How to register a subsidiary company in India: the complete guide

This guide is for founders and finance teams at companies based outside India — in the USA, UK, Europe, Singapore or elsewhere — who want their own legal entity in India to hire, sign contracts, invoice in rupees and hold local assets.

It covers who a subsidiary suits, the exact incorporation steps, real costs, how foreign subsidiaries are taxed, the complete annual compliance calendar, and the friction points official portals never mention. It is written to be the only page you need before you commit.

One expectation to set straight away: incorporating the company is the fast part. Opening the bank account is what holds founders up — banks run enhanced KYC on overseas directors, and that single step adds three to four weeks. Plan around it from day one.

Who should set up a subsidiary in India — and who shouldn't?

A subsidiary is the right structure if you need to hire employees on local payroll, sign customer or vendor contracts, raise India-side capital, or hold assets in India. It is a separate legal entity, so the parent's liability is ring-fenced to its shareholding.

It is overkill if you only want to test the market or pay a few contractors. In that case an Employer of Record — a service that employs people on your behalf so you don't need your own entity — is faster and cheaper. We've published the full arithmetic on where the crossover sits in our comparison of EOR vs subsidiary in India.

The subsidiary makes sense once you are committed to India for the medium term.

The three structures foreign companies can use

For most companies the subsidiary wins on flexibility. Branch and liaison offices need RBI approval, are restricted in what they may do, and are taxed less favourably. See our comparison of branch office versus Indian subsidiary.

How long does it take to register a subsidiary in India?

Incorporation takes about 2–3 weeks (10–20 working days) once your documents are apostilled and complete. The certificate of incorporation, PAN and TAN are issued together at the end of the filing.

The bank account is the slow part. For a foreign-owned company it takes a further 20–25 days because the bank verifies overseas directors and shareholders. So the honest end-to-end timeline to fully operational is closer to 6–8 weeks, not the two weeks most pages quote.

What are the requirements to register a subsidiary?

• Shareholding: the foreign parent can own up to 100% in most sectors under the automatic route.
• Directors: minimum 2, and at least 1 must be resident in India — present in India for 182 days or more in the previous financial year, under section 149(3) of the Companies Act, 2013. We provide resident director services if you don't have one.
• Shareholders: minimum 2. A common structure is 99.99% held by the parent and 0.01% by a second foreign individual or entity.
• Capital: no statutory minimum.
• Registered office: a physical, residential or virtual address with a recent utility bill and rent or ownership proof.

What documents do you need?

• Parent company: certificate of incorporation or charter, address proof, and a board resolution or power of attorney naming the authorised signatory — all apostilled.
• Directors and shareholders: apostilled or notarised passport copies, address proofs, photographs, and DIN if already held.
• Registered office: lease deed or ownership proof plus a utility bill.
• Business scope: objects of the company, industry code, initial capital and share allotment details.

If your country is a member of the Hague Apostille Convention — the USA, UK, Germany, Netherlands, Italy, Singapore and most of Europe are — an apostille is sufficient. Non-member countries need consular attestation, which takes longer.

What are the steps to incorporate?

The filing is fully online through the Ministry of Corporate Affairs portal. Six stages take you from documents to a live, bankable company.

1. Prep and KYC

Gather parent documents, director IDs and proofs of address. Fix the shareholding and board structure, and pick an exact company name.

2. Digital setup

Obtain Digital Signature Certificates (DSC — India's legally binding electronic signature) for the directors, and DIN where needed.

3. Name and charter

Reserve the name and finalise the MoA and AoA (Memorandum and Articles of Association — the company's charter documents) with your Indian business objects.

4. SPICe+ filing

File SPICe+ with the Registrar of Companies, alongside AGILE-PRO-S to apply for GST, EPFO/ESIC and to initiate the bank account.

5. Certificate of Incorporation

Receive your CIN, PAN and TAN, issue share certificates, and update the statutory registers.

6. Bank account and go live

Open the current account, bring in capital, file FC-GPR within 30 days of share allotment and INC-20A within 180 days, and put inter-company agreements and payroll in place.

How are foreign subsidiaries taxed in India?

An Indian subsidiary is taxed as a domestic company, not at any special foreign rate.

*Including surcharge and health & education cess. Opting into 115BAA means forgoing most exemptions and incentives — worth modelling before you elect.

Treaty rates that matter to foreign parents

India's Double Taxation Avoidance Agreements typically reduce dividend withholding well below the domestic 20%. Rates depend on the treaty and sometimes on shareholding percentage, so check the specific article rather than assuming. Claiming a treaty rate requires a valid Tax Residency Certificate from your home revenue authority, plus Form 10F filed electronically on the Income Tax portal.

FEMA and RBI: the filings foreign parents miss

This is the part of Indian compliance that catches out almost every foreign parent, because it has no equivalent in most home jurisdictions. These are Reserve Bank of India obligations under FEMA, separate from company law and tax.

FC-GPR is the one that trips people up. The 30-day clock runs from share allotment, not from when the money arrives or when someone remembers. It is filed through the RBI's FIRMS portal and requires a valuation certificate and a company secretary's certificate. Missing it means a compounding application to the RBI — a formal, chargeable process.

The FLA return is due every year, by 15 July, from every Indian company that has ever received FDI. It is required even in years with no new investment and no activity. Many foreign parents file it once at setup and never again, which is a breach every subsequent year.

The annual compliance calendar

Once incorporated, your subsidiary carries recurring obligations across three regulators: the Registrar of Companies, the Income Tax Department and GST authorities. Here is the full picture.

Monthly and quarterly

Annual

Note that the statutory audit is mandatory for every Indian company from its first year, regardless of turnover or activity. This surprises founders from jurisdictions with small-company audit exemptions — there is no such exemption in India. Full detail in our guide to compliances for running a subsidiary company in India.

Payroll compliance once you start hiring

The moment you employ people in India, a further layer applies. These are employer obligations, not employee ones, and they are enforced.

Employer social security contributions add roughly 15–17% on top of gross salary. Budget for this when modelling India headcount cost — quoted Indian salaries are almost always exclusive of it.

Transfer pricing: the one most foreign parents underestimate

If your Indian subsidiary transacts with its foreign parent in any way — a cost-plus service fee, a management charge, a software licence, an intra-group loan — Indian transfer pricing rules apply from day one.

In practice this means three things:

• Arm's length pricing. The charge between parent and subsidiary must match what unrelated parties would agree. A cost-plus mark-up is the common model for captive service centres.
• Form 3CEB, an accountant's report on all international related-party transactions, is mandatory — there is no de minimis exemption for having such transactions at all.
• Documentation supporting the pricing must exist contemporaneously. Building it after a notice arrives is far weaker evidence than having it from the outset.

Where Form 3CEB applies, your income tax return deadline moves from 31 October to 30 November. Transfer pricing is among the most actively litigated areas of Indian tax, and captive service subsidiaries of foreign parents are a standard audit target. Get the policy and inter-company agreement in place before the first invoice, not at year-end.

What non-compliance actually costs

The ₹100-per-day ROC penalty has no ceiling, which means a forgotten annual return compounds indefinitely. We regularly see foreign parents discover six-figure rupee liabilities on dormant subsidiaries nobody was actively managing.

How do you get money in — and profits out?

Capital comes in from the parent as a share subscription. The inward remittance must be reported, shares allotted within 60 days of receipt, and FC-GPR filed within 30 days of allotment. Open the account with a bank used to foreign-owned subsidiaries and pre-check KYC to avoid delays.

Profits go back out as dividends, royalty, interest or service fees, each backed by an inter-company agreement, after Indian tax and withholding. Draft a transfer pricing policy before the first cross-border charge — retrofitting it at year-end is where most disputes start.

What the official guides don't tell you

These are friction points we hit repeatedly across 450+ foreign setups — none of which appear on government portals.

• Name rejection is the most common early delay. Roughly 1 in 3 first-attempt name applications get bounced — almost always for generic or descriptive words, not trademark clashes. Submit two distinctive options, not one safe-sounding one.
• Bank KYC timing varies wildly by bank, not just by state. The same apostilled file can clear in 12 days at one bank and 30 at another. Pick the bank before you incorporate, not after.
• Apostille turnaround is the hidden gate. Some countries route apostilles through a backlog of 10–15 working days, and that happens before the Indian clock starts. Begin apostilles the week you decide to proceed.
• The virtual office is a recurring cost nobody quotes upfront — typically USD 120–360 per year, separate from incorporation.
• No resident director lined up early means stalled filings and banking. Identify or arrange one before step 1, not midway.
• The financial year is fixed. Indian companies must use 1 April to 31 March. You cannot align it to a December or June parent year-end, so plan for a permanent reporting mismatch with head office.

What does it cost to set up and run a subsidiary in India?

One-time incorporation and the ongoing annual run-rate are separate budgets. Figures are in USD; ongoing costs are our published pricing for a subsidiary of up to 20 employees.

GST audit (USD 750, if turnover exceeds ₹2 crore) and a transfer pricing study (from USD 750) are conditional add-ons. Full pricing: subsidiary cost breakdown.

Subsidiary setup checklist

Tick each item as you complete it. Bookmark this page to track progress.

Frequently asked questions

Can a foreign company own 100% of an Indian subsidiary?

Yes. In most sectors a foreign parent can own 100% under the automatic route, with no prior government approval. A few sectors — multi-brand retail, certain media, defence — have FDI caps or need approval. You still need 2 shareholders, so a common structure is 99.99% parent / 0.01% second holder.

How long does it take to register a subsidiary in India?

Incorporation takes about 2–3 weeks (10–20 working days) once documents are apostilled. The bank account adds 20–25 days for a foreign-owned company, so plan for 6–8 weeks to fully operational.

How many directors and shareholders are required?

Minimum 2 directors, at least 1 resident in India (present 182+ days in the previous financial year), and minimum 2 shareholders. Foreign individuals or companies can be both.

Is there a minimum capital to register a company in India?

No statutory minimum. You can incorporate with a nominal amount, though most founders bring in enough to cover early operations and satisfy the bank.

Does a foreigner need to visit India to set up a company?

No — the process is fully online. You courier original apostilled documents to India; some banks request a video KYC call for the account.

How are foreign subsidiaries taxed in India?

As a domestic company: about 25.17% effective under the concessional regime (115BAA), or 17.16% for new manufacturing (115BAB), including surcharge and cess. Older 25%/30% slabs apply if you don't opt in.

Is dividend distribution tax still charged?

No — DDT was abolished from 1 April 2020. Dividends are taxed in the shareholder's hands; the company withholds tax. For a non-resident parent, 20% plus surcharge and cess, or the lower treaty rate (often 10–15%).

What is FC-GPR and when must it be filed?

Form FC-GPR reports the issue of shares to a non-resident and must be filed with the RBI through the FIRMS portal within 30 days of share allotment. It is the single most commonly missed filing by foreign parents, and late filing requires a compounding application under FEMA.

What is the FLA return?

The Foreign Liabilities and Assets return, an annual filing to the RBI due by 15 July, required from every Indian company that has received FDI. It must be filed even in years with no new investment or activity.

Does transfer pricing apply to my subsidiary?

If your subsidiary has any transaction with its foreign parent — a service fee, management charge, licence or loan — yes, from day one. Form 3CEB is mandatory with no de minimis threshold, and your tax return deadline moves to 30 November.

What is Press Note 3 and does it affect me?

Press Note 3 of 2020 requires prior government approval for investment from entities based in, or beneficially owned from, countries sharing a land border with India — China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Afghanistan. It applies regardless of sector and looks through to beneficial ownership, so an entity incorporated elsewhere but controlled from those countries is caught.

What does it cost to run a subsidiary each year?

For up to 20 employees, about USD 450/month for bookkeeping, tax and payroll, plus roughly USD 1,800/year for annual filings — around USD 7,200 annual run-rate, excluding one-time setup.

What is INC-20A and why does it matter?

The declaration of commencement of business, filed within 180 days of incorporation after capital is deposited. Miss it and the company can't legally operate; penalty is ₹50,000 on the company plus ₹1,000 per day on officers in default.

Can a US LLC register a subsidiary in India?

Yes. A US LLC, C-Corp or any foreign entity can be the parent, holding shares directly. Its incorporation documents must be apostilled — the USA is a Hague Convention member, so apostille rather than consular attestation applies.

Can I align the Indian financial year with my parent company's?

No. Indian companies must use 1 April to 31 March. There is no ability to elect a different year-end, so a parent with a December or June year-end should plan for a permanent reporting mismatch.