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Indian Subsidiary Company Registration
Setting up a subsidiary in India can be a transformative step for expanding your business operations and accessing one of the world's largest and most dynamic markets. At IndiaFilings, we specialise in providing comprehensive and tailored services for the incorporation of a foreign subsidiary in India. Our team of experts is here to guide you through the complexities of Indian subsidiary registration, from understanding the legal requirements and navigating regulatory approvals to assisting with compliance and documentation. Partner with us for the incorporation of a foreign subsidiary in India and unlock India's vast business potential to drive your company's growth and success.
Subsidiary Company
A subsidiary company is often referred to as a sister company, while the company that exercises control over it is known as the parent company or holding company. The parent company holds the authority to control the subsidiary company, either in part or entirely.
The registration process for a foreign subsidiary company in india is governed by the Companies Act of 2013. According to the Companies Act of 2013, a subsidiary company can be defined as a company in which a foreign corporate body or parent entity holds a minimum of 50% of the total share capital. In essence, the parent company exerts a significant influence and control over the subsidiary company.
Types of Subsidiaries in India
In India, there are two primary categories of subsidiaries:
Wholly-Owned Subsidiary
In a wholly-owned subsidiary, the parent company possesses 100% ownership of the subsidiary's shares. However, it's important to note that wholly-owned subsidiaries can only be established in sectors that permit 100% Foreign Direct Investment (FDI).
Subsidiary Company
In this category of subsidiary, the parent company owns 50% of the subsidiary's shares.
Before proceeding with establishing a foreign subsidiary company in india, obtaining approval from the Reserve Bank of India is a crucial prerequisite. This regulatory step ensures compliance with the country's foreign investment regulations and safeguards the interests of all stakeholders involved.
Advantages of Indian Subsidiary Company Registration
There are several compelling advantages associated with the incorporation of foreign subsidiary in india.
Entry into the Indian Market
India's competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiary companies in the country.
Foreign Direct Investment (FDI) in India
FDI involves investments by foreign companies in Indian private companies through share subscriptions or acquisitions. In 2020, the Indian government introduced a provision requiring prior approval for investments from countries sharing a border with India, making Indian subsidiary registration an attractive option for foreign investors.
Perpetual Succession
The concept of perpetual succession ensures that a company's existence remains intact regardless of events like changes in management, transfers of membership, or insolvency. The company continues to operate seamlessly, providing stability and continuity.
Limited Liability
Limited liability is a significant advantage that encourages individuals to opt for company formation over other business structures. This principle extends to Indian subsidiary registration companies, protecting the personal assets of shareholders and directors. The company bears responsibility for its debts to third parties, shielding the personal assets of its stakeholders.
Scope of Diversification
Establishing an Indian subsidiary company registration provides a strategic avenue for foreign businesses to expand their operations. This contributes to the growth and development of the Indian economy and introduces a wide range of goods and services, fostering healthy competition.
Separate Legal Identity
According to the Companies Act, a company is recognized as a distinct legal entity separate from its shareholders and directors. This legal status empowers the company to engage in agreements with other competent entities as an artificial legal person. It also grants the company the ability to initiate legal actions and respond to allegations before the judicial system in its own name, without direct involvement from its members or directors.
Property Ownership and Rental
A subsidiary company, being a legal entity, possesses the authority and right to purchase or rent properties in India for its business activities. To prevent potential conflicts among company members, it is advisable to acquire such properties in the name of the company itself, aligning with the principle of perpetual succession.
These are the major advantages of getting an Indian subsidiary registration and establishing a company.
Regulatory Authorities for Indian Subsidiary Company Registration
The Ministry of Corporate Affairs (MCA is responsible for setting and enforcing the rules and regulations governing company registration and compliance. Registrar of Companies (ROC) offices handle the procedures related to company incorporation, ensuring companies follows legal requirements. Reserve Bank of India (RBI) regulates foreign currency exchange aspects for foreign subsidiary company in india, ensuring adherence to financial regulations.
Requirements and Key Facts about Company Registration in India
Here are the essential elements to consider for the incorporation of foreign subsidiary in India:
- Company Name: Your new business requires a unique name that is distinct from existing businesses' names or trademarks
- Shareholders: The parent company can hold 100% of the shares, or any combination of two foreign nationals can be shareholders. It is not mandatory to have an Indian resident as a shareholder.
- Share Capital: India does not impose a minimum capital requirement for company registration.
- Directors: A minimum of two directors is mandatory, with at least one director being an Indian resident. Nominee directorship services can be provided if required.
- Registered Address: Every company in India must have a registered address that is officially recorded in government records. Virtual office address services are available to meet this requirement.
- 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.
- Company Secretary: It is mandatory to file three secretarial returns each year, which are handled by a company secretary. IndiaFilings can assist with this requirement. A statutory auditor must also be appointed.
Taxation
- Professional fees, including government fees for company registration
- Following incorporation, companies are subject to a profit tax rate of approximately 25.36%.
- GST (Goods and Services Tax) is applicable to domestic sales, with monthly GST returns and one annual tax return required.
Annual Compliance
India has unique compliance requirements, including mandatory statutory audits even for smaller companies.
- Foreign subsidiary company in india must appoint a statutory auditor and submit annual filings.
- Navigating these requirements is crucial for establishing and operating a company in India under the Companies Act 2013.
How to Register a Subsidiary Company in India?
Incorporation of foreign subsidiary in india involves several key steps and compliance requirements. Here's a step-by-step guide on how to register a subsidiary company in India:
Determine the Type of Company
Decide on the type of company you want to establish Incorporation of foreign subsidiary in india.
Obtain Digital Signature Certificate (DSC)
Since the registration process is conducted online, you must obtain a Digital Signature Certificate (DSC) for the proposed directors of the company. The DSC is used to sign the necessary documents during the registration process electronically.
Apply for a Director Identification Number (DIN)
The directors of the subsidiary company must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). This can be done by submitting the DIN application online.
Name Approval
Please choose a unique name for your subsidiary company and apply for its approval through the MCA's online portal. Ensure that the chosen name adheres to the naming guidelines provided by the MCA.
Draft Memorandum of Association (MoA) and Articles of Association (AoA)
MoA and AoA are legal documents that outline the company's objectives, rules, and regulations. Prepare these documents following the Companies Act 2013.
File Incorporation Documents
Once your chosen name is approved, you must file the incorporation documents, including the MoA, AoA, and other required forms, with the Registrar of Companies (ROC) through the MCA's online portal. The incorporation process is typically done using the SPICe+ form on the Ministry of Corporate Affairs portal.
Payment of Registration Fees
Pay the necessary registration fees to the ROC based on the authorized capital of the subsidiary company.
Obtain a Certificate of Incorporation (COI)
If all the submitted documents and information are in order, the ROC will issue a Certificate of Incorporation. This certificate officially confirms the indian subsidiary registration for a company.
Apply for Permanent Account Number (PAN) and Tax Registration
After obtaining the CoI, apply for a Permanent Account Number and a Tax Deduction and Collection Account Number from the Income Tax Department for the subsidiary company.
Open Bank Account
Finally, open a bank account in the name of the foreign subsidiary company in india.
Compliance with Other Regulations: In addition to the company registration process, ensure compliance with other relevant regulations.
Obtain a GST Number
Goods and Services Tax (GST) registration is required after completing the above steps, mainly if the company engages in various business activities. Every Indian company must apply for a GST number for taxation purposes.
Initiating Business Operations
Once the incorporation of a foreign subsidiary in India is completed, the company can commence its business operations.
These step-by-step guide provides you a thorough Indian subsidiary registration process.
Compliance Requirements for Indian Subsidiary Registration
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 India
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.
Online Trademark Search
Enter a brand name to search across all trademark classes
All trademarks are registered in India with the Office of the Controller General of Patents, Designs and Trade Marks. A trademark application has to be filed under a class that denotes the type of goods or services the brand or logo represents. There are 45 trademark classes and each class represent a distinct type of goods or service.
Trademark search can be conducted using the tool above to check if any identical or similar brand or logo is registered or applied for under the same class. If there is an existing application, care must be taken while reapplying to ensure that the application is not rejected by the Trademark Registrar. Trademark Search.
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 Partners
Max 50 Partners
|
Min 2 Shareholders
Max 15 Directors
Max 200 Shareholders
1 Director
1 Nominee Director
|
|
Registration Time | 7-9 working days | |||
Promoter Liability | Unlimited Liability | Limited Liability | ||
Documentation |
LLP Deed
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
|
Documents Required For India Business Setup
India Business Setup FAQ's
Zero Late Fee Platform
Many small businesses pay lakhs in penalty every year to the Government for late filing various statutory returns. Such penalty or late fee paid is not tax deductible and is a drain on profitability. At IndiaFilings, our mission is to provide the most affordable services to our customers and help them avoid all late fee.To achieve our mission - we have built enterprise grade technology to help you proactively know the upcoming compliance and avoid penalty.Checkout our compliance services below, talk to an Advisor and stop paying unwanted late fees.
Related Business Registrations
In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.
MCA Compliance
Every registered entity must fulfill its compliance obligations at the end of each financial year. These typically encompass tasks such as auditing financial records, filing income tax returns, and submitting annual forms to the MCA.
Form | Company Compliance | Due date | Penalty |
COB Filing | Commence of Business Certificate | To be filed before 180 days of company Incorporation | Rs.50,000 for non-compliance |
DIR 3 EKYC | Any director with DIN | On or Before 30th September every year | Deactivation of the DIN A late filing fee of Rs.5,000 Disqualification of the Directors |
Form ADT 1 | Appointment of auditor | Within 15 days from the date of appointment of the Auditor | Late fees will be applicable, with fees ranging from 2 to 12 times the nominal fee, depending on the number of days of delay. |
Form AOC 4 | Filing financial statements of the company | 30 days from the conclusion of the AGM | Late fees will be applicable, with fees ranging from 2 to 12 times the nominal fee, depending on the number of days of delay. |
Form MGT 7 | Annual Returns of the Company | 60 days from the conclusion of the AGM |
In addition to the above filings, depending on the type of entity and business activity more compliance filing maybe applicable. Please check with an IndiaFilings Advisor to help you with the compliance for your company.
All Limited Liability Partnerships (LLP) registered in India are required to file statutory returns with the Ministry of Corporate Affairs (MCA) each year. IndiaFilings can help you maintain your LLP Compliance at a very affordable price.
Form | LLP Compliance | Due date | Penalty |
DIR 3 KYC | For every designated partners of a limited liability partnership (LLP) with DIN | Before 30th September every year | Deactivation of the DIN A late filing fee of Rs.5,000 Disqualification of the Partners |
Form 11 | Annual Returns | May 30th every year | Late fees will be applicable, ranging from 1 to 15 times the nominal fee for Small LLPs and 1 to 30 times the nominal fee for other than Small LLPs, depending on the number of days of delay. |
Form 8 | Statements of Accounts and Solvency | 30th October every year |
Apart from the aforementioned filings, there might be additional compliance filings that could be relevant for LLPs. Please consult with an IndiaFilings Advisor to assist you with the compliance needs of your LLP.
Entity | Form | Due date |
Private Limited Company | Annual Return (Form MGT-7) | 60 days from the conclusion of the AGM or 28th November 2024 (Which Ever is Earlier) |
Financial Statements (Form AOC-4) | 29th October 2024 | |
DIR-3 KYC | 30th September 2024 | |
Form DPT-3 | 30th June 2024 | |
Form ADT-1 | Within 15 days from the date of appointment of the Auditor | |
ITR 6 (Non audit case) | 31st July 2024 | |
ITR 6 (Audit Cases) | 31st October 2024 | |
GSTR 9 | 31st Dec 2024 | |
Limited Liability Partnership | ITR 5 (Non audit case) | 31st July 2024 |
ITR Form 5 (Audit case) | 30th September 2024 | |
Annual return - Form 11 | 30 May 2024 | |
Financial Statements - Form 8 | 30 October 2024 |
Note : Get in touch with our experts to efficiently handle your compliance filings, whether you are an LLP, a company, partnership firm or a proprietorship. Contact us to ensure your compliance is filed before the due date.
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