Table of Contents

Producer Company Registration in India: Eligibility, Steps & Taxation

1. Introduction

More than 60% of India’s population depends on agriculture for their livelihood. However, a significant portion of farmers and agricultural workers operate in an unorganized manner, with limited education and exposure to modern agricultural technologies and market developments. To support and organize agricultural producers, the Government of India has introduced several schemes and incentives, one of which is the registration of a Producer Company.

Producer Company registration is governed by the provisions of Part IX-A of the Companies Act, 1956, as these provisions continue to apply under Section 465(1) of the Companies Act, 2013. A Producer Company is a hybrid between a private limited company and a cooperative society, allowing farmers to collaborate in business activities while retaining democratic governance.

2. Activities of a Producer Company

A registered Producer Company can undertake the following activities:

• Producing, processing, harvesting, procurement, grading, pooling, handling, export, or import of goods or services.

• Providing technical consultancy services, training, education, and research for members.

• Revitalization and cultivation of land and water resources related to primary produce.

• Offering financial assistance to members of the Producer Company.

3. Eligibility for Producer Company Registration

To register a Producer Company, the following criteria must be met:

• A minimum of 10 or more individuals engaged in agricultural activities.

• A minimum of 2 or more producer institutions can also form a Producer Company.

• A combination of individuals and producer institutions can also register as a Producer Company.

• A minimum of 5 directors and a maximum of 15 directors.

• The company must be registered as a private limited company but with the benefits of a cooperative society.

4. Producer Company Registration Process

Producer Company registration is an online process, with applications submitted through the Ministry of Corporate Affairs (MCA) portal. The steps involved are:

Step 1: Obtain Digital Signature Certificate (DSC)

All proposed directors must obtain a DSC, which is required for filing online documents.

• Documents required:

o PAN card

o Aadhaar card

o Passport-size photograph

o Email ID and mobile number

Step 2: Obtain Director Identification Number (DIN)

Each proposed director must obtain a DIN, which serves as a unique identifier for company directors.

• Required documents:

o Self-attested PAN card

o Address proof

o Passport-size photograph

Step 3: Name Reservation

The company name must be unique and must include ‘Producer Company’ at the end. The SPICe+ Form is used for name reservation, with two name options submitted to the Registrar of Companies (ROC).

Step 4: Drafting MoA and AoA

• Memorandum of Association (MoA): Defines the primary activities and objectives of the company.

• Articles of Association (AoA): Outlines the operational and governance structure of the company.

Step 5: Filing of Incorporation Application

The SPICe+ form is used for incorporation, along with the following attachments:

• MoA & AoA

• Address proof of the registered office

• Directors’ KYC documents

Step 6: Certificate of Incorporation

Upon verification, the ROC issues the Certificate of Incorporation, marking the official registration of the company.

5. Compliance Requirements for Producer Companies

To ensure smooth operations, Producer Companies must comply with the following requirements:

• Annual Filings: Submission of financial statements and annual returns to the ROC.

• Audit Reports: Conducting annual audits.

• Board Meetings: At least four board meetings per year.

• Income Tax Filing: Filing returns and availing tax exemptions based on agricultural activities.

• Maintenance of Books of Accounts: Proper records of transactions, investments, and financial statements.

6. Taxation of Producer Companies

While agricultural income is exempt under Section 10(1) of the Income Tax Act, 1961, tax benefits depend on the nature of agricultural activities:

• 100% exemption for income from growing and selling crops.

• Partial exemption for activities involving processing of agricultural products (e.g., tea manufacturing).

• Tax benefits for cooperative principles under the Income Tax Act.

7. Advantages of Producer Company Registration

• Limited Liability: Members’ liability is limited to their share capital contribution.

• Access to Government Support: Eligibility for subsidies, grants, and credit facilities.

• Legal Recognition: Provides a structured business framework.

• Tax Benefits: Exemptions on agricultural income.

• National Operational Scope: Producer Companies can operate across India.

• Better Market Opportunities: Facilitates better access to markets and enhanced price realization.

8. Conclusion

A Producer Company offers a structured approach for farmers and agricultural producers to collaborate, access financial support, and leverage government incentives. The registration process ensures legal recognition, enabling them to function effectively while availing multiple benefits. With expert assistance from service providers like Return Filings, agricultural entrepreneurs can seamlessly complete their registration and compliance requirements, ensuring long-term success and sustainability in the agricultural sector.

With expert assistance from Return Filings, you can ensure a smooth registration and compliance process for your Producer Company. For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091.

frequently asked questions (faq's) related to Producer Company Registration in India

Q What is a Producer Company?+

Q What are the primary objectives of a Producer Company?+

Q What legal framework governs Producer Companies in India?+

Q What are the advantages of starting a Producer Company?+

Q What are the main activities of a Producer Company?+

Q How is membership structured in a Producer Company?+

Q What is the governance structure of a Producer Company?+

Q Is there a requirement for regular meetings in Producer Companies?+

Q Can existing cooperative societies transition into Producer Companies?+

Q Can Producer Companies operate nationwide?+

Q What are the minimum share capital requirements for a Producer Company?+

Q What is the registration procedure for a Producer Company?+

Q What are the compliance requirements for Producer Companies?+

Q What are the post-incorporation steps for Producer Companies?+

Q How can one verify the availability of a company name for a Producer Company?+

Q What are the taxation considerations for Producer Companies?+

Q Can Producer Companies distribute dividends?+

Q Is there a provision for hiring professional managers in Producer Companies?+

Q How does Return Filings assist in Producer Company registration?+

Q How do I register a Producer Company in India?+

Q What are the benefits of forming a Producer Company?+

Q Who can be a member of a Producer Company?+

Q What is the difference between a Producer Company and a cooperative society?+

Q What are the legal requirements for a Producer Company?+

Q How do I manage a Producer Company effectively?+

Q How do I raise funds for a Producer Company?+

Q What are the challenges faced by Producer Companies?+

Q How can I find buyers for the products of a Producer Company?+