Generally a Company in India can take fund from its shareholders in the form of share capital by issuing shares and borrow from its Directors and Financial institutions as loan to run its business. However any other receipts as described below are not permitted except after complying certain provisions of Companies act 2013 and Deposit Rules. Any violation to the provisions will lead to monetary punishment upto ten carore and imprisonment upto 7 years as per section 76A of the Act.

Definition of Deposit:

As per Section 2(31) of companies Act 2013, and Rules 2(1)(c) of Companies (Acceptance of Deposit) Rules, 2014 , “deposit” includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as provided under Rule 2(1)(c) of the Companies (Acceptance of Deposit) Rules, 2014. Therefore every receipt of money is deposit except as provided under Rule 2(1)(c) which are as under:

Receipts which are not deposit(Exemption to Deposits):

If a Company receives following amounts then these will not be considered as deposits and need not to face bad consequences of law:
(Rule 2(1)(C) of the Companies (Acceptance of Deposit) Rules, 2014)

1. Any amount received from the Banks/Fin. Institutions / Insurance companies/ Govt authorities, Foreign Governments, Foreign Banks, Multilateral financial institutions, Foreign Governments owned development financial institutions, Foreign export credit agencies, Foreign collaborators, Foreign bodies corporate and Foreign citizens, Foreign authorities or Persons resident outside India subject to the provisions of FEMA Act and Rules;
2. Any amount received by a company from any other company (Subject to other provisions of companies Act 2019 like sec 180 etc);(Inter Corporate Loan)
3. Any amount received and held towards subscription money, share application money or advance towards allotment of securities pending allotment (only upto 60+15 days, i.e. from 76th amount will become deposit).(Subscription or Share application money)
4. Any amount received from a director of the company or a relative of the director of the Private company+ a declaration in writing that the amount is not borrowed money by Director/relative: (Loan from Director/its relative)
5. Any amount raised by the Issue of Bonds OR Secured Debentures OR bonds OR debentures compulsorily convertible into shares of the company within 10 years:(Secured Bond/Debentures)
6. Any amount raised by issue of Unsecured, Listed, Non-Convertible Debentures;(Bond/Debentures)
7. Any amount received from an employee of the company upto his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit;
8. Any non-interest bearing amount received and held in trust;
9. Any amount received in the course of, or for the purposes of, the business of the company
   1. As an advance for the supply of goods / services upto a period of 365 days.
   2. As an advance for consideration for an immovable property under an agreement of sale etc.
   3. As a security deposit against supply of goods/services;
   4. Advance against capital goods.
   5. As an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement;
   6. As an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government;
   7. As an advance for subscription towards publication, whether in print or in electronic to be adjusted against receipt of such publications;
10. Any amount brought in by the promoters of the company by way of unsecured loan as a stipulation of any lending financial institution or a bank.
11. Any amount received by the company under any collective investment scheme;
12. An amount of Rs. 25 lakh or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person.
13. Any amount received by a company from Alternate Investment Funds, Domestic Venture Capital Funds, Infrastructure Investment Trusts, Real Estate Investment Trusts and Mutual Funds registered with the Securities and Exchange Board of India in accordance with regulations made by it.”