Before you incorporate
- Choosing the vehicle — a wholly owned subsidiary, an LLP, a branch, liaison or project office. They differ in what they may do, how they are taxed and how easily you can leave. See subsidiary, branch or liaison office.
- The approval route — most sectors take 100% foreign ownership without prior approval, but sector caps and Press Note 3 can move you to the government route.
- The resident director — the requirement that blocks more incorporations than any other, covered in the resident-director rule.
Incorporation and capital
- Incorporation on the MCA portal — name approval, the SPICe+ forms, digital signatures and director identification numbers for foreign directors, and the documents from abroad that have to be notarised and, depending on the country, apostilled or consularised. The list is in incorporating with foreign directors.
- Bringing in the share capital — the bank account and the bank’s KYC of the remitter, the valuation certificate for the issue price, allotment, the return of allotment with the Registrar and FC-GPR with the Reserve Bank within 30 days of allotment. The sequence is in bringing in the share capital.
- The first 90 days — commencement of business, first auditor, tax registrations, GST, the shops and establishments licence, payroll registrations and the intercompany agreement. See the first 90 days.
The annual retainer
Once the company exists, the work becomes a calendar. The full version, month by month, is in the annual compliance calendar, with a downloadable spreadsheet. In outline:
- Companies Act — board meetings and minutes, the AGM, financial statements and annual return, director KYC, significant beneficial owner filings
- FEMA — the FLA return each July, and reporting when shares are issued or transferred or a loan is taken from the parent
- Income tax — advance tax, TDS deposits and returns, the tax audit and the return of income
- Transfer pricing — benchmarking of every transaction with the parent and the accountant’s report each year
- GST and payroll — monthly returns, provident fund, employees’ state insurance and professional tax
- Accounts and reporting — books, monthly MIS, and the reporting pack for the parent’s year-end
Money moving between India and the parent
Most of the tax exposure in a subsidiary sits in its payments to and from the group. Each has its own withholding, GST and transfer pricing position:
- Management fees, royalties and cost recharges paid to the parent
- Dividends paid to the parent, at the treaty rate
- Loans from the parent and the external commercial borrowing rules
- Share transfers between the parent and resident shareholders
How the engagement runs from abroad
One named contact, reachable on email, WhatsApp or a video call at a time that works for your time zone. A compliance calendar agreed in the first month, and a short monthly status note showing what was filed, what is due next and what we need from you. Documents move by email and e-signature wherever the law allows, and by courier where an original is required.
Where the subsidiary is a captive centre serving the parent, the transfer pricing, permanent establishment and secondment questions are covered in more depth on GCC and captive unit taxation. The RBI filings on their own are on FEMA and FDI compliance, and closing a subsidiary is covered in exiting an Indian subsidiary.