Compliance Requirements for Indian Subsidiary Registration

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To establish a legal and valid Indian subsidiary company registration, compliance with specific regulations is mandatory:

Foreign Exchange Management Act (FEMA): Foreign companies based in India must adhere to foreign exchange laws and regulations outlined in the Foreign Exchange Management Act, 1999.
Companies Act, 2013: All Indian subsidiary companies must comply with the Companies Act, 2013 provisions.
Reserve Bank of India (RBI) Compliances: RBI imposes several foreign exchange management compliances on Indian subsidiary companies.
Income Tax Act, 1961: Indian subsidiaries must file income tax returns every year. The corporate tax rate in India is currently 25%.
Annual Returns: Companies are required to file annual returns with the MCA and the Registrar of Companies.
SEBI (Listing Obligations and Disclosure Regulations): If the subsidiary lists its securities on a stock exchange, it must comply with SEBI regulations.

Taxation of Indian Subsidiary Companies

Indian subsidiary companies are subject to specific taxation policies:

Taxes are levied on all income earned within or outside India, including dividends from foreign subsidiaries.
Tax rates for foreign subsidiaries in India include 50% for royalty received for technical services from the government or any Indian entity and 40% for other income.
A surcharge of 2% is applied if the company’s income falls between Rs. 1 Crore and Rs. 10 Crores; for payments above Rs. 10 Crores, a 5% surcharge is levied.
A 4% health and education cess is added to the total tax amount.

Concessional tax rates apply to Indian subsidiaries in specific sectors, such as oil exploration, air transportation, and shipping businesses.

FDI in Private Limited Company

100% Foreign Direct Investment is allowed in most sectors. A few sectors, however, require prior approval from the Central Government for foreign investments. These sectors include private security agencies, civil aviation, mining, print media and broadcasting, satellite establishment and operation, pharmaceuticals, and trading of food products.

Foreign entities can establish wholly-owned Indian subsidiaries with 100% ownership, subject to specific qualifications.

For a Private Limited Company

No minimum capital requirement
Minimum of 2 directors (at least one must be a resident of India)
Minimum of 2 shareholders

For a Public Company

Minimum of 3 directors
At least seven shareholders

How IndiaFilings Can Assist with Indian Subsidiary Company Registration

Still unsure how to register a subsidiary company in India? IndiaFilings simplifies Indian subsidiary registration by offering comprehensive support at every crucial step. From selecting a unique name and obtaining essential Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) to assisting with PAN and TAN applications and setting up a dedicated company bank account, we streamline the entire registration process.

Our expert team ensures compliance with regulatory requirements, including the Foreign Exchange Management Act (FEMA), Companies Act, 2013, Reserve Bank of India (RBI) compliances, and the Income Tax Act, 1961.

We facilitate filing annual returns, guide you through SEBI (Listing Obligations and Disclosure Regulations) compliance, and provide tax services to navigate India’s taxation policies. With IndiaFilings as your partner, you can initiate and grow your Indian subsidiary business confidently and efficiently.

Check Business Name Availability

Find if business name can be registered with MCA in IndiaSearch

To register a company in India, the first step is to obtain name approval for the business from the Ministry of Corporate Affairs (MCA). This process takes about 24-48 hours. A private limited company name in India must end with the words private limited. One Person Company ends with (OPC) private limited. LLP end with LLP and Section 8 companies can end with words like foundation, association or institution.

A company name proposed to be registered cannot be identical or similar to an existing company name. Also, every company name must include a word that denotes the activity undertaken. For example, in VERVE Financial Services Private Limited – Financial Services denote the activity undertaken. Check Business Name Availability.

Proprietorship vs Limited Liability Partnership (LLP) vs Company

Features	Proprietorship	Partnership	LLP	Company
Definition	Unregistered type of business entity managed by one single person	A formal agreement between two or more parties to manage and operate a business	A Limited Liability Partnership is a hybrid combination having features similar to a partnership firm and liabilities similar to a company.	Registered type of entity with limited liability to the owners and shareholders
Ownership	Sole Ownership	Min 2 PartnersMax 50 Partners	Designated Partners	Min 2 DirectorsMin 2 ShareholdersMax 15 DirectorsMax 200 ShareholdersFor One Person Company1 Director1 Nominee Director
Registration Time	7-9 working days
Promoter Liability	Unlimited Liability		Limited Liability
Documentation	MSME GST Registration	Partnership Deed	LLP DeedIncorporation Certificate	MOA AOA Incorporation Certificate
Governance	–	Under Partnership Act	LLP Act, 2008	Under Companies Act,2013
Transferability	Non Transferable	Transferable if registered under ROF	Transferable
Compliance Requirements	Income tax filing if turnover is more than Rs.2.5 lakhs	ITR 5	Form 11 Form 8 ITR 5	ITR 6 MCA filing Auditor’sappointment Know More

Documents Required For India Business Setup

Recent Utility BillBusiness Place

Aadhaar CardAadhaar is mandatory for Indian Directors.

Name Significance Letter

Specimen

India Business Setup FAQ’s

What is a subsidiary company in India?

A subsidiary company is a business entity controlled, in part or entirely, by a foreign parent company. The registration process for such a company in India is governed by the Companies Act of 2013.

What are the types of subsidiaries in India?

There are two primary types:

Wholly-owned subsidiaries, where the parent company owns 100% of the shares
Subsidiary companies, where the parent company owns at least 50% of the shares.

What are the advantages of registering a subsidiary company in India?

Some advantages include entry into the Indian market is:

Foreign direct investment opportunities
Perpetual succession
Limited liability
Scope for diversification
Separate legal identity

Who regulates the registration of Indian subsidiary companies?

The Ministry of Corporate Affairs (MCA), Registrar of Companies (ROC), and Reserve Bank of India (RBI) are the regulatory authorities involved in the process.

Are there any specific requirements for company names in India?

Yes, India has strict rules for company names, and they must be unique and distinct from existing businesses names or trademarks.

How many shareholders are required for an Indian subsidiary company?

The parent company can hold 100% of the shares, or at least two foreign nationals can be shareholders. An Indian resident shareholder is not mandatory.

Is there a minimum capital requirement for company registration in India?

India does not impose a minimum capital requirement for company registration.

How many directors are required for an Indian subsidiary company?

A minimum of two directors is mandatory, with at least one director being an Indian resident. Nominee directorship services can be provided if necessary.

What is the significance of a registered address for an Indian subsidiary company?

Every Indian company must have a registered address officially recorded in government records. Virtual office address services are available to fulfill this requirement.

What is an Annual General Meeting (AGM)?

According to the Companies Act, every Indian company must conduct at least one general meeting annually, in addition to two board meetings.

Why is a Company Secretary necessary for Indian subsidiary companies?

A Company Secretary is essential for handling three secretarial returns each year. They also help with statutory compliance, including annual filings.

What are the taxation policies for Indian subsidiary companies?

Taxes are levied on income earned within or outside India. Rates vary, but the current corporate tax rate in India is approximately 25.36%. GST (Goods and Services Tax) is applicable to domestic sales.

What is the Foreign Exchange Management Act (FEMA)?

FEMA outlines foreign exchange laws and regulations that foreign companies in India must adhere to.

How can IndiaFilings assist with Indian subsidiary company registration?

IndiaFilings offers comprehensive support, including name selection, obtaining Director Identification Numbers (DIN) and Digital Signature Certificates (DSC), PAN and TAN applications, and compliance with regulatory requirements.

Can foreign entities establish wholly-owned Indian subsidiaries?

Yes, foreign entities can establish wholly-owned Indian subsidiaries with 100% ownership, subject to certain qualifications.

What sectors in India require prior approval for foreign investments?

Sectors like private security agencies, civil aviation, mining, print media and broadcasting, satellite establishment and operation, pharmaceuticals, and trading of food products require prior approval for foreign investments.

What is the surcharge for Indian subsidiary companies with certain income levels?

2% surcharge is applied if the companys income falls between Rs. 1 Crore and Rs. 10 Crores; for incomes above Rs. 10 Crores, a 5% surcharge is levied.

Are concessional tax rates available for specific sectors in India?

Sectors like oil exploration, air transportation, and shipping businesses enjoy concessional tax rates.

What is the significance of perpetual succession for Indian subsidiary companies?

Perpetual succession ensures that a company remains intact despite changes in management, membership transfers, or insolvency, providing stability and continuity.

Can Indian subsidiary companies purchase or rent properties in India?

Yes, Indian subsidiary companies, as legal entities, can purchase or rent properties for their business activities, aligning with the principle of perpetual succession.

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