treatment of share application money

Share Application money can be kept for as much period as desired by the company.

There is no time limit. But Income tax Deptt. may question if kept for a long period.

It can be shown in the Balance Sheet after Paid up Share Capital as "Share Application Money" (pending allotment).

Agree...

However do not forget to check the terms of subscripttion agreement between the prospective investor and Issuer Company regarding refund of share application money etc.

Regarding time limit to convert such share application money into capital the law is silent. However as per practice (specifically mention/mandatory requirement in FEMA regarding foreign money) allot share with 6 months of the receipt of application money.

Regards