Basic Facts on Foreign Subsidiary Company Compliance in India
Foreign subsidiary companies have 50% or more foreign equity ownership. The foreign company is the holding company or parent company.
Company incorporation determines compliance. Thus, it is necessary to understand what compliances must be met depending on the company type, industry, annual turnover, number of employees, etc.
Foreign subsidiaries must follow the Income Tax Act, Companies Act, Transfer pricing guidelines, and FEMA guidelines.
Foreign subsidiaries must file income tax returns with the income tax department, annual returns with the Ministry of corporate affairs, and other filings with the Reserve Bank of India and SEBI.
Foreign subsidiaries must follow TDS, GST, PF, ESI, and other Indian tax regulations. The industry, state of incorporation, number of employees, and sales turnover of a foreign subsidiary company determine its compliance requirements.
Most Indian private limited and limited companies can accept 100% foreign direct investment. Due to a growing economy and investor-friendly environment, FDI in India has increased dramatically.