Home / Change in Business Structure / Proprietorship to Private Limited Conversion Conversion

Last updated: 2 October 2026
Moving from a proprietorship to a private limited company brings limited liability, credibility with banks and customers, and room for investors. Our team incorporates the company, transfers the business and carries your registrations and GST credit across.
A proprietorship cannot be converted directly. The usual route is:
Bank accounts, licences, contracts and employee records are moved to the company’s name.
Based on the Companies Act, 2013, the Income-tax Act, 2025 and the CGST Rules. Last updated: 27 September 2026.
Minimum shareholders and directors for the new company
Business transfer agreement records the takeover
Proprietor’s voting power for tax neutrality
Consideration for a tax-neutral transfer
Transfers unused GST credit
Company needs its own GST registration
The tax conditions apply for five years after conversion.
Some assets kept outside the company.
A new investor pushes the former proprietor below 50% within five years.
Customers and suppliers continue dealing with the proprietorship.
Other structure options.
Keep sole ownership.
Incorporating a company.
For the new company.
Company compliance.
Shareholding and tax conditions planned.
Company incorporated through SPICe+.
Business transfer agreement executed.
Transfer structured to meet the conditions.
New registration and ITC-02.
Old registrations closed.
The company now follows company law compliance.
Maintain the 50% voting power condition.
INC-20A within 180 days.
First auditor within 30 days.
AOC-4 and MGT-7A every year.
Share your query and our team will reply during business hours.
Not directly. A new company is incorporated and takes over the business under a business transfer agreement.
Not if the conditions for a tax-neutral takeover are met, including the 50% voting power rule for five years.
No. The company takes its own registration and moves unused credit through ITC-02.
At least two shareholders and two directors.
Business moves to the company’s account and the old account is closed once transactions settle.
ACS – Director, Expertvuw Management Pvt Ltd
This work is handled by Expertvuw’s team, with filings made on the MCA portal. Certifications and audits required by law are issued by independent practising professionals engaged for your case.