Expanding a business into India offers a multitude of opportunities for international companies. Foreign businesses can create a presence in one of the fastest-growing economies in the world by registering an Indian subsidiary company. At Vijendra & Co, we provide comprehensive services to assist businesses with Indian Subsidiary Company Registration, ensuring a smooth and efficient process.
What is a subsidiary business?
A subsidiary is a business that is owned or managed by another business, known as the parent company. If a foreign company owns more than 50% of the equity shares, it may establish a subsidiary in India through the Indian Subsidiary Company Registration procedure. As a result, the parent corporation can continue to exercise control while growing its business in India. Subsidiaries in India are governed by the Companies Act, 2013, ensuring transparency and legal compliance.
Advantages of Subsidiary Company Registration in India
Indian Subsidiary Company Registration comes with numerous advantages, including:
1. Access to a Large Market: India has a vast consumer base, offering growth potential across various industries. 2. Limited liability: The liability of a shareholder is limited to the amount of money they have invested. 3. Separate Legal Entity: An Indian subsidiary is treated as a separate legal entity, ensuring the parent company's liabilities are distinct from the subsidiaries. 4. Tax Benefits: Eligible companies may benefit from tax incentives and deductions under Indian law. 5. Ease of Compliance: India provides a well-defined regulatory framework for foreign subsidiaries. 6. Investment Opportunities: Establishing a subsidiary allows access to Indian capital markets.
Requirements for Indian Subsidiary Company Registration Before an Indian subsidiary company may start the registration process, a few requirements must be met:
1. Parent Company: At least 50% of the subsidiary's ownership must be owned by a foreign company. 2. Directors: At least two directors must be based in India, and at least one of them must be a resident. 3. Shareholders: A minimum of two shareholders, who may be either private citizens or business organizations. 4. Registered Office: A physical address in India is mandatory for official communication. 5. Authorized Capital: There is no minimum capital requirement; however, the authorized capital should reflect business needs.
Eligibility for Subsidiary Company Registration Foreign entities planning Indian Subsidiary Company Registration must meet the following eligibility criteria:
1. The parent company must be legally registered in its home country. 2. Adherence to the Indian government's Foreign Direct Investment (FDI) regulations. 3. Adherence to the Companies Act 2013, and other regulatory frameworks. 4. Designating an Indian resident director. Here’s a detailed list of documents required for subsidiary company registration in India, categorized by the parent company, Indian directors, and the subsidiary company itself
For the Foreign Parent Company:
1. Certificate of Incorporation – Notarized and apostilled. 2. Board Resolution – Authorizing the establishment of a subsidiary in India and appointing authorized representatives. 3. Copies of the articles of association (AOA) and memorandum of association (MOA) that have been notarized and apostilled. 4. Address Proof of Parent Company – Utility bill (not older than 2 months) or official bank statement. 5. Authorized Representative Details: The authorized signatory's passport and proof of address. 6. Declaration from Parent Company – Stating their intention to establish a subsidiary in India
For the Indian Directors:
1. PAN Card – Mandatory for all Indian directors. 2. Aadhaar Card: To verify address and identity. 3. Passport (if applicable) – Required if the director is an NRI. 4. DIN (Director Identification Number) – Application through Form DIR-3 if not already obtained. 5. A Digital Signature Certificate (DSC) is necessary in order to submit electronic forms to the Ministry of Corporate Affairs (MCA). 6. Proof of address: most recent utility bill, bank statement, or lease (no more than two months old). 7. Consent to Act as Director –
Form DIR-2 ? For the Subsidiary Company Registration in india :
1. The suggested company name is listed in order of choice for Spice PART-A form clearance. 2. Registered Office Address Proof – o Ownership proof (sale deed) OR o Rent Agreement + NOC from the landlord 3. MOA & AOA – Tailored for the subsidiary’s business activities. 4. Bank Account Proof – For capital investment, once the company is incorporated. 5. Shareholding Structure: Information about how the parent business and other shareholders divide up the shares. 6. Declaration of Compliance – Form INC-9, declaring adherence to company laws. 7. Here's a table outlining the tax benefits of a subsidiary company for both foreign and Indian parent companies:
Tax Benefits of the Subsidiary Company
Tax Benefit
Subsidiary of Foreign Parent Company
Subsidiary of Indian Parent Company
Corporate Tax Rate
22% (plus applicable surcharge & cess for domestic subsidiary)
22% (plus applicable surcharge & cess for domestic subsidiary)
Dividends
Subject to a 20% Dividend Distribution Tax (DDT) or withholding tax (if distributed to foreign parent, based on DTAA)
No DDT; dividends taxable in the hands of shareholders as per applicable slab rates.
Transfer Pricing Benefits
Applicable – ensures arm’s length pricing for transactions between parent and subsidiary
Applicable – ensures arm’s length pricing for transactions between parent and subsidiary
Double Taxation Avoidance Agreement (DTAA)
Eligible for benefits under DTAA, reducing withholding tax on royalties, fees, etc.
Not applicable unless engaging in cross-border transactions.
Tax Holiday (Startups or Special Sectors)
Eligible under certain conditions (e.g., SEZ units, startups under Section 80-IAC)
Eligible under specific schemes like Section 80-IAC for startups.
Business losses can be carried forward for 8 years. Unabsorbed depreciation can be carried forward indefinitely.
Business losses can be carried forward for 8 years. Unabsorbed depreciation can be carried forward indefinitely.
Goods & Services Tax (GST)
Input Tax Credit (ITC) available on eligible business expenses.
Input Tax Credit (ITC) available on eligible business expenses.
Tax (GST)
eligible business expenses.
on eligible business expenses.
Capital Gains Tax
Lower withholding tax rates under DTAA for payments like interest, royalties, and technical services.
Applicable withholding tax for domestic payments as per Income Tax Act.
Repatriation of Profits
Allowed but subject to foreign exchange regulations and applicable withholding tax.
Freely allowed within India without additional restrictions.
Investment Incentives
Eligible for government incentives under "Make in India" and SEZ schemes.
Eligible for similar schemes under government initiatives (e.g., PLI scheme).
Minimum Alternate Tax (MAT)
Applicable at 15% (plus surcharge and cess) on book profits.
Applicable at 15% (plus surcharge and cess) on book profits.
R&D Deductions
Weighted deductions available for specific R&D expenditures (subject to conditions).
Similar deductions available under Section 35 for eligible R&D expenses.
Foreign Tax Credit (FTC)
Available if taxes are paid in a foreign jurisdiction (subject to DTAA).
Not applicable unless income is taxed abroad.
Checklist for Indian Subsidiary Company Registration in india
A detailed checklist helps streamline the Indian Subsidiary Company Registration process: Documentation from the parent company:
1. Including the board resolution, articles of association (AoA), Memorandum of association (MoA), and certificate of formation. 2. Director Information: Identity proof, address proof, and Director Identification Number (DIN). 3. Utility invoices and the office space leasing agreement serve as proof of a registered office. 4. Digital Signature Certificate (DSC): For digital document submissions. 5. Form Submission: Send the Ministry of Corporate Affairs (MCA) the SPICe+ PART-B, paperwork for incorporation. 6. Tax Registrations: Obtain PAN and TAN for tax compliance.
The procedures for establishing a subsidiary business in India
The registration of an Indian subsidiary company involves the following steps:
1. Name Approval: Reserve a unique company name through the MCA portal. 2. Director Identification Number (DIN) and Digital Signature Certificate (DSC): Obtain the DIN and DSC for potential directors. 3. Drafting Documents: Prepare the MoA, AoA, and other essential documents. 4. Filing the SPICe+ Form: Send in the necessary paperwork and the incorporation form. 5. Certificate of Incorporation: Upon approval, receive the Certificate of Incorporation, establishing the subsidiary. 6. Compliance Registrations: Register for your TAN, PAN, and GST.
Requires Compliance from Indian Subsidiary Companies After registering an Indian subsidiary company, continued compliance is crucial:
1. Annual Filings: Submit financial statements and annual returns to the MCA. 2. Board Meetings: Conduct regular board meetings and maintain records. 3. Tax Compliance: Make sure that income tax returns and GST filings are made on time. 4. Foreign Exchange Management Act (FEMA): Comply with FEMA guidelines while doing international transactions. 5. Statutory Audits: Conduct audits in accordance with Indian regulations. Why Register an Indian Subsidiary Company with Vijendra & Co.?
At Vijendra & Co, we specialize in Indian Subsidiary Company Registration with a client-centric approach
Our group of professionals guarantees:
1. Expert Guidance: thorough counsel catered to your company's need. 2. End-to-End Support: Assistance from documentation to post-registration compliance. 3. Efficient Processing: Streamlined procedures to expedite registration. 4. Regulatory Compliance: Adherence to all legal and statutory obligations. 5. Tailored Solutions: Tailored services to achieve your company objectives.
Commonly Asked Questions
1. What is the minimal amount of capital needed to register an Indian subsidiary company? There is no minimum capital required to register an Indian subsidiary company.
2. Can a foreigner have a director position in an Indian subsidiary? Yes, but the directors must reside in India at least one time
3. How long does the Indian Subsidiary Company Registration process take? The process usually takes 20 to 30 working days, depending on governmental approvals and document preparedness.
4. Are there any sector-specific restrictions on foreign subsidiaries? Yes, certain sectors like defense and telecommunications have specific FDI caps and regulatory guidelines.
5. What are the tax implications for Indian subsidiaries? Indian subsidiaries are subject to corporate tax rates and other applicable taxes as per Indian law.
6. Can an Indian subsidiary repatriate profits to its parent company? Yes, profits can be repatriated following FEMA guidelines and after fulfilling tax obligations.
At Vijendra & Co, we are dedicated to facilitating seamless Indian Subsidiary Company Registration for businesses aiming to establish a successful presence in India.
