Foreign subsidiary registration in Aron
Foreign Subsidiary Company Compliance
A company where 50% or more of its equity shares are owned by a foreign company is a foreign subsidiary company. The foreign company in such case is called the holding company or the parent company.
Compliances are based on the company that is incorporated. Hence, it is necessary to understand what compliances are supposed to be met according to the type of the company, the operations of the industry, annual turnover, number of employees, etc.
Foreign subsidiary companies are mandatorily required to maintain compliance according to the Income Tax Act, Companies Act, Transfer pricing guidelines, and FEMA guidelines.
The foreign subsidiary compliance includes income tax filing with the income tax department, annual return with the ministry of corporate affairs, and other filings with the authorities like the Reserve Bank of India or the securities and exchange board of India (SEBI).
All the companies even foreign subsidiaries will have to comply with other Indian tax regulations like the TDS, GST regulation, PF regulation, ESI regulations, and others. The compliance requirement for a foreign subsidiary company would differ based on the industry, state of incorporation, number of employees, and sales turnover.
Foreign Direct Investment of up to 100% is allowed into an Indian private limited company and limited company for most of the sector. The amount of FDI in India has increased manifold over the last few years due to a booming economy and welcoming environment for foreign investors
