You are sitting in front of the SPICe+ incorporation form, and it asks for two numbers: your authorised capital and your paid-up capital. You freeze. Are they the same thing? If you put a large figure, will you have to deposit that money in the bank? If you put too little, will you be stuck when you want to bring in an investor next year? These are the exact questions that trip up most first-time founders in India, and getting them wrong can mean unnecessary fees or a rushed filing six months down the line.
The difference between authorised vs paid-up capital is one of the most misunderstood concepts in Indian company law, yet it is also one of the simplest once you see the full picture. This guide breaks down every layer of share capital, shows you the rules that actually apply in 2026, and walks through worked numeric examples so you know precisely what to enter and why.
Authorised Capital Meaning: The Ceiling You Set
The authorised capital meaning is straightforward: it is the maximum amount of share capital a company is legally permitted to issue to its shareholders. It is also called nominal capital or registered capital, because this figure is registered in the capital clause of your Memorandum of Association (MOA).
Think of authorised capital as the credit limit on a card. It sets the upper boundary, but it does not mean money has changed hands. A company with an authorised capital of ₹10 lakh can issue shares worth up to ₹10 lakh, but it can choose to issue far less. You only pay the government fees and stamp duty linked to this ceiling, not the cash value of the shares themselves.
Crucially, you cannot issue shares beyond your authorised capital. The moment your company needs to raise that ceiling, you must formally increase the authorised capital first, which we cover in detail below.
Paid-up Capital: The Money Actually Received
Paid-up capital is the amount of money a company has actually received from its shareholders in exchange for shares that have been issued. If shareholders have paid the full value of the shares allotted to them, paid-up capital equals the issued capital. If they have only paid a part, the unpaid portion is treated separately as calls unpaid.
This is the figure that reflects real money in your company. It appears on your balance sheet under shareholders’ funds, and it is the number lenders, investors, and tender authorities look at when they want to gauge how much the founders have committed.
Is There a Minimum Paid-up Capital Requirement in India?
Here is the single most important update on paid-up capital requirement India rules: there is no minimum. The Companies (Amendment) Act, 2015 removed the earlier requirement of ₹1 lakh for a private limited company and ₹5 lakh for a public limited company. Since then, you can incorporate a private limited company with a paid-up capital as low as ₹1, although most founders choose a practical figure such as ₹1 lakh or ₹10 lakh.
This change made starting a company in India significantly more accessible. You no longer need to lock up a fixed sum just to satisfy a statutory threshold. You decide the capital based on your genuine business needs, not an arbitrary legal floor.
The Five Layers of Share Capital
Authorised and paid-up are the two figures most people know, but Indian company law actually recognises five distinct layers of share capital. Understanding all of them removes the confusion entirely, because each one is simply a narrower subset of the one above it.
- Authorised capital — the maximum the company can issue, as registered in the MOA.
- Issued capital — the part of authorised capital the company has actually offered to shareholders.
- Subscribed capital — the part of issued capital that shareholders have agreed to take up.
- Called-up capital — the part of the subscribed amount the company has formally asked shareholders to pay.
- Paid-up capital — the part of called-up capital that shareholders have actually paid.
The relationship always flows downward: authorised is greater than or equal to issued, which is greater than or equal to subscribed, which is greater than or equal to called-up, which is greater than or equal to paid-up. In a typical small private company where all issued shares are fully paid, the bottom four figures collapse into one number, and only authorised capital sits above it.
Authorised vs Paid-up Capital: Side-by-Side Comparison
The table below summarises the practical differences you need to keep in mind when you incorporate or restructure your company.
| Basis | Authorised Capital | Paid-up Capital |
|---|---|---|
| Meaning | Maximum capital the company can legally issue | Actual capital received from shareholders |
| Also known as | Nominal / registered capital | Realised capital |
| Cash involved | No real money; only a ceiling | Real money credited to the company |
| Recorded in | Capital clause of the MOA | Balance sheet, under shareholders’ funds |
| Minimum in 2026 | No fixed legal minimum; commonly ₹1 lakh | No minimum (abolished in 2015) |
| Can it exceed the other? | Always greater than or equal to paid-up | Can never exceed authorised capital |
| How to change | Alter MOA + file form SH-7 with MCA | Issue and allot more shares |
How Authorised Capital Affects ROC Fees and Stamp Duty
Your authorised capital is not just a formality. It directly drives two costs you pay to the government: the Registrar of Companies (ROC) registration fees and stamp duty. Both are calculated on slabs that rise as your authorised capital rises.
This is why founders should set authorised capital thoughtfully. Set it too low and you will pay again to increase it the moment you want to bring in funds. Set it needlessly high and you pay higher upfront fees and stamp duty for headroom you may never use. Stamp duty is also a state subject, so the exact rate varies depending on the state in which your registered office sits.
Worked Example: Setting Capital at Incorporation
Imagine you and a co-founder are registering a private limited company. You expect to invest ₹5 lakh between you at the start, but you anticipate raising an angel round of around ₹30 lakh within 18 months.
- Authorised capital: set at ₹40 lakh, giving you ample room for the angel round without an immediate increase.
- Issued and subscribed capital: ₹5 lakh, the shares you allot to the two founders today.
- Paid-up capital: ₹5 lakh, assuming both founders pay the full value of their shares.
Here, your paid-up capital is ₹5 lakh while your authorised capital is ₹40 lakh. The ₹35 lakh gap is unissued headroom. When the angel investor comes in, you can issue fresh shares up to that ceiling without touching the MOA, which saves time and a filing fee at exactly the moment you are busy closing a round.
How to Increase Authorised Capital with the MCA
When your company outgrows its ceiling, you must raise it before issuing new shares. Here is how to increase authorised capital MCA procedure works in practice, step by step. (Always confirm the current forms and fees on the official MCA portal, as the Ministry periodically updates them.)
- Check your Articles of Association (AOA). The AOA must authorise an increase in share capital. If it does not, you will need to amend the AOA first by special resolution.
- Hold a board meeting. The directors pass a board resolution approving the proposed increase and call a general meeting of shareholders.
- Pass an ordinary resolution. At the general meeting, shareholders approve the increase in authorised capital by ordinary resolution and authorise the corresponding alteration to the capital clause of the MOA.
- File form SH-7 with the MCA. Within 30 days of the resolution, file form SH-7 with the Registrar of Companies, along with the prescribed fee, the altered MOA, and the resolution. This is the form that records the change of authorised capital.
- Pay the differential fee and stamp duty. You pay ROC fees and stamp duty on the increased portion of authorised capital, calculated on the applicable slab for your state.
Once SH-7 is approved, your authorised capital is officially raised, and you are free to issue and allot the additional shares your growth plans need.
Worked Example: Raising the Ceiling Later
Suppose a company was incorporated with an authorised capital of ₹10 lakh, all of which is now issued and paid up. A new investor wants to inject ₹25 lakh of fresh equity. The company cannot issue those shares, because doing so would breach the ₹10 lakh ceiling.
The directors first increase the authorised capital to, say, ₹50 lakh through the board-and-shareholder process above and file SH-7. Only after that approval can the company allot the new ₹25 lakh worth of shares, taking paid-up capital to ₹35 lakh while leaving ₹15 lakh of authorised headroom for future rounds.
Why These Figures Matter for Due Diligence
Authorised and paid-up capital are public information. Every company registered with the MCA carries both figures on its master data, which means investors, vendors, and competitors can all see them. A vendor evaluating whether to extend credit, or an investor sizing up a target, will routinely check the paid-up capital to judge how much real money sits behind the business.
You can verify these figures for any Indian company yourself. A free WeeDoo company search covers more than 27 lakh MCA-registered companies and 38 lakh directors, with authorised and paid-up capital shown right on the company master data. It is a quick way to benchmark your own capital structure against peers or to run basic due diligence on a prospective partner before you commit.
If you need the underlying filings, WeeDoo also offers document retrieval at ₹249 per company, alongside 40+ free financial calculators and end-to-end company registration and compliance support — useful when you are deciding what capital figures to set in the first place.
Frequently Asked Questions
Can paid-up capital be more than authorised capital?
No. Paid-up capital can never exceed authorised capital. Authorised capital is the legal ceiling, and you cannot issue or receive payment for shares beyond that limit. If you need more paid-up capital than your current ceiling allows, you must first increase the authorised capital by altering the MOA and filing form SH-7 with the MCA.
What is the minimum paid-up capital for a private limited company in 2026?
There is no minimum. The Companies (Amendment) Act, 2015 abolished the earlier ₹1 lakh requirement for private limited companies and the ₹5 lakh requirement for public companies. You can technically incorporate with a paid-up capital of ₹1, though most founders choose a practical working figure based on their actual funding needs.
Does a higher authorised capital cost more?
Yes. ROC registration fees and stamp duty are calculated on slabs tied to your authorised capital, so a higher ceiling generally means higher upfront government charges. However, you only pay these on the authorised figure, not on the cash value of shares. The trade-off is between paying more now for headroom and paying a separate fee later to increase the ceiling when you actually need it.
How long does it take to increase authorised capital?
Once the board and shareholders pass the necessary resolutions, form SH-7 must be filed with the Registrar of Companies within 30 days of the shareholder resolution. The MCA then processes the form, and approval typically follows within a few working days if the documentation is in order. Confirm current timelines and fees on the official MCA portal.
Where can I check a company’s authorised and paid-up capital?
Both figures form part of every company’s MCA master data and are publicly viewable. You can look them up free on a WeeDoo company search, which indexes over 27 lakh companies and 38 lakh directors, or retrieve the underlying filed documents for a small fee if you need the source records for due diligence.
