. final sale deed. In order to apply, one must submit a form and the Certificate of Registration obtained from the previous procedure. The records at the Municipality are then Procedure 5. Execute and register the final sale deed at the updated and a letter given to the client, certifying who is the new owner and de- Subregistrar's Office (State) scribing the property. One needs the certificate, in practice, to be able to satisfy the Time: 24 days next buyer's search of the property to see who the owner is. Cost: INR 41,776 (2% of the property value for registration fee) Comments: The deed for registration is presented to the officer in charge of registra- * This procedure can be completed simultaneously with previous procedures tion at the Subregistrar's Office within whose jurisdiction the property is located. The officer checks the documents and annexes, and sets a date for both parties to REGISTERING PROPERTY sign the instrument of transfer before the Subregistrar. The Subregistrar also ensures that the stamp duty paid is consistent with the value of the property, and receives Bhubaneshwar, Orissa payment of the registration and execution fees. Property value: USD 47,505 = INR 2,088,776 The seller and buyer are required to bring two witnesses, along with the following Data as of: February 2009 documents: Procedure 1. Verify Record of Right of Hal Settlement (Municipal) a. ROR of land; b. If vendor is of a scheduled caste or scheduled tribe, certificate to that effect; Time: 5 days c. Four passport-sized photographs of the authorized signatories of both parties; Cost: INR 20 d. Photo identification of each party and witnesses such as a voters' identity card, Comments: The buyer should verify the Record of Right (ROR) of Hal Settlement, passport, or identity card issued by the government of India, semi-government the ROR of Sabik Settlement, and the Deed of Conveyance if any transfer of title and autonomous bodies or identification by a Gazette Officer; from Sabik to Hal Settlement occurred during the period over which the search is conducted. e. Certified true copies of Certificate of Incorporation of both seller and buyer; This procedure is unique to the state of Orissa, in which certain tribal areas are f. True copy of the site plan or map of the locality where the property is situated protected. (not required but may be asked for); Following Resolution S-88/2005-39463 dated September 28, 2005, the fees for g. Copy of sale deed (in duplicate). obtaining the Record of Right have been reduced to INR 20. The documents are submitted to the reader of the Subregistrar for scrutiny. After Records have been computerized from the year 2003 onwards. scrutiny, the reader indicates the registration fee required on the document itself. The registration fee is to be deposited with the cashier against a receipt. After Procedure 2.* Check for encumbrances at the office of the payment of the registration fees, the document is copied into the registry, copies of Subregistrar of Assurance (State) the document are pasted onto 2 indexes titled "name and property" and "accounts and reports." The document is delivered upon presentation of the receipt previously Time: 7 days issued by the cashier. Cost: INR 2,100 (INR 26 for the first year of search + INR 15 for each additional year The value of a given property, determined by the area or zone in which it is located, + lawyer fees) can be verified from a valuation schedule. If the Subregistrar feels that the property Comments: The buyer should conduct a search of the property in the Subregistrar's has been undervalued, a strategy used to minimize the amount of stamp duty to be Office, noting the location details of the property and the time period to be checked. paid, he may decide to inspect the site, which can take from 3 to 5 days. This is not While investigating the title, it should be verified that: often the case, however. a. The legal document is in the name of the owner, issued by the Revenue Record Department under the seal of the Tahsildar; Procedure 6. Apply to the Circle Revenue Office for mutation of b. On the date of purchase the title of the owner for the preceding 30 years (prefer- the property title (State) ably) shows no mortgage or other encumbrance as still existing on the date of Time: 90 days purchase; Cost: INR 2,500 c. The property is transferable and heritable; Comments: The authorized signatory must submit the duly signed application d. The transferor is competent and/or authorized to transfer the property; along with an affidavit, indemnity bond, and a certified/notarized copy of the e. The transferee is qualified to be a transferee; registered title deed. After assessment of the request for mutation, the Revenue Circle Office settles the value of the property tax to be levied and issues a letter of f. The object of consideration for the transfer is lawful; mutation in favor of the buyer certifying that the property has been mutated under g. The transfer has been made and completed in the manner prescribed by law; the buyer's name. Land records have been computerized. h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- ing and Regulation) Act (1976) and a clearance certificate for the property has * This procedure can be completed simultaneously with previous procedures been issued by the ULC (Urban Land Ceiling) Authorities. LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 123123

REGISTERING PROPERTY Procedure 5.* The final sale deed is prepared by the buyer or his Chennai, Tamil Nadu lawyer (Private) Property value: USD 47,505 = INR 2,088,776 Time: 3 days Data as of: February 2009 Cost: INR 7,500 (lawyer fees) Comments: Though not mandatory, it is common practice for a lawyer to draft the Procedure 1. Obtain a tax clearance certificate from local tax final sale deed. authorities (Municipal) Time: 3 days Procedure 6. Execute and register the final sale deed at the Cost: No cost Subregistrar's Office (State) Comments: The parties or their representative verify with local and municipal tax Time: 17 days agencies that all taxes and charges payable have been paid up to date. Cost: INR 21,048 (1% of the property value + INR 100 for computer charges + INR 60 for subdivision of survey number) Procedure 2.* Check with the Registrar of Companies about any Comments: The deed for registration is presented to the registration officer at the existing charges against the property (State) Subregistrar's Office within whose jurisdiction the property is located. The officer Time: 2 days checks the documents and annexes, and sets a date for both parties to sign the Cost: INR 3,100 (INR 50 for public search of document + INR 50 for two certified cop- instrument of transfer before the Subregistrar. The Subregistrar also makes sure that ies + INR 3,000 for lawyer/accountant fee) the stamp duty paid is consistent with the value of the property, and receives payment of the registration and execution fees. Comments: The buyer must conduct a search in the local court registry for any litigation, insolvency proceedings against an Individual, winding-up proceedings The seller and buyer are required to bring two witnesses, along with the following against a company, or any charges on the property with the Registrar of Companies. documents: The court services are computerized. However, the server regularly goes down and a. Document required to be registered (in duplicate); several charges have not been uploaded yet. The website remains a work in progress. b. Two passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses, such as a voters' identity card, Procedure 3. Check for encumbrances at the office of Subregistrar passport, or identity card issued by the government of India, semi-government of Assurance (State) and autonomous bodies, or identification by a Gazette Officer; Time: 3 days d. Certified true copy of the resolution of the Board of Directors' of both seller and Cost: INR 7,500 (including lawyer fees) buyer; Comments: The buyer should conduct a search of the property in the Subregistrar's e. Certified true copies of the Certificate of Incorporation of both seller and buyer. Office, noting the location details of the property and the time period to be checked. Items 4 and 5 listed above are mandatory only when the government is a party to While investigating the title, it should be verified that: the transaction. In all other cases, it is not mandatory; a. The legal document is in the name of the owner, issued by the Revenue Record f. PAN card must be submitted for registration of documents pertaining to any Department under the seal of the Tahsildar; transaction involving a property exceeding a value of INR 500,000. b. On the date of purchase the title of the owner for the preceding 30 years (prefer- The documents are submitted to the reader of the Subregistrar of Assurance for ably) shows no mortgage or other encumbrance as still existing on the date of the scrutiny. After scrutiny, the reader indicates the registration fee required, on the purchase; document itself. The registration fee is to be deposited with the cashier against a c. The property is transferable and heritable; receipt. d. The transferor is competent and/or authorized to transfer the property; The value of a given property, determined by the area or zone in which it is located, e. The transferee is qualified to be a transferee; can be verified from a valuation schedule. If the Subregistrar feels that the property has been undervalued, a strategy used to minimize the amount of stamp duty to be f. The object of consideration for the transfer is lawful; paid, he may decide to inspect the site, which can take from 3 to 5 days. This is not g. The transfer has been made and completed in the manner prescribed by law; often the case, however. h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- After payment of the registration fees, the document is copied into the registry, ing and Regulation) Act (1976) and a clearance certificate for the property has copies of the document are pasted onto 2 indexes titled "name and property" and been issued by the ULC (Urban Land Ceiling) Authorities. "accounts and reports." The document is delivered upon presentation of the receipt All land records have been computerized from 1987 onward. Prior to 1987, records previously issued by the cashier. must be checked manually. Officials of the Subregistrar conduct the searches and issue the Encumbrance Procedure 7. Apply to the Circle Revenue Office for mutation of Certificate upon receiving an application from the buyer/lawyer. Although a lawyer the property title (State) is engaged to file the application and follow up with the Subregistrar, official fees for Time: 18 days an Encumbrance Certificate are INR 100 per year of search. Cost: INR 5,500 (including lawyer fees) The Encumbrance Certificate can also be obtained online, based on the following Comments: The authorized signatory must submit the duly signed application fee schedule: along with an affidavit, indemnity bond, and a certified/notarized copy of the a. Application fees: INR 1; registered title deed. After assessment of the request for mutation, the Revenue b. Search for first year: INR 15; Circle Office settles the value of the property tax to be levied and issues a letter of c. Search for subsequent years (per year): INR 5; mutation in favor of the buyer certifying that the property has been mutated under the buyer's name. Land records have been computerized. d. Computer search: INR 100; e. Courier charge: INR 25. * This procedure can be completed simultaneously with previous procedures Procedure 4. Obtain stamp paper after payment of stamp duty (State) REGISTERING PROPERTY Time: 7 days Gurgaon, Haryana Cost: INR 167,102 (6% of the property value for stamp duty + 2% of the property Property value: USD 47,505 = INR 2,088,776 value for surcharge/transfer fee) Data as of: February 2009 Comments: In Chennai, one can obtain stamp paper from stamp vendors. Stamp duty was reduced from 8% to 6% in 2003. Obtaining stamp paper from the Treasury, Procedure 1. Check for encumbrances at the office of the dependent on availability, may take longer than through stamp vendors. Subregistrar of Assurance (State) Time: 4 days Cost: INR 5,500 (including lawyer fees) 124 DOING BUSINESS IN INDIA 2009

Comments: The buyer should conduct a search of the property at the Subregistrar's Comments: The authorized signatory must submit the duly signed application Office, noting the location details of the property and the time period to be checked. along with an affidavit, indemnity bond, and a certified/notarized copy of the regis- While investigating the title, it should be verified that: tered title deed. After assessment of the request for mutation, HUDA/HSIIDC settles a. The legal document is in the name of the owner, issued by the Revenue Record the value of the property tax to be levied and issues a letter of mutation in favor of Department under the seal of the Tahsildar; the buyer certifying that the property has been mutated under the buyer's name. b. On the date of purchase the title of the owner for the preceding 30 years (prefer- Due to Gurgaon's growing popularity as a place to buy property, as well as the ably) shows no mortgage or other encumbrance as still existing on the date of the extremely large size of the municipality's jurisdiction, the Municipal Office is purchase; overworked, and it can take some time to conduct this procedure. However, an online submission procedure has been put in place, which allows applications to be c. The property is transferable and heritable; processed more quickly. Nonetheless, the Municipality still takes time (up to 20 days) d. The transferor is competent and/or authorized to transfer the property; to scrutinize the information presented. e. The transferee is qualified to be a transferee; f. The object of consideration for the transfer is lawful; * This procedure can be completed simultaneously with previous procedures g. The transfer has been made and completed in the manner prescribed by law; h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- REGISTERING PROPERTY ing and Regulation) Act (1976) and a clearance certificate for the property has been issued by the ULC (Urban Land Ceiling) Authorities. Guwahati, Assam Gurgaon has completely computerized its Subregistrar's Office. Therefore, the time Property value: USD 47,505 = INR 2,088,776 to conduct the search has been dramatically reduced. Data as of: February 2009 All papers with regard to payment of taxes, electricity bills, and water bills need Procedure 1. Check for encumbrances at the office of Subregistrar to be checked. If the seller is a company incorporated under the provisions of the Companies Act (1956) then it is prudent to take search in the office of the Registrar of Assurance (State) of Companies to verify whether there is any charge on the property registered under Time: 6 days the provisions of Section 125 of the Companies Act (1956). Cost: INR 6,000 (including lawyer fees) Comments: The buyer should conduct a search of the property at the Subregistrar's Procedure 2. The final sale deed is prepared by the buyer or his Office, noting the location details of the property and the time period to be checked. lawyer (Private) While investigating the title, it should be verified that: Time: 4 days a. The legal document is in the name of the owner, issued by the Revenue Record Cost: INR 9,000 (lawyer fees) Department under the seal of the Tahsildar; Comments: Though not mandatory, it is common practice for a lawyer to draft the b. On the date of purchase the title of the owner for the preceding 30 years (prefer- final sale deed. ably) shows no mortgage or other encumbrance as still existing on the date of the purchase; Procedure 3. Stamp, execute and register the final sale deed at c. The property is transferable and heritable; the office of Subregistrar (State) d. the transferor is competent and/or authorized to transfer the property; Time: 3 days e. the transferee is qualified to be a transferee; Cost: INR 140,327 (6% of the property value for stamp duty + INR 15,000 registration f. the object of consideration for the transfer is lawful; fee if the property value is above INR 2,000,000) g. the transfer has been made and completed in the manner prescribed by law. Comments: The documents are submitted to the reader of the Subregistrar of As- In many parts of the city, land records are only partly updated. The city is divided into surance for scrutiny. After scrutiny, the reader indicates the registration fee required, 8/9 mouzas and some mouzas' records are updated only to 1996, 1998, and 2001. which is based on the following fee schedule: For all of them, a manual check at the office of Subregistrar is required. Property value (registration fee) All papers with regard to payment of taxes, electricity bills, and water bills must be < INR 100,000 (INR 500) checked. If the seller is a company incorporated under the provisions of the Compa- INR 100,001-500,000 (INR 1,000) nies Act (1956) then it is prudent to search in the office of the Registrar of Companies INR 500,001-1,000,000 (INR 5,000) to verify whether there is any charge on the property registered under the provisions of Section 125 of the Companies Act (1956). INR 1,000,001-1,500,000 (INR 10,000) INR 1,500,001-2,000,000 (INR 12,500) Procedure 2. The final sale deed is prepared by the buyer or his > INR 2,000,000 (INR 15,000) lawyer (Private) After depositing the fees, the documents are presented to the Subregistrar in accor- Time: 5 days dance with Section 32 of the Registration Act (1908). Normally, the seller hands over Cost: INR 7,000 (including lawyer fees) the physical possession of the property to the buyer when the deed is presented for registration. Upon payment of the required registration fees and computer service Comments: Though not mandatory, it is common practice for a lawyer to draft the charges in cash, as per the receipt, the document is returned within 30 minutes. final sale deed. The documentation should include: Procedure 3. Stamp, execute, and register the final sale deed at a. Document required to be registered (in duplicate); the Subregistrar's Office (State) b. Two passport-sized photographs of the authorized signatories of both parties; Time: 3 days c. Photo identification of each party and witnesses (i.e. voter's identify card, pass- Cost: INR 302,872 (6% of the property value for stamp duty + 8.5% of the property port, or identity card issued by the government of India, semi-government and value for registration fees) autonomous bodies, or identification by a Gazette Officer); Comments: The subsequent procedures can be conducted with the certified copy d. Certified true copy of the resolution of the Board of Directors of both seller and of the sale deed. buyer; The documents are submitted to the office of the Subregistrar of Assurance within e. Certified true copies of certificate of incorporation of both seller and buyer. whose jurisdiction the property is located. The authorized signatories of the seller and buyer are required to be present along with two witnesses, and the following Procedure 4. Apply to HUDA/HSIIDC for mutation of the property documents: title (State) a. Document required to be registered (in duplicate); Time: 15 days b. Two passport-sized photographs of the authorized signatories of both parties; Cost: INR 5,520 c. Photo identification of each party and witnesses (i.e.,, a voter's identify card, passport, or identity card issued by the Government of India, semi-government and autonomous bodies, or identification by a Gazette Officer); LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 125125 d. Certified true copy of the resolution of the resolution of the Board of Directors of Procedure 3.* Pay the stamp duty and other fees at the bank both seller and buyer; (State) e. Certified true copies of the Certificate of Incorporation of both seller and buyer; Time: 1 day f. Copy of the Municipal tax bill to indicate the year in which the building was Cost: INR 198,434 (7% of the property value for stamp duty + 2% of the property constructed. value for transfer fee + 0.5% of the property value for registration fee) The documents are submitted to the reader of the Subregistrar of Assurances for Comments: Stamp duty was decreased by the government of Andhra Pradesh vide scrutiny. After scrutiny, the reader indicates the registration fee required on the G.O. Ms. No. 1126 dated June 13, 2005; the transfer fee decreased under G.O. Ms. Nos. document itself. The registration fee is to be deposited with the cashier against a 622, 623, and 624 dated June 27, 2005 and G.O. Ms. No. 239 dated June 30, 2005, receipt. After depositing the fees, the documents are presented to the Subregistrar in which took effect July 1, 2005. The present applicable rates are as follows: accordance with Section 32 of the Registration Act (1908). Normally, the seller hands All municipal corporations: over physical possession of the property to the buyer when the deed is presented for registration. Upon payment of the required registration fees and computer service 9.5% of the property value = 7% for stamp duty + 2% for transfer fee + 0.5% for charges in cash, the document is returned. registration fee; In Assam, there is only one Subregistrar's Office, which is overloaded with work. The Special and selection-grade municipalities: office will keep the original sale deed for about 2 years to enter the details in the 9.5% of the property value = 7% for stamp duty + 2% for transfer fee + 0.5% for computer, then return it to the buyer. registration fee; Other places: Procedure 4. Apply to the Guwahati Revenue Authority for 9.5% of the property value = 6% for stamp duty + 3% for transfer fee + 0.5% for mutation of the property title (State) registration fee. Time: 70 days Cost: INR 5,125 (INR 25 for application + INR 100 for certified copy + INR 5000 for Procedure 4. Execute and register the final sale deed at the lawyer fees) Subregistrar's Office (State) Comments: The authorized signatory must submit the duly signed application Time: 8 days along with an affidavit, indemnity bond, and a certified/notarized copy of the regis- Cost: INR 120 (scanning charges) tered title deed. After assessment of the request for mutation, the Guwahati Revenue Comments: The documents are submitted to the office of the Subregistrar of Assur- Authority settles the value of the property tax to be levied and issues a letter of ances within whose jurisdiction the property is located. The respective authorized mutation in favor of the buyer certifying that the property has been mutated under signatories of the seller and buyer are required to be present along with two wit- the buyer's name. nesses and the following documents: a. Document required to be registered (in duplicate); * This procedure can be completed simultaneously with previous procedures b. Four passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses (i.e., a voters' identity card, REGISTERING PROPERTY passport, or identity card issued by the government of India, semi-government Hyderabad, Andhra Pradesh and autonomous bodies, or identification by a Gazette Officer); Property value: USD 47,505 = INR 2,088,776 d. Certified true copy of the Resolution of the Board of Directors' of both seller and Data as of: February 2009 buyer and the power of attorney in favor of the person executing the sale deed; e. Certified true copies of the Certificate of Incorporation of both seller and buyer; Procedure 1. Check for encumbrances at the office of the f. Photograph of the property concerned; Subregistrar of Assurances (State) g. Approach route map to the concerned property from the nearest landmark/main Time: 3 days road; Cost: INR 3,750 (INR 120 for research fee + lawyer fees) h. Notarized affidavits from both parties to attest that the transaction respects the Comments: Due to bifurcations (i.e., shifts in jurisdiction over the years) it is now terms of the ULC act; common for the buyer to go to two offices of the Subregistrar to conduct their i. Latest receipt to show payment of municipal tax to Municipal authorities. research, once for earlier years (up to 1985), once for later year (from 1985 onward). The documents are submitted to the reader of the Subregistrar of Assurances for A third procedure may be required, but is not common. scrutiny. After scrutiny, the reader indicates the stamp duty and registration fee The buyer should search the property in the Registry and the Revenue Office. While required-9% and 0.5%, respectively, of the transaction value-on the document itself. investigating the title it should be verified that: The stamp duty and registration fee are to be deposited with the concerned bank a. The "Patta"/legal ownership document, in the owner's name, issued by the against a receipt. After depositing the stamp duty and fees, the documents must Revenue Department under the Seal of the Tahsildar; be presented to the Subregistrar by the parties in accordance with Section 32 of the Registration Act (1908) along with the bank receipt or challan. In practice, the b. The Encumbrance Certificate (EC) for the preceding 31 years (preferably) shows seller hands over physical possession of the property to the buyer when the deed is no mortgage or other encumbrance as still existing on the date of purchase; presented for registration. c. The property is transferable and heritable, at the revenue and ULC dept; Thereafter, endorsements are made on the document under Sections 52, 58, and 60 d. The transferor is competent and/or authorized to transfer the property; of the Registration Act after completion of procedures at the Subregistrar's Office. e. The transferee is qualified to be a transferee; The document is copied into the registry, copies of the document are pasted onto 2 f. The object or consideration for the transfer is lawful. Also, all papers with regard indexes, one titled "name and property," the other titled "accounts and reports." The to payment of taxes, electricity bills, and water bills must be checked. document is delivered upon presentation of the receipt issued by the cashier. Since Information on electricity and water bill status is not available at the Subregistrar's land records have been computerized from 1980 onward, the registered document is Office. The buyer must check receipts from the seller and confirm whether up-to- returned the same day. date water and electricity bills have been paid. It is general practice to go to the Subregistrar's Office in advance in order to calculate All the records in the Subregistrar's Office are computerized and most of the records the stamp duty and registration fees payable so that payments can be arranged ac- are public documents. Anyone wishing to search the records must first apply to the cordingly and delays/disputes can be avoided on the day of the registration. registrar, who then issues the non-encumbrance certificate. Procedure 5. Apply to the Circle Revenue Office for mutation of Procedure 2. The final sale deed is prepared by the buyer or his the property title (State) lawyer (Private) Time: 24 days Time: 2 days Cost: INR 10,000 (including lawyer fees) Cost: INR 7,000 (lawyer fees) Comments: Though not mandatory, it is common practice for a lawyer to draft the final sale deed. 126 DOING BUSINESS IN INDIA 2009

Comments: The authorized signatory must submit the duly signed application f. Copy of the latest property registration card (to be obtained from the City Survey along with an affidavit, indemnity bond, and a certified/notarized copy of the Department) to indicate that the property does not belong to the government; registered title deed. After assessment of the request for mutation, the Hyderabad g. Copy of the Municipal tax bill to indicate the year when the building was con- Revenue Department settles the value of the property tax to be levied and issues structed; a letter of mutation in favor of the buyer certifying that the property has been h. No-Objection Certificate from the Urban Land Ceiling Department; mutated under the buyer's name. Records at the Revenue Department have been computerized. i. PAN card. The documents are presented to the Subregistrar's Office in accordance with Section 32 of the Registration Act (1908). Normally, the seller hands over physical possession * This procedure can be completed simultaneously with previous procedures of the property to the buyer when the deed is presented for registration. Upon payment of the required registration fees and computer service charges in cash, the REGISTERING PROPERTY document is returned. Indore, Madhya Pradesh Procedure 5. Apply to the Circle Revenue Office for mutation of Property value: USD 47,505 = INR 2,088,776 the property title (State) Data as of: February 2009 Time: 30 days Procedure 1. Check for encumbrances at the office of the Cost: INR 3,500 (including lawyer fees) Subregistrar of Assurances (State) Comments: The authorized signatory must submit the duly signed application Time: 5 days along with an affidavit, indemnity bond, and a certified/notarized copy of the Cost: INR 7,500 (including lawyer fees) registered title deed. After assessment of the request for mutation, the Circle Revenue Office settles the value of the property tax to be levied and issues a letter of Comments: The buyer should conduct a search of the property at the Subregistrar's mutation in favor of the buyer certifying that the property has been mutated under Office, noting the location details of the property and the time period to be checked. the buyer's name. While investigating the title, it should be verified that: a. The legal document is in the owner's name, issued by the Revenue Record Department under the seal of the Tahsildar; * This procedure can be completed simultaneously with previous procedures b. On the date of purchase the title of the owner for the preceding 30 years (preferably) shows no mortgage or other encumbrance as still existing on the date of the REGISTERING PROPERTY purchase; Jaipur, Rajasthan c. The property is transferable and heritable; Property value: USD 47,505 = INR 2,088,776 d. The transferor is competent and/or authorized to transfer the property; Data as of: February 2009 e. The transferee is qualified to be a transferee; f. The object of consideration for the transfer is lawful; Procedure 1. Check for encumbrances at the office of Subregistrar of Assurances (State) g. The transfer has been made and completed in the manner prescribed by law; Time: 3 days h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- ing and Regulation) Act (1976) and a clearance certificate for the property has Cost: INR 3,375 (INR 25 per year for 15 years of research + INR 3,000 in lawyer fees) been issued by the ULC (Urban Land Ceiling) Authorities. Comments: The buyer should search the property in the Registry and the Revenue All papers with regard to payment of taxes, electricity bills, and water bills must be Office. While investigating the title it should be verified that: checked. If the seller is a company incorporated under the provisions of the Compa- a. The "Patta"/legal ownership document, in the owner's name, issued by the nies Act (1956) then it is prudent to search in the office of the Registrar of Companies Revenue Department under the Seal of the Tahsildar; to verify whether there is any charge on the property registered under the provisions b. The Encumbrance Certificate (EC) for the preceding 31 years (preferably) shows of Section 125 of the Companies Act (1956). no mortgage or other encumbrance as still existing on the date of purchase; c. The property is transferable and heritable; Procedure 2. Purchase stamp paper from stamp vendors (Private) d. The transferor is competent and/or authorized to transfer the property; Time: 1 day e. The transferee is qualified to be a transferee; Cost: INR 20,888 (1% of the property value) f. The object or consideration for the transfer is lawful; Procedure 3. The final sale deed is prepared by the buyer or his g. The transfer has been made and completed in the manner prescribed by law. lawyer (Private) Also, all papers with regard to payment of taxes, electricity bills, and water bills Time: 1 day must be checked. Usually the seller will provide receipts to the buyer, as well as tax receipts for property taxes. It is common practice that the lawyer issues the Cost: INR 7,500 (lawyer fees) non-encumbrance certificate after conducting the search on behalf of the parties. In Comments: Though not mandatory, it is common practice for a lawyer to draft the Jaipur, there is a lower volume of records than in other cities and therefore this step final sale deed. takes less time. In addition, land records are in the process of being computerized.

Procedure 4. Execute and register the final sale deed at the office Procedure 2. Pay the stamp duty at the State Treasury and obtain of Subregistrar (State) stamp paper (State) Time: 2 days Time: 2 days Cost: INR 183,812 (8% of the property value for stamp duty + 0.8% of the property Cost: INR 167,102 (8% of the property value for stamp duty) value for registration fees) Comments: Stamp paper is to be purchased from the treasury authorized vendors Comments: The documents are submitted to the office of the Subregistrar of Assur- by cash, bank draft, or check. ances within whose jurisdiction the property is located. The authorized signatories of the seller and buyer are required to be present along with two witnesses and the Procedure 3.* The final sale deed is prepared by the buyer or his following documents: lawyer (Private) a. Document required to be registered (in duplicate); Time: 3 days b. Two passport-sized photographs of the authorized signatories of both parties; Cost: INR 7,500 (lawyer fees) c. Photo identification of each party and witnesses (i.e., a voter's identify card, Comments: Though not mandatory, it is common practice for a lawyer to draft the passport, or identity card issued by the government of India, semi-government final sale deed. and autonomous bodies, or identification by a Gazette Officer); d. Certified true copy of the resolution of the resolution of the Board of Directors of both seller and buyer; e. Certified true copies of certificate of incorporation of both seller and buyer; LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 127127

Procedure 4. Execute and register the final sale deed at the e. The transferee is qualified to be a transferee; Subregistrar's Office (State) f. The object of consideration for the transfer is lawful; Time: 2 days g. The transfer has been made and completed in the manner prescribed by law; Cost: INR 22,888 (1% of the property value for registration fee + INR 2,000 for lawyer h. The property being sold is free of restrictions for sale under the Kerala Land fees) Reform Act. Comments: The authorized signatories for the seller and buyer are required to be All papers with regard to payment of taxes, electricity bills, and water bills must be present along with two witnesses at the time of registration, as well as the following checked. If the seller is a company incorporated under the provisions of the Compa- documents: nies Act (1956) then it is prudent to search in the office of the Registrar of Companies a. Sale agreement to be registered (in duplicate); to verify whether there is any charge on the property registered under the provisions of Section 125 of the Companies Act (1956). b. Two passport-sized photographs of the authorized signatories of both parties; Records are in the process of being computerized. c. Photo identification of each party and witnesses (i.e., a voters' identity card, passport, or identity card issued by the government of India, semi-government and autonomous bodies, or identification by a Gazette Officer; Procedure 2. The final sale deed is prepared by the buyer or his lawyer (Private) d. Certified true copy of the Resolution of the Board of Directors' of both seller and buyer; Time: 3 days e. Certified true copies of the Certificate of Incorporation of both seller and buyer. Cost: INR 6,500 (lawyer fees) The deed for registration is presented to the registration officer at the Subregistrar's Comments: Though not mandatory, it is common practice for a lawyer to draft the Office within whose jurisdiction the property is located. The officer checks the final sale deed. documents and annexes, and sets a date for both parties to sign the instrument of transfer before the Subregistrar. The Subregistrar also ensures that the stamp duty Procedure 3. Stamp, execute, and register the final sale deed at paid is consistent with the value of the property, and receives payment of the reg- the Subregistrar's Office (State) istration and execution fees. The registration fee is to be deposited with the cashier Time: 1 day against a receipt. Cost: INR 302,872 (12.5% of the property value for stamp duty + 2% of the property The value of a given property, determined by the area or zone in which it is located, value for registration fees) can be verified from a valuation schedule. If the Subregistrar feels that the property Comments: The documents are submitted to the office of the Subregistrar of Assur- has been undervalued, a strategy used to minimize the amount of stamp duty to be ances within whose jurisdiction the property is located. The authorized signatories paid, he may decide to inspect the site, which can take from 3 to 5 days. This is not of the seller and buyer are required to be present along with two witnesses, and to often the case, however. present the following documents: After payment of the registration fees, the document is copied into the registry, a. Document required to be registered (in duplicate); copies of the document are pasted onto 2 indexes titled "name and property" and "accounts and reports." The document is delivered upon presentation of the receipt b. Two passport-sized photographs of the authorized signatories of both parties; previously issued by the cashier. c. Photo identification of each party and witnesses (i.e., a voter's identify card, Prior to 2005, registration of the final sale deed could only be made at the Subreg- passport, or identity card issued by the government of India, semi-government istrar's Office under whose jurisdiction the property fell. Since 2005, however, it is and autonomous bodies, or identification by a Gazette Officer); possible to register the property in any office of the Subregistrar, regardless of its ju- d. Certified true copy of the resolution of the Board of Directors of both seller and risdiction. After registration, the Subregistrar's Office sends the necessary documents buyer; to the zonal office in charge of the area where the property is located. e. Certified true copies of the Certificate of Incorporation of both seller and buyer. The documents are submitted to the reader of the Subregistrar of Assurances for Procedure 5. Apply to the Circle Revenue Office for mutation of scrutiny. After scrutiny, the reader indicates the registration fee required on the the property title (State) document itself. The registration fee is to be deposited with the cashier against a Time: 15 days receipt. After depositing the fees, the documents are presented to the Subregistrar's Cost: INR 5,000 (INR 2,000 for mutation charges + INR 3,000 for lawyer fees) Office in accordance with Section 32 of the Registration Act (1908). Normally, the seller hands over physical possession of the property to the buyer when the deed is Comments: The authorized signatory for the buyer must submit the duly signed presented for registration. application along with an affidavit, indemnity bond, and a certified/notarized copy of the registered title deed. After assessment of the request for mutation, the Circle Procedure 4. Apply to the Circle Revenue Office for mutation of Revenue Office settles the value of the property tax to be levied and issues a letter of mutation in favor of the buyer certifying that the property has been mutated under the property title (State) the buyer's name. Time: 20 days Cost: INR 8,000 (INR 6,000 for lawyer fees + INR 2,000 for administrative fees) * This procedure can be completed simultaneously with previous procedures Comments: After receipt of the registered title deed, the buyer applies to the Village Office of the locality under which the property falls, and produces the following REGISTERING PROPERTY documents: a. Title deed; Kochi, Kerala b. Location and sketch of the plot; Property value: USD 47,505 = INR 2,088,776 c. Encumbrance certificate; Data as of: February 2009 d. Tax receipt in the buyer's name. Procedure 1. Check for encumbrances at the office of the To effect the mutation the buyer must pay the tax in his name after the sale is Subregistrar of Assurances (State) registered. Time: 3 days Cost: INR 6,800 (INR 800 in research fees + INR 6,000 for lawyer fees) * This procedure can be completed simultaneously with previous procedures Comments: The buyer should conduct a search of the property in the Subregistrar's Office, noting the location details of the property and the time period to be checked. REGISTERING PROPERTY While investigating the title, it should be verified that: Kolkata, West Bengal a. The legal document is in the owner's name, issued by the Revenue Record Property value: USD 47,505 = INR 2,088,776 Department under the seal of the Tahsildar; Data as of: February 2009 b. On the date of purchase the title of the owner for the preceding 30 years (preferably) shows no mortgage or other encumbrance as still existing; Procedure 1. Check for encumbrances at the office of the c. The property is transferable and heritable; Subregistrar of Assurances (State) d. The transferor is competent and/or authorized to transfer the property; Time: 18 days 128 DOING BUSINESS IN INDIA 2009

Cost: INR 7,500 (including lawyer fees) Comments: The authorized signatory for the buyer must submit the duly signed Comments: The buyer should conduct a search of the property in the Subregistrar's application along with an affidavit, indemnity bond, and a certified/notarized copy Office, noting the location details of the property and the time period to be checked. of the registered title deed. After assessment of the request for mutation, the Circle While investigating the title, it should be verified that: Revenue Office settles the value of the property tax to be levied and issues a letter of mutation in favor of the buyer certifying that the property has been mutated under a. The property is in the owner's name, issued by the Revenue Department under the buyer's name. the seal of the Tahsildar; b. The property is transferable and heritable; * This procedure can be completed simultaneously with previous procedures c. The transferor is competent and/or authorized to transfer the property; d. The transferee is qualified to be a transferee; REGISTERING PROPERTY e. The object or consideration for the transfer is lawful; f. The transfer has been made and completed in the manner prescribed by law. Also, Ludhiana, Punjab all papers with regard to payment of taxes, electricity bills, and water bills may Property value: USD 47,505 = INR 2,088,776 need to be checked, especially in the case of high-consumption properties such Data as of: February 2009 as factories; for a warehouse, it may not be necessary, or the vendor will simply present recent receipts to the buyer. Procedure 1. Check for encumbrances at the office of the Land records from 2003 onward have been computerized. Subregistrar of Assurances (State) If the seller is a company incorporated under the provisions of the Companies Act Time: 5 days (1956) then it is advisable to search in the office of the Registrar of Companies to Cost: INR 7,000 (including lawyer fees) verify whether there is any charge on the property registered under the provisions of Comments: The buyer should conduct a search of the property at the Subregistrar's Section 125 of the Companies Act (1956). Office, noting the location details of the property and the time period to be checked. While investigating the title, it should be verified that: Procedure 2. Pay the stamp duty at the State Treasury and obtain stamp paper (State) a. The legal document is in the owner's name, issued by the Revenue Record Department under the seal of the Tahsildar; Time: 1 day b. On the date of purchase the title of the owner for the preceding 30 years (prefer- Cost: INR 148,303 (6% of the property value for stamp duty + 1.1% of the property ably) shows no mortgage or other encumbrance as still existing on the date of the value for registration fees) purchase; Comments: A stamp paper, on which final sale agreement must be drafted, is c. The property is transferable and heritable; obtained after payment of stamp duty to the State Treasury. d. The transferor is competent and/or authorized to transfer the property; Procedure 3.* The final sale deed is prepared by the buyer or his e. The transferee is qualified to be a transferee; lawyer (Private) f. The object of consideration for the transfer is lawful; Time: 3 days g. The transfer has been made and completed in the manner prescribed by law. Cost: INR 5,000 (lawyer fees) h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- ing and Regulation) Act (1976) and a clearance certificate for the property has Comments: Though not mandatory, it is common practice for a lawyer to draft the been issued by the ULC (Urban Land Ceiling) Authorities. final sale deed. All papers with regard to payment of taxes, electricity bills, and water bills must be Procedure 4. Stamp, execute, and register the final sale deed at checked. If the seller is a company incorporated under the provisions of the Compa- the Subregistrar's Office (State) nies Act (1956) then it is prudent to search in the office of the Registrar of Companies to verify whether there is any charge on the property registered under the provisions Time: 7 days of Section 125 of the Companies Act (1956). Cost: No cost Comments: The final sale deed, written on stamp paper, is submitted to the office of Procedure 2. The final sale deed is prepared by the buyer or his the Subregistrar of Assurances within whose jurisdiction the property is located. The lawyer (Private) respective authorized signatories of the seller and buyer are required to be present Time: 1 day along with two witnesses in order to execute the sale agreement, and to submit the Cost: INR 10,500 (lawyer fees) following documents: Comments: Though not mandatory, it is common practice for a lawyer to draft the a. Document required to be registered (in duplicate); final sale deed. b. Two passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses (i.e., a voters' identity card, Procedure 3. Stamp, execute, and register the final sale deed at passport, or identity card issued by the government of India, semi-government the Subregistrar's Office (State) and autonomous bodies, or identification by a Gazette Officer; Time: 1 day d. Certified true copy of the Resolution of the Board of Directors' of both seller and Cost: INR 197,990 (INR 10,000 for registration fees + 9% of the property value for buyer (already in possession of seller), and power of attorney where applicable. stamp duty, which includes 3% of the property value for development charges) In practice, the seller hands over physical possession of the property to the buyer Comments: The final sale deed, written on stamp paper, is submitted with the office when the deed is presented for registration. of the Subregistrar of Assurances within whose jurisdiction the property is located. Thereafter endorsements are made under Sections 52, 58, and 60 of the Registration The respective authorized signatories of the seller and buyer are required to be pres- Act on the document after completion of procedures at the Subregistrar's Office. ent along with two witnesses and the following documents: The document is copied into the registry, copies of the document are pasted onto a. Document required to be registered (in duplicate); 2 indexes, one titled "name and property," the other titled "accounts and reports." The document is delivered upon presentation of the receipt issued by the cashier in b. Two passport-sized photographs of the authorized signatories of both parties; respect of the document at the time of presentation. c. Photo identification of each party and witnesses (i.e., a voter's identify card, When a document is presented for registration under Section 19 and is not in a lan- passport, or identity card issued by the government of India, semi-government guage known to the registering officer, the translation together with the true copy of and autonomous bodies, or identification by a Gazette Officer); the document is filed in the appropriate book (as per West Bengal Act 17 of 1978). d. Certified true copy of the resolution of the resolution of the Board of Directors of Stamp duty is 6%, if the property value is below INR 2,500,000 and 7%, if above. both seller and buyer; e. Certified true copies of the Certificate of Incorporation of both seller and buyer; Procedure 5. Apply to the Circle Revenue Office for mutation of f. Copy of the latest property registration card (to be obtained from the City Survey the property title (State) Department) to indicate that the property does not belong to the government; Time: 78 days g. Copy of the Municipal tax bill to indicate the year when the building was con- Cost: INR 5,000 (including lawyer fees) structed; LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 129129 h. No-Objection Certificate from the Urban Land Ceiling Department. Procedure 4. Execute and register the final sale deed at the The documents are submitted to the reader of the Subregistrar of Assurances for Subregistrar's Office (State) scrutiny. After scrutiny, the reader indicates the registration fee required on the Time: 1 day document itself. The registration fee is to be deposited with the cashier against a Cost: INR 20,908 (1% of the property value for registration fee + INR 20 for scanning receipt. After depositing the fees, the documents are presented to the Subregistrar's charges) Office in accordance with Section 32 of the Registration Act (1908). In practice, the seller hands over physical possession of the property to the buyer when the deed Comments: The execution of the sale deed in front of 2 witnesses is done at the is presented for registration. Upon payment of the required registration fees and same time and place when the buyer submits documents to the Subregistrar's Office computer service charges in cash, as per the receipt, the document is returned. for registration. The documents are submitted to the office of the Subregistrar of Assurances within Procedure 4. Apply to the Circle Revenue Office for mutation of whose jurisdiction the property is located. The authorized signatories of the seller the property title (State) and buyer are required to be present along with two witnesses. Once the document is registered, a distinct document number is assigned to that document. The record Time: 60 days of registration is kept in the office of the Subregistrar of Assurances. Cost: INR 6,500 (including lawyer fees) The documents are submitted to the reader of the Subregistrar of Assurances for Comments: The authorized signatory must submit the duly signed application scrutiny. After scrutiny, the reader indicates the registration fee required, which is 1% along with an affidavit, indemnity bond, and a certified/notarized copy of the of the transaction value or INR 30,000, whichever is less on the document itself. The registered title deed. After assessment of the request for mutation, the Circle registration fee is to be deposited with the cashier against a receipt. After deposit- Revenue Office settles the value of the property tax to be levied and issues a letter of ing the fees, the documents are presented to the Subregistrar in accordance with mutation in favor of the buyer certifying that the property has been mutated under Section 32 of the Registration Act (1908). Normally, the seller hands over physical the buyer's name. possession of the property to the buyer when the deed is presented for registration. Upon payment of the required registration fees and computer service charges in * This procedure can be completed simultaneously with previous procedures cash, as per the receipt, the document is returned within 30 minutes. The documentation shall include: REGISTERING PROPERTY a. Document required to be registered (in duplicate); Mumbai, Maharashtra b. Two passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses (i.e., a voters' identity card, Property value: USD 47,505 = INR 2,088,776 passport, or identity card issued by the government of India, semi-government Data as of: February 2009 and autonomous bodies, or identification by a Gazette Officer; Procedure 1. Check for encumbrances at the office of the d. Certified true copies of the Certificate of Incorporation of both seller and buyer; Subregistrar of Assurances (State) e. Copy of the latest property registration card (to be obtained from the City Survey Time: 5 days Department) to indicate that the property does not belong to the government; Cost: INR 10,000 (INR 750 for official fees, the remainder for lawyer and clerk fees) f. Copy of the Municipal tax bill to indicate the year in which the building was constructed. Comments: The buyer should conduct a search of the property in the Subregistrar's Office, noting the location details of the property and the time period to be checked. Procedure 5. Apply to the Survey and Land Records Office for While investigating the title, it should be verified that: mutation of the title of the property (State) a. The legal document is in the owner's name, issued by the Revenue Record Department under the seal of the Tahsildar; Time: 30 days b. On the date of purchase the title of the owner for the preceding 30 years (prefer- Cost: INR 300 ably) shows no mortgage or other encumbrance as still existing on the date of the Comments: After receipt of the registered title deed, the buyer applies to the Survey purchase; and Land Records Office seeking mutation of the title of the property in its favor. The c. The property is transferable and heritable; authorized signatory must submit the duly signed application along with an affidavit, indemnity bond, and a certified/notarized copy of the registered title deed. d. The transferor is competent and/or authorized to transfer the property; After the assessment of the request for mutation, the Land and Survey Office decides e. The transferee is qualified to be a transferee; the value for levying tax on property and then issues a letter of mutation in favor of f. The object of consideration for the transfer is lawful; the buyer. Costs include: an application fee of INR 100, indemnity bond on INR 100 g. The transfer has been made and completed in the manner prescribed by law. stamp paper, affidavit at INR 50, and notarized sale deed for INR 50. h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- ing and Regulation) Act (1976) and a clearance certificate for the property has * This procedure can be completed simultaneously with previous procedures been issued by the ULC (Urban Land Ceiling) Authorities. All papers with regard to payment of taxes, electricity bills, and water bills must be REGISTERING PROPERTY checked. If the seller is a company incorporated under the provisions of the Compa- nies Act (1956) then it is prudent to search in the office of the Registrar of Companies New Delhi, Delhi to verify whether there is any charge on the property registered under the provisions Property value: USD 47,505 = INR 2,088,776 of Section 125 of the Companies Act (1956). Data as of: February 2009 Procedure 2. The final sale deed is prepared by the buyer or his Procedure 1. Check for encumbrances at the office of the lawyer (Private) Subregistrar of Assurances (State) Time: 7 days Time: 3 days Cost: INR 19,500 Cost: INR 9,000 (including lawyer fees) Comments: The buyer's lawyer prepares the final sale deed and then engrosses the Comments: The buyer should conduct a search of the property in the Subregistrar's document on green paper, leaving the date and place blank. This document is then Office, noting the location details of the property and the time period to be checked. submitted to be stamped. While investigating the title, it should be verified that: It is standard practice for law firms to charge a flat fee when dealing with real estate a. The legal document is in the owner's name, issued by the Revenue Record transactions. Department under the seal of the Tahsildar; b. On the date of purchase the title of the owner for the preceding 30 years (prefer- Procedure 3. Pay the stamp duty on the final sale deed through ably) shows no mortgage or other encumbrance as still existing on the date of the franking at the designated bank (Private) purchase; Time: 1 day c. The property is transferable and heritable; Cost: INR 104,439 (5% of the property value for stamp duty) d. The transferor is competent and/or authorized to transfer the property; e. The transferee is qualified to be a transferee; 130 DOING BUSINESS IN INDIA 2009

f. The object of consideration for the transfer is lawful; REGISTERING PROPERTY g. The transfer has been made and completed in the manner prescribed by law. Noida, Uttar Pradesh It is common practice for parties to hire a lawyer for this procedure. Official search Property value: USD 47,505 = INR 2,088,776 fees amount to INR 50. Land records have been partially computerized. Data as of: February 2009 Procedure 2. Pay the stamp duty at the State Treasury and obtain Procedure 1. Check for encumbrances at the office of the stamp paper (State) Subregistrar of Assurances (State) Time: 2 days Time: 12 days Cost: INR 125,327 (3% of the property value for stamp duty + 3% of the property Cost: INR 9,000 (INR 750 per year of research, over 14 years, as lawyer fees) value for municipal tax) Comments: The buyer should conduct a search of the property in the Subregistrar's Comments: The buyer must deposit the amount of stamp duty and registration fees Office, noting the location details of the property and the time period to be checked. with the Treasury in cash or by bank draft. Once the deposit has been made and a While investigating the title, it should be verified that: draft of the sale agreement has been agreed upon by both parties, the agreement a. The legal document is in the owner's name, issued by the Revenue Record will be written and stamped on stamp paper, usually by a lawyer. Stamp duty for Department under the seal of the Tahsildar; men in New Delhi amounts to 3% of the property value (2% for women). Stamp duty has been reduced from 5% to 3% by the India Stamp (Delhi Amendment) Act (2007) b. On the date of purchase the owner's title for the preceding 12 years (as commonly vide Notification No. F.14(20)/LA-2007/LJ/07/7042, published in the official gazette practiced in Noida) shows no mortgage or other encumbrance as still existing on dated November 13, 2007. the date of the purchase; c. The property is transferable and heritable; Procedure 3.* The final sale deed is prepared by the buyer or his d. The transferor is competent and/or authorized to transfer the property; lawyer (Private) e. The transferee is qualified to be a transferee; Time: 3 days f. The object of consideration for the transfer is lawful; Cost: INR 5,500 (lawyer fees) g. The transfer has been made and completed in the manner prescribed by law; Comments: Though not mandatory, it is common practice for a lawyer to draft the h. The property being sold is free of restrictions for sale under the Urban Land (Ceil- final sale deed. ing and Regulation) Act (1976) and a clearance certificate for the property has been issued by the ULC (Urban Land Ceiling) Authorities; Procedure 4. Execute and register the final sale deed at the office i. The property has been made freehold by the Noida authorities. of Subregistrar (State) The buyer should submit an inspection form along with Form 29 to the Subregistrar's Time: 8 days Office, to provide information on the location of the property and the date of original Cost: INR 6,000 (including lawyer fees) registration of the property. Comments: Parties/lawyers submit the following documents at the Subregistrar's All papers with regard to payment of taxes, electricity bills, and water bills must be Office under whose jurisdiction the property is located: checked. If the seller is a company incorporated under the provisions of the Compa- a. Two copies of the sale purchase agreement, on stamp paper. One copy will remain nies Act (1956) then it is prudent to search in the office of the Registrar of Companies with the Subregistrar for the records; to verify whether there is any charge on the property registered under the provisions of Section 125 of the Companies Act (1956). b. Two passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses (i.e., a voter identity card, pass- Procedure 2. Obtain a transfer memorandum from the port, or identity card issued by the government of India, semi-government and Development Authority (Municipal) autonomous bodies, or identification by a Gazette Officer; Time: 11 days d. Certified true copy of the Resolution of the Board of Directors' of both seller and buyer and the Power of Attorney authorizing a representative to sign the sale Cost: INR 405,115 (INR 725 per square meter of land + INR 1,000 for processing fees) deed; Comments: In Noida, as a huge majority of properties are leasehold, the buyer must e. Certified true copies of the Certificate of Incorporation of both seller and buyer. submit an application to the development authority for a transfer memorandum along with the transfer memorandum of the seller. The development authority will The documents are submitted to the reader of the Subregistrar of Assurances for check if the property can be transferred for the mentioned usage and, upon comple- scrutiny. After scrutiny, the reader indicates the registration fee required on the tion of the verification, will issue a transfer memorandum. This memorandum is document itself. The registration fee is to be deposited with the cashier against a necessary for the buyer to register the sale deed. receipt. After depositing the fees, the documents are presented to the Subregistrar's Office in accordance with Section 32 of the Registration Act (1908). In practice, the seller hands over physical possession of the property to the buyer when the deed Procedure 3. The final sale deed is prepared by the buyer or his is presented for registration. Upon payment of the required registration fees and lawyer (Private) computer service charges in cash, as per the receipt, the document is returned. Time: 3 days The value of a given property, determined by the area or zone in which it is located, Cost: INR 7,000 (lawyer fees) can be verified from a valuation schedule. If the Subregistrar feels that the property Comments: Though not mandatory, it is common practice for a lawyer to draft the has been undervalued, a strategy used to minimize the amount of stamp duty to be final sale deed. paid, he may decide to inspect the site, which can take from 3 to 5 days. This is not often the case, however. Procedure 4. Stamp, execute and register the final sale deed at the Subregistrar's Office (State) Procedure 5. Apply to the Circle Revenue Office for mutation of the property title (State) Time: 2 days Cost: INR 109,539 (5% of the property value for stamp duty + INR 5,100 for registra- Time: 40 days tion fees) Cost: INR 10,000 (including lawyer fees) Comments: The final sale deed, written on stamp paper, is submitted to the office of Comments: The buyer applies to the Municipal Authority to mutate the title of the the Subregistrar of Assurances within whose jurisdiction the property is located. The property in his favor. The authorized signatory must submit the duly signed applica- respective authorized signatories of the seller and buyer are required to be present, tion along with an affidavit, an indemnity bond, and a certified/notarized copy of the along with two witnesses and the following documents, in order to execute the sale registered title deed. The Circle Revenue Office assesses the claim, settles the value agreement: of the property tax (which can be paid online), and issues a letter of mutation in a. Document required to be registered (in duplicate); favor of the buyer certifying that the property has been mutated under the buyer's name. Official fees for this procedure would amount to INR 50-100, depending on b. Two passport-sized photographs of the authorized signatories of both parties; the size and location of the property. c. Photo identification of each party and witnesses (i.e., a voter's identify card, passport, or identity card issued by the government of India, semi-government and autonomous bodies, or identification by a Gazette Officer); * This procedure can be completed simultaneously with previous procedures LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 131131 d. Certified true copy of the resolution of the resolution of the Board of Directors of Procedure 3.* The final sale deed is prepared by the buyer or his both seller and buyer; lawyer (Private) e. Certified true copies of the Certificate of Incorporation of both seller and buyer; Time: 3 days f. Copy of the latest property register card (to be obtained from the City Survey Cost: INR 5,500 (lawyer fees) Department) to indicate that the property does not belong to the government; Comments: Though not mandatory, it is common practice for a lawyer to draft the g. Copy of the Municipal tax bill to indicate the year when the building was con- final sale deed. structed; h. Photograph of the property from all directions; Procedure 4. Execute and register the final sale deed at the i. Permanent Account Number card. Subregistrar's Office (State) The documents are submitted to the reader of the Subregistrar of Assurances for Time: 61 days scrutiny. After scrutiny, the reader indicates the registration fee required on the Cost: INR 84,551 (2% of the property value for court fees + 2% of the property value document itself. The registration fee is to be deposited with the cashier against a for municipal fees + INR 1,000 for statutory fees) receipt. After depositing the fees, the documents are presented to the Subregistrar's Comments: The final sale deed, written on stamp paper, is submitted to the office of Office in accordance with Section 32 of the Registration Act (1908). In practice, the the Subregistrar of Assurances within whose jurisdiction the property is located. The seller hands over physical possession of the property to the buyer when the deed respective authorized signatories of the seller and buyer are required to be present is presented for registration. Upon payment of the required registration fees and along with two witnesses in order to execute the sale agreement, and to submit the computer service charges in cash, as per the receipt, the document is returned. following documents: The stamp duty has been reduced from 10% to 5% for men and 4% for women, a. One copy of the sale purchase agreement, on stamp paper; following Schedule 1A of the Indian Stamp Act, which enacted the reduction June 25, 2008. b. Certified true copy of the Resolution of the Board of Directors' of both seller and buyer; Procedure 5. Apply to the Circle Revenue Office for mutation of c. Certified true copies of the Certificate of Incorporation of both seller and buyer the property title (State) (not always required). Time: 9 days The documents are submitted to the reader of the Subregistrar of Assurances for scrutiny. After scrutiny, the reader indicates the registration fee required, on the Cost: No cost document itself. The due registration fee is to be deposited with the cashier against Comments: The authorized signatory must submit the duly signed application a receipt. After depositing the fees, the buyer and the seller present the documents along with an affidavit, indemnity bond, and a certified/notarized copy of the to the Subregistrar's Office, in accordance with Section 32 of the Registration Act registered title deed. After assessment of the request for mutation, the Circle (1908). In practice, the seller hands over physical possession of the property to the Revenue Office settles the value of the property tax to be levied and issues a letter of buyer when the deed is presented for registration. The document is copied into the mutation in favor of the buyer certifying that the property has been mutated under registry, copies of the document are pasted onto 2 indexes, one titled "name and the buyer's name. property," the other titled "accounts and reports." The document is delivered upon presentation of the receipt issued by the cashier. REGISTERING PROPERTY The value of a given property, determined by the area or zone in which it is located, Patna, Bihar can be verified from a valuation schedule. If the Subregistrar feels that the property has been undervalued, a strategy used to minimize the amount of stamp duty to be Property value: USD 47,505 = INR 2,088,776 paid, he may decide to inspect the site, which can take from 3 to 5 days. This is not Data as of: February 2009 often the case, however.

Procedure 1. Check for encumbrances at the office of the Procedure 5. Apply to the Circle Revenue Office for mutation of Subregistrar of Assurances (State) the property title (State) Time: 7 days Time: 15 days Cost: INR 500 Cost: INR 2,020 (INR 20 for official fees + INR 2,000 for lawyer fees) Comments: The buyer should conduct a search of the property in the Subregistrar's Comments: The authorized signatory must submit the duly signed application Office, noting the location details of the property and the time period to be checked. along with an affidavit, indemnity bond, and a certified/notarized copy of the While investigating the title, it should be verified that: registered title deed. After assessment of the request for mutation, the Circle a. The "Patta"/legal ownership document, is in the owner's name, issued by the Revenue Office settles the value of the property tax to be levied and issues a letter of Revenue Department under the seal of the Tahsildar; mutation in favor of the buyer certifying that the property has been mutated under b. The Encumbrance Certificate (EC) for the preceding 31 years (preferably) shows the buyer's name. no mortgage or other encumbrance as still existing on the date of purchase; c. The property is transferable and heritable; * This procedure can be completed simultaneously with previous procedures d. The transferor is competent and/or authorized to transfer the property; e. The transferee is qualified to be a transferee; REGISTERING PROPERTY f. The object or consideration for the transfer is lawful; Ranchi, Jharkhand g. The transfer has been made and completed in the manner prescribed by law. Also, Property value: USD 47,505 = INR 2,088,776 all papers with regard to payment of taxes, electricity bills, and water bills must be Data as of: February 2009 checked, usually by the seller furnishing receipts from bills and taxes. It is common practice to hire a lawyer to conduct the transfer process, and the legal Procedure 1. Check for encumbrances at the office of the fees are therefore included in the cost above. Subregistrar of Assurances (State) Land records have been computerized. Time: 7 days Procedure 2. Pay the stamp duty at the State Treasury and obtain Cost: INR 3,000 stamp paper (State) Comments: The buyer should conduct a search of the property in the Subregistrar's Office, noting the location details of the property and the time period to be checked. Time: 3 days While investigating the title, it should be verified that: Cost: INR 167,102 (8% of the property value for stamp duty) a. The "Patta"/legal ownership document, is in the owner's name, issued by the Comments: The buyer must deposit the amount of stamp duty and registration fees Revenue Department under the seal of the Tahsildar; with the Treasury, in cash or by bank draft. Once the deposit has been made and a b. The Encumbrance Certificate (EC) for the preceding 31 years (preferably) shows draft of the sale agreement has been agreed upon by both parties, the agreement no mortgage or other encumbrance as still existing on the date of purchase; will be written and stamped on the stamp paper, usually by a lawyer. In Patna, since c. The property is transferable and heritable; 2005, it is also possible to pay the stamp duty at a bank. d. The transferor is competent and/or authorized to transfer the property; 132 DOING BUSINESS IN INDIA 2009

e. The transferee is qualified to be a transferee; Below are the internal procedures to be undertaken at the Revenue Authorities: f. The object or consideration for the transfer is lawful; a. Submission of application for mutation along with a copy of the sale deed; g. The transfer has been made and completed in the manner prescribed by law.. b. A number is assigned to the application and a date is fixed for submitting the Also, all papers with regard to payment of taxes, electricity bills, and water bills record to the Circle Officer; must be checked, usually by the seller furnishing receipts from bills and taxes. c. The record is submitted to the Circle Officer; Officially, it costs INR 20 to conduct a search for the first year, then INR 10 for each ad- d. The Circle Officer approves the application on being satisfied that it is in order and ditional year. Companies would commonly hire a lawyer to conduct this procedure. that the required documents have been furnished, and thereafter orders the appointment of a "Karmchari" to report on the local inspection regarding possession Procedure 2. Pay the stamp duty at the State Treasury and obtain of land by the applicant and the amount of tax to be imposed; stamp paper (State) e. The Karmchari submits his report on the local inspection; Time: 9 days f. The record is submitted to the Circle Officer and, in the case of a favorable report, Cost: INR 83,551 (4% of the property value for stamp duty) he approves the application for mutation; Comments: The buyer must deposit the amount of stamp duty and registration fees g. A mutation correction slip is issued in the favor of the applicant, which is consid- with the Treasury, in cash or by bank draft. Once the deposit has been made and a ered conclusive proof of mutation. draft of the sale agreement has been agreed upon by both parties, the agreement will be written and stamped on the stamp paper, usually by a lawyer. * This procedure can be completed simultaneously with previous procedures Procedure 3.* The final sale deed is prepared by the buyer or his lawyer (Private) Time: 2 days Cost: INR 3,500 (lawyer fees) Comments: Though not mandatory, it is common practice for a lawyer to draft the final sale deed.

Procedure 4. Execute and register the final sale deed at the office of the Subregistrar (State) Time: 1 day Cost: INR 20,888 (1% of the property value for registration fees) Comments: The final sale deed, written on stamp paper, is submitted to the office of the Subregistrar of Assurances within whose jurisdiction the property is located. The respective authorized signatories of the seller and buyer are required to be present along with two witnesses in order to execute the sale agreement, and to submit the following documents: a. One copy of the sale purchase agreement, on stamp paper, and an exact copy on plain bond paper; b. Two passport-sized photographs of the authorized signatories of both parties; c. Photo identification of each party and witnesses (i.e., a voter identity card, passport, or identity card issued by the government of India, semi-government and autonomous bodies, or identification by a Gazette Officer; d. Certified true copy of the Resolution of the Board of Directors of both seller and buyer (not always required to be submitted); e. Certified true copies of the Certificate of Incorporation of both seller and buyer (not always required to be submitted). The documents are submitted to the reader of the Subregistrar of Assurances for scrutiny. After scrutiny, the reader indicates the registration fee required, on the document itself. The registration fee is to be deposited with the cashier against a receipt. After depositing the fees, the buyer and the seller present the documents to the Subregistrar's Office, in accordance with Section 32 of the Registration Act (1908). In practice, the seller hands over physical possession of the property to the buyer when the deed is presented for registration. The document is copied into the registry. Copies of the document are pasted onto 2 indexes, one titled "name and property," the other titled "accounts and reports." The document is returned three days after submission. The value of a given property, determined by the area or zone in which it is located, can be verified from a valuation schedule. If the Subregistrar feels that the property has been undervalued, a strategy used to minimize the amount of stamp duty to be paid, he may decide to inspect the site, which can take from 3 to 5 days. This is not often the case, however. Land Records are in the process of being computerized.

Procedure 5. Apply to the Circle Revenue Office for mutation of the property title (State) Time: 39 days Cost: INR 2,710 (INR 2,500 for lawyer fees + INR 200 for stationary fees + INR 10 for official application fee) Comments: The authorized signatory must submit the duly signed application along with an affidavit, indemnity bond, and a certified/notarized copy of the registered title deed. After assessment of the request for mutation, the Circle Revenue Office settles the value of the property tax to be levied and issues a letter of mutation in favor of the buyer certifying that the property has been mutated under the buyer's name. LISTLIST OF OF PROCEDURES PROCE%63&4tt REGISTERING STARTING A PROPERTY BUSINESS 133133 134

Acknowledgments Doing Business in India 2009 was pro- Doing Business in India 2009 was duced by a team led by Jana Malinska. The made possible thanks to the support of team was comprised of Teymour Abdel the Department of Industrial Policy and Contact details for local partners Aziz, Claudia Contreras, Aikaterini Leris, Promotion (DIPP) of the Ministry of Valerie Erica Marechal, Parth Phiroze Commerce and Industry, especially Ajay are available on the Mehrotra, Trimor Mici, Dana Omran, Shankar, Gopal Krishna and Rajat Kumar Doing Business website at Madalina Papahagi, Brice Richard, and who coordinated the project. The Gov- http://subnational.doingbusiness.org Mrinalini Singh. The report was prepared ernment of Maharashtra also provided under the general direction of Mierta extensive support, especially Azeez M. Capaul. Collaboration was received from Khan and Malini V. Shankar. Assistance colleagues of the International Finance was received from Shyamal Misra, S. Na- Corporation Delhi office and South Asia tarajan, and A.P. Singh. Enterprise Development Facility led by The project was sponsored by the Anil Sinha and Irina Niederberger and World Bank Group. the World Bank’s South Asia Finance and More than 280 accountants, ar- Private Sector Development, especially chitects, business consultants, custom Simon Bell and John Speakman. brokers, engineers, freight forwarders, Svetlana Bagaudinova, Mierta Ca- lawyers, property experts, and utility paul, Paramita Dasgupta, Suhail Kassim, providers contributed to Doing Busi- Marialisa Motta, Stefka Slavova, John ness in India 2009. Data collection was Speakman, and Zenaida Hernandez Uriz coordinated by Harminder Chawla, Niti reviewed the full text. Peer-review com- Paul, Ratnika Sehgal, Avinash Kumar and ments were received from Igor Artemiev, Suraj Kumar from the law firm Chawla & Rajul Awasthi, Penelope Fidas, Iva Ilieva Co.; B.N. Banerjee, Moushumi Chopra, Hamel, Marianne Kilpatrick, Peter Lade- Radhika Sankaran, Rahul Dhawan, and gaard, Julien Levis, Nick Manning, An- Richa Tiwari from the law firm Fox Man- dres Federico Martinez, Andrei Mikhnev, dal Little; and Ravi Singhania, Manju Thomas Moullier, Giovanna Prennushi, Mohotra, Dipak Rao and Jinni Sinha from Richard Stern, Uma Subramanian, and the law firm Singhania and Partners. Mahesh Uttamchandani. Fernanda Amit Agarwal, Rohini Aggarawal, and Almeida, Priya Basu, Diego Borrero, Fred- Gupta Nikhil from PricewaterhouseCoo- erick Bustelo, Allen Dennis, Sabine Hert- pers coordinated the tax questionnaires. veldt, Manuel Enrique Garcia Huitron, A.P. Carthick Reddy, R. Chandramouli, Ankur Huria, Sebastian James, Dahlia and Jason Samuel from the Institute of Khalifa, Sarah Kitakule, Joanna Nasr, Rina Logistics, Confederation of Indian In- Harpinder Oberai, Caroline Otonglo, Su- dustry Chennai, coordinated the trade shanta Kumar Pal, Dhruba Purkayastha, questionnaires. Sayef Tanzeem Qayyum, Rita Ramalho, The team wants to extend its special Luis Aldo Sanchez-Ortega, Vinod Satpa- gratitude to the more than 230 national, thy, Samir Stewart, Sumriti Singh, Suku state and municipal government officials N. Thomas, and Justin Yap provided assis- who participated in the project and who tance at various stages of the project. The made valuable comments during the con- report was edited by Grace Morsberger sultation and data review period. Their and designed by G. Quinn Information names are listed on the following pages. Design. ACKNOWLEDGMENTS 135

PUBLIC OFFICIALS

AHMEDABAD, Mohit S. Shah S. Subramanya Hemant Sharma P.K. Gupta GUJARAT Justice Commissioner Director of Industries Financial Commissioner & High Court of Gujarat Bruhat Bangalore and Director, Institute Secretary to Government Pradeep P. Bhatt Mahanagar Palike (BMP) of Entrepreneurship of Haryana M.M. Srivastava Registrar General - Greater Bangalore City Development, Orissa Government of Haryana High Court of Gujarat Principal secretary, Energy Corporation Government of Orissa and Petrochemicals Dept. R.C. Gupta S.A. Dula Government of Gujarat D.B. Suresh CHENNAI, TAMIL Registrar General Manager Haryana & Punjab High Chief general manager, Manjula Subramaniyam NADU Indextb- Industrial BESCOM Court, Chandigarh Chief Secretary Extension Bureau V. Venugopal Alahan R.K. Jajoria Government of Gujarat Government of Gujarat Managing Director Town Planner Executive Engineer I.P. Gautam D. Thara Karnataka Udyong Mitra Chennai Municipal Haryana Electricity Board Municipal Commissioner Director Corporation Ahmedabad Municipal D.S. Vishwanath Salil Narang Ahmedabad Municipal Chitra Corporation Corporation Director Deputy General Manager Government of Karnataka Senior Town Planner Haryana State Industrial Prem Kumar Gera D. Thardisham Chennai Municipal & Infrastructure Resident Commissioner Chief Executive BHUBANESHWAR, Development Authority Development Corporation Government of Gujarat Ahmedabad Urban ORISSA Development Authority Elongo Rajesh Sharma Chief Engineer Sujit Gulati Chinmay Basu Dy. General Manager Rajeev Topno Tamil Nadu Metro Water Haryana State Industrial Industries Commissioner Principal Secretary, Government of Gujarat Managing Director, Board & Infrastructure Indextb Industries Department Development Corporation Vijay Kumar Janjua Government of Gujarat Government of Orissa M.F. Farooqui Principal Secretary to Sharma Director & Secretary, K.D. Vyas Ashok Dalwai Government of Gujarat Government Executive Engineer General Manager, Indextb Commissioner-cum- Goverment of Tamil Nadu HUDA divison no 1. Bhagyesh Jha Government of Gujarat Secretary to Govt. Steel & Commissioner of Mines Department R.K. Ganesha Dharam Vir Information & Managing BENGALURU, Government of Orissa Senior Town Planner Chief Secretary Director, Indextb KARNATAKA Chennai Municipal Government of Haryana Vishal Dev Development Authority Government of Gujarat Director IT & Managing V.P. Baligar GUWAHATI, ASSAM Gauri Kumar Director of Orissa B. Hari Principal Secretary to Principal Secretary Computer Application Advocate Deepak Agarwal Government, Commerce & Centre & Orissa Madras High Court (Industries and Mines) Industries Department Guwahati Municipal Government of Gujarat Industrial Infrastructure Government of Karnataka Development Corporation Dheeraj Kumar Corporation Additional Secretary to Dilipkumar J. Mahajan N. Chandrasekhar (IDCO) Deepak Barua Deputy Municipal Government of Orissa Government, Industrial Joint Director, Commerce Department Chief Town Planner Commissioner and Industry Department Guwahati Municipal Ahmedabad Municipal Ashish Kumar Government of Tamil Nadu Government of Karnataka Investment Promotion Corporation Corporation Rajesh Lakhoni Sandeep Dash Officer, Orissa Investment Ravi Capoor N.M. Munshi Municipal Commissioner Special Commissioner, and Export Promotion Commissioner & Secretary Senior Town Planner Office Chennai Municipal Resources & Finance Corporation Industry & Commerce Ahmedabad Urban Bruhat Bangalore Government of Orissa Government of Assam Development Authority Selvi R. Mala Mahanagar Palike (BMP) Ashok Meena Ranjan Chakravarty S.K. Nanda - Greater Bangalore City Managing Director, Registrar General Corporation Madras High Court Sub Registrar Principal Secretary, Forest Industrial Promotion & Guwahati Office of the and Environment Dept. S.B. Kolhar Investment Corporation of S. Ramasundaran Subregistrar Government of Gujarat Orissa Ltd. (IPICOL) Director, Technical Cell, Chairman and Managing D.K. Gogoi Commerce & Industries Government of Orissa Director M.K. Neenama Town Planner Deputy City Engineer Dpt. Nanda Tamil Nadu Industrial Government of Karnataka Development Corporation Guwahati Municipal Ahmedabad Municipal Engineer Development Authority Corporation D.N. Nayak Public Health Engineering Srinivasan Jay Kumar Chief Executive Officer Organisation Engineer Sunil Ojha Assistant Engineer, Manager Karnataka Industrial S.N. Nayak Tamil Nadu Electricity Areas Development Board Board Guwahati Water Supply Torrent Power Manager, IPCOL Department Sudhakar Rao Government of Orissa L.J. Tripathy Lalit P. Padalia C.R. Sarma Additional Commissioner Chief Secretary B.N. Palai Chief Secretary Government of Karnataka Government of Tamil Nadu Registrar General (Commercial Tax) Group Head - Outreach & Guwahati High Court Government of Gujarat U.A. Vasanth Rao Promotion, IPCOL M. Velmurugan H.K. Sharma Deputy Commissioner Government of Orissa Director, Vigilance Bureau Nilesh Patel Secretary, Industries & Ahmedabad Municipal Bruhat Bangalore U.K. Paty Goverment of Tamil Nadu Mahanagar Palike (BMP) Commerce Department Corporation Manager Government of Assam - Greater Bangalore City Orissa Power Transmission GURGAON, K.H. Poojarah Corporation corporation Limited HARYANA M.P. Sharma Additional City Engineer Sandesh Joint Commissioner Ahmedabad Municipal Venugopala Sarma Rajeev Arora Guwahati Municipal Corporation Chambers of Registrar Commissioner & Secretary, (Administration) Managing director Corporation Revenue and Disaster Haryana State Industrial P.K. Pujari High Court of Karnataka Management, Urban P.C. Sharma Commissioner of & Infrastructure Venkatesh Shekhar Development Department Development Corporation Chief Secretary Commercial Tax Government of Orissa Government of Assam Government of Gujarat Assistant Executive S.S. Dhillion Engineer K.C. Satpathy Director & Special Shamsher Singh M. Sahu Karnataka Udyong Mitra Planning member Delhi Municipal Vice Chairman & managing Secretary H.L. Shivananda Bhubaneshwar Town & Country Corporation director GIDC Development Authority Government of Gujarat Managing Director Planning & Urban Estates Government of Karnataka Department 136 DOING BUSINESS IN INDIA 2009

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Arun Kumar Vhuyan M. Sadhu Sundar Rajwardhan Shrivastava M.S. Jaya Sahelie Mukherjee Commissioner Official on Special Duty Additional managing Senior Town Planner Kolkata Municipal Guwahati Municipal Industries & Commerce director, MP Trade and Regional Town Planning Corporation Corporation Department, Government Investment Facilitation Office of India Corporation M.V. Rao HYDERABAD, Manoj Joshi Managing Director ANDHRA PRADESH INDORE, MADHYA Harbhajan Singh Managing Director West Bengal Industrial PRADESH Town Planner Kerala State Industrial Development Corporation Indore Municipal B. Sam Bob Development Corporation Corporation (KSIDC) Sebyasachi Sen Principal Secretary to Vivek Aggarwal Principal Secretary Government Collector and District Raghwendra Kumar Singh K. Suresh Kumar Industry & Commerce Goverment of Andhra Magistrate Managing Director Company Secretary & Head Secretary Pradesh Collectorate Indore AKVN Audyogik Kendra (legal) Government of West Vikas Nigam, LTd. Indore, Dinesh Kumar B.D. Agrawal Kerala State Industrial Bengal Special Economic Zone Development Corporation Principal Secretary, General manager (KSIDC) LUDHIANA, Finance Department District Trade & Pratap Verma PUNJAB Goverment of Andhra Industries Centre, Indore Advisor Investment A. Malini Pradesh Industrial Promotion Deputy General Manager Pramod Agrawal Madhya Pradesh State Vishav Bandhu T. Murali Managing director, MP Kerala State Industrial General Manager Industrial Development Development Corporation Deputy Director, Financial Corporation Corporation District Industries Center, Commissionerate of Goverment of Madhya (KSIDC) Ludhiana Industries Pradesh Verma Prasad S.C. Dhillon Goverment of Andhra Senior Engineer Officer Pradesh Sunil Kumar Bansal Indore Water Board Engineer Development Fire and Rescue Services Water Department Durga Rao Prasad Commissioner, SEZ JAIPUR, V. R . S u d h i Ludhiana Registrar Goverment of Madhya RAJASTHAN Deputy Chief Engineer Vijay Kumar Janjua High Court of Andhra Pradesh Kerala State Eletricity Pradesh Director and Secretary D.S. Chaturvedi Subodh Jain Board Government of Punjab, N.K. Prasad Zonal Officer Superintendent Engineer P.J. Thomas Dept. Of Industries and Commissioner of Industry Indore Municipal Public Health Engineering Chief Secretary Commerce and Commerce & Export Corporation Department Government of Kerala J.S. Kahlan Promotion Manohar Kant Industries & Commerce Dabkarra District Revenue Officer CEO KOLKATA, WEST Department, Government Executive Engineer BENGAL Ludhiana Municipal of India Indore Municipal Jaipur Municipal Corporation Corporation Corporation Rammohan Alapan Bandhyopadhyay Mandeep Kaur Umesh Kumar Health and Sanitation R.G. Dwivedi Municipal Commissioner District Town Planner Greater Hyderabad General manager Commissioner (Investment) Kolkata Municipal Ludhiana Municipal Municipal Corporation MP Financial Corporation Bureau of Investment Corporation Corporation Promotion, Rajasthan I.Y.R. Krishna Rao Praveen Garg Shyamal Chakroborty V.N. Mathur D.C. Samant Principal Secretary, Managing Director Kolkata High Court Chief Coordinator (Policy) Madhya Pradesh State Chief Secretary Government of Punjab, Finance Department Sumanta Chaudhuri Goverment of Andhra Industrial Development Government of Rajasthan, Dept. Of Industries and Pradesh Corporation Secretariat Secretary Commerce Government of India, D. Muralidhar Reddy Pramod Kumar Gupta Ashok Sampatram Departments of Public Mohinder Pal Executive Director, CEO Principal Secretary, Dept Enterprises & Industrial Investment Commissioner Andhra Pradesh Indore Development of Industries Reconstruction Ludhiana Municipal Infrastructure Authority Government of Rajasthan, Corporation Secretariat Debashish Gore Corporation Subhash Kakde Vikas Pratap Lavang Sharma Director General K. Purshotta Reddy Registrar Buildings Commissioner Chief Town Planner High Court Indore Bench Chief Town Planner Kolkata Municipal Municipal Corporation of Hyderabad Jaipur Development Corporation Ludhiana Kulshreshta Authority Konda Reddy Senior Town Planner Subrata Gupta Ramesh Inder Singh Sadhna Sharma Engineer Indore Municipal Executive Director Chief Secretary Hyderabad Metropolitan Corporation Deputy Town Planner West Bengal Industrial Government of Punjab Water & Sewarage Board Jaipur Development Development Corporation Neeraj Mandloi Authority Seet Singh Manohar Reddy Commissioner S. Kishore Ludhiana Municipal PS Sharma General Manager Indore Municipal Director Industries Corporation Corporation Engineer Commercial Electrical & Special Secretary Singhla Supply, Andhra Pradesh Jaipur Vidyut Vidran Nagam Commerce R.K. Pal Limited Executive Engineer Chief Engineer Government of West C.V.S.K. Sarma Bengal Punjab State Electricity Commissioner & Special Madhya Pradesh Paschim KOCHI, KERALA Board Shetra Vidyut Vitran P.H. Kurian Officer & Principal G. Vajralingam Secretary to Govt. MA & Company Limited, Indore T. Balakrishnan Secretary to Government UD Department Principal Secretary to (Investment Promotion) Managing director Shrikant Pandey Punjab Financial Greater Hyderabad District Registrar Government, Industries Government of Kerala Municipal Corporation and Commerce Corporation B.K. Maitry M.C. Ranka Anil K. Varshney Sathynarayan Soloman Fernadez Director General Water Managing director BSES Rajdhani Power Additional Director MP Auto Cluster Chief Engineer Supply -Technical Kerala Water Authority Kolkata Municipal Limited Hyderabad Metropolitan Awadesh Sharma Corporation Water & Sewarage Board P.S. Gopinathan Additional Commissioner Probir Mitra Indore Municipal Law Secretary Corporation Kochi Municipal Engineer Corporation Calcutta Electric Supply Corporation Limited ACKNOWLEDGMENTS 137

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MUMBAI, Atul Garg Sanjay Yadav Mohinder Singh Rama Khalko MAHARASHTRA Division Officer Municipal Corporation of CEO Mayor Delhi Fire Service Delhi Noida Industrial Ranchi Municipal Mangesh M. Gondavale Development Authority Corporation Gulati Yashpal Deputy Commissioner Yash Pal Singh K.K. Khandewal Sales Tax Mumbai Planning member Deputy Registrar Delhi Development (Vigilance) Officer on Special duty Secretary, Department of Azeez M. Khan Authority Delhi Hight Court Noida Industrial Industries Principal Secretary of Development Authority Government of Jharkhand R.K. Gupta NOIDA, UTTAR Industries, Energy, and Sunil Kumar Labor Department Municipal Corporation of PRADESH PATNA, BIHAR Government of Delhi Executive Officer Ranchi Municipal Maharashtra Hariprasad Archana Agrawal Akhilesh Chandra Registrar General Corporation Sudhir Khanapure Dy. Chief Accountant, Secretary, Dept of Infrastructure & Patna High Court Madhu Koora Additional controller of Financial Management & Budget Office Industrial Development. Arunish Chawla Chief Minister stamps Government of Uttar General Stamp Office Municipal Corporation of Additional Finance Government of Jharkhand Delhi Pradesh, Secretariat, Mumbai Lucknow Commissioner Dhirender Kumar Kumar Government of Bihar Special Secretary & Vilas R. Koranne Shailaendra Cairae Municipal Corporation of Sub - Engineer S. Jalja Director, Handicraft, Silk Municipal Corporation of Assistant general manager & Handloom Greater Mumbai Government of Uttar Municipal Commissioner Delhi Patna Municipal Government of Jharkhand Nitin V. Pimpale Pradesh, Industrial H.L. Malik Corporation Ashok Kumar Mishra Joint Sub Registrar Development Authority, Adviser, Department of Ministry of Industries Ravindra Kumar Deputy Secretary – Mumbai City Industries Industries Atul Kumar Gupta Chief Engineer Navrang Saini Government of NCT Delhi, Patna Water Board Government of Jharkhand Ministry of Corporate Delhi Secretariat Chief Secretary / Industrial Development Navin Kumar Sudhir Prasad Affairs R.S. Meena Commissioner Principal Secretary, Registrar General Malini V. Shankar Deputy Commissioner Government of Uttar Finance & IT Ranchi High Court Municipal Corporation of Development Commissioner Pradesh, Secretariat, Government of Bihar Ajay Nath Shahdeo Government of Delhi Lucknow B. Ojha Deputy Mayor Maharashtra K.S. Mehra Sushil Kumar Director Ranchi Municipal A.R. Talwar Municipal Commissioner Additional Chief Patna Municipal Corporation Municipal Corporation of Principal Secretary to Executive Officer Corporation R.K. Shahdeo Government of Punjab, Delhi New Okhla Industrial Development Authority R.J. Mohan Pillai General Manager Department of Industries Rakesh Mehta District Industry Centres & Commerce Chief Secretary Chief Secretary Atul Kumar Government of Bihar (DIC), Industry Department Government of NCT Delhi, M.L. Tambe Project Engineer Ram Kumar Singh Deputy Municipal Delhi Secretariat New Okhla Industrial Arvind Prasad Development Authority Executive Engineer Town Planner Commissioner Rajesh Prakesh Ranchi Regional Municipal Corporation of Patna Municipal ADC - Factory licensing A.K. Pandey Corporation Development Authority Greater Mumbai Municipal Corporation of Senior manager Shailesh Kumar Singh Thacker Delhi State Government Agency Ram Naresh Singh for Industrial Promotion- Senior Engineer Secretary, Department of Municipal Corporation of Savita Rao Urban Development Greater Mumbai Udyog Bandhu Bihar State Electricity Government of the Board Government of Jharkhand National Capital Territory N. Patel NEW DELHI, DELHI N.N. Sinha of Delhi (GNCTD) Commercial Building Cell - Ashok K. Sinha Secretary of Industry A.K. Ambasht A.K. Shangar Officer in charge Principal Secretary, Industries Government of Jharkhand Municipal Corporation of Delhi Hight Court MRS Raghava Government of Bihar K.K. Verma Delhi Assistant Project engineer Dalbir Singh Executive Engineer Ajit Bharihoke New Okhla Industrial Jitendra Srivastava Executive Engineer Development Authority Jharkhand State Registrar General Delhi Jal Board Joint Secretary Finance Electricity Board Delhi Hight Court Surendra Vikram Singh Government of Bihar Somvir Singh Rathore Nutan Guha Biswas RANCHI, Station officer Registrar Government of NCT Delhi, Delhi Fire Service JHARKHAND Delhi Secretariat High Court Lucknow P.S. Tomar A.K. Saxena A.K. Basu Dharmendra Addl. Commissioner, Assistant Project Engineer Chief Secretary Government of NCT Delhi, Revenue Government of Jharkhand Delhi Secretariat Municipal Corporation of New Okhla Industrial Delhi Development Authority Arvinder Singh Deol Dhillon Nirmal Sharma Ward Councilor Joint Director Delhi Manmeet Singh Walia Office Superintendent Ranchi Municipal Master Plan Government of NCT of Corporation Delhi Development Delhi, Department of Law, Noida Development Authority Justice& L.A. Authority 138 DOING BUSINESS IN INDIA 2009

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