How to start a consulting firm in India: registrations and compliance

LLP or private limited company?

An LLP is popular with consulting partnerships: limited liability, flexible profit sharing and lighter compliance, with no audit needed until turnover crosses ₹40 lakh or contribution crosses ₹25 lakh. Partners withdraw profits without dividend tax, though the LLP pays tax on its income.

A private limited company suits firms that want outside investors, ESOPs or a future sale. A sole consultant can begin as a proprietor. Regulated professionals such as chartered accountants and advocates must also follow their professional councils' rules on firm structure, names and advertising.

Registrations for a consulting firm

There is no general consulting licence in India. Registrations are corporate, tax and local, plus professional council registrations for those in regulated professions such as accountancy and law.

GST for consultants

Management, technical, IT and business consulting fees are taxed at 18% GST. Business clients claim this as credit, so registering early can help with larger clients even before the threshold. Input tax credit is available on rent, laptops, software and professional fees used in the business.

Services to clients outside India can be zero-rated exports if the export of services conditions are met, including receipt of payment in convertible foreign exchange or rupees where RBI permits. File the LUT before the first export invoice each financial year.

Income tax: presumptive scheme and audit

Section 58 of the Income-tax Act 2025 allows resident individuals and partnership firms, but not LLPs or companies, to declare 50% of gross receipts as income from specified professions, where receipts are up to ₹50 lakh, or ₹75 lakh if cash receipts are within 5%. The specified professions are referred to in section 62(4); technical consultancy is among those traditionally covered.

Under section 63, a tax audit applies when professional receipts exceed ₹50 lakh, or when a presumptive taxpayer declares lower profits and income exceeds the exemption limit. Clients deduct TDS on professional fees, which you claim in your return.

Annual compliance for LLPs and companies

An LLP files its annual return in Form 11 by 30 May and its statement of accounts and solvency in Form 8 by 30 October, and partners with DPIN complete DIR-3 KYC once every three financial years by 30 June. Income-tax returns are filed by the due date that applies to your category.

A company holds board meetings and an AGM, appoints an auditor, and files financial statements and its annual return with MCA. Both structures file GST and TDS returns throughout the year.

Working with associates and subcontractors

Consulting firms often use associate consultants rather than employees. Put each arrangement in writing, covering scope, confidentiality, ownership of work product and non-solicitation of clients. Deduct TDS on their fees where required and collect their GST invoices if they are registered.

If associates work mainly for you under your control, check whether the relationship looks like employment under the labour codes, which would bring wage and social security obligations. Clear independent contractor terms and genuine independence reduce that risk.

Pitfalls for consulting firms

Strong engagement letters with scope, fees, liability limits, confidentiality and IP ownership protect the firm far more than its legal structure alone does, especially in disputes.

• Assuming an LLP can use the 50% presumptive scheme; it cannot.
• Billing foreign clients without a current LUT.
• Missing LLP Form 11 and Form 8 deadlines, which attract daily fees.
• Engagement letters without liability caps or IP terms.

Step by step

1. 1Choose the structure

   LLP, company or proprietorship based on partners and plans.

2. 2Register the entity

   Incorporate with MCA and obtain PAN and TAN.

3. 3Register for GST

   Register before crossing ₹20 lakh or when clients need GST invoices.

4. 4File the LUT

   Before invoicing foreign clients each financial year.

5. 5Local registrations

   Shop and establishment and professional tax where applicable.

6. 6Draft engagement terms

   Scope, fees, liability caps, confidentiality and IP.

7. 7Calendar annual filings

   Form 11, Form 8, DIR-3 KYC, GST, TDS and income-tax deadlines.