Compliances for foreign subsidiary companies: Timelines and Regulations

In this guide, we’ll cover the key due dates and regulations for all applicable laws and compliances for a foreign Subsidiary companies.

1. Secretarial Complinaces
2. Payroll Compliances
3. TDS – Witholding tax compliance
4. GST – VAT ompliances
5. Income Tax complianaces

Secretarial Compliances for a Foreign Subsidiary Company:

Secretarial compliances are the backbone of your foreign subsidiary’s operations. Key aspects and due dates include:

1. Annual filing: Submit financial statements (within 30 days of AGM) and annual returns (within 60 days of AGM) to MCA. AGM to be held by 29th September every year.
2. Board meetings: Conduct at least four board meetings per year (one in each quarter).
3. Annual General Meeting (AGM): Hold an AGM within six months of the financial year-end.

Payroll Compliances for a Foreign Subsidiary Company: Managing Employee Benefits and Deductions

Payroll compliances ensure your foreign subsidiary adheres to employee-related regulations. Key aspects and due dates are:

1. Provident Fund (PF): Register with the Employees’ Provident Fund Organization (EPFO) and make monthly contributions (employee and employer) by the 15th of the following month.
2. Employee State Insurance (ESI): Register with the Employees’ State Insurance Corporation (ESIC) and contribute (employee and employer) by the 15th of the following month.
3. Professional Tax (PT): Register for PT (if applicable) and make monthly/quarterly contributions (varies by state).
4. Labour Welfare Fund (LWF): Contribute to the LWF (if applicable) as per the respective state’s due dates.
5. Gratuity: Comply with the Payment of Gratuity Act for employees who complete five years of service.
6. Employee Tax Deductions: Deduct TDS from employee salaries and deposit by the 7th of the following month.

GST Compliances for a Foreign Subsidiary Company: 

Navigating Goods and Services Tax (GST) is essential for a foreign subsidiary in India. Key points and due dates are:

1. Registration: Obtain a GST Identification Number (GSTIN) if your annual turnover exceeds INR 20 lakhs.
2. Invoicing: Follow GST invoice rules.
3. Filing: Submit GSTR-3B (monthly or quarterly) and GSTR-1 (monthly or quarterly) within the specified due dates.
4. Input Tax Credit (ITC): Claim ITC on eligible expenses.
5. Audits: Conduct annual GST audits (due by December 31st) if turnover exceeds INR 2 crores.

TDS Compliances for a Foreign Subsidiary Company: Withholding taxes

Tax Deducted at Source (TDS) is a vital part of Indian taxation. Important aspects and due dates are:

1. Deduction: Withhold tax from payments like salary, rent, or professional fees.
2. Deposit: Pay the deducted tax to the government by the 7th of the following month.
3. TDS Returns: File quarterly TDS returns (Form 24Q, 26Q, 27Q, or 27EQ) by the due dates (31st July, 31st October, 31st January, and 31st May).
4. Certificates: Issue TDS certificates (Form 16 or 16A) to payees.
5. Lower/No Deduction: Apply for a lower or no deduction certificate if required.

Statutory Audit Compliances for a Foreign Subsidiary Company: 

Statutory audits are critical for verifying your subsidiary’s financial statements. Key aspects and due dates include:

1. Appointment: Appoint an independent auditor within 30 days of incorporation.
2. Audit: Conduct an annual audit of financial records.
3. Report: Obtain an audit report from the auditor.
4. Filing: Submit the report to the MCA (within 30 days of AGM).

SFT Compliances for a Foreign Subsidiary Company: Monitoring High-Value Transactions

Statement of Financial Transactions (SFT) tracks high-value transactions for your foreign subsidiary. Key aspects and due dates are:

1. Reporting: Report specified transactions to the Income Tax Department.
2. Deadline: Submit SFT by May 31st each year.
3. E-filing: File SFT through the e-filing portal.

Form 61 Compliances for a Foreign Subsidiary Company: 

Form 61 declarations help manage income from undisclosed sources. Important aspects and due dates include:

1. Purpose: Declare cash transactions exceeding INR 50,000.
2. Filing: Submit Form 61 with the tax department within the specified due dates (April-September: October 31st; October-March: April 30th).
3. Verification: Attach valid ID proof.

Income Tax Compliances for a Foreign Subsidiary Company: Navigating Corporate Taxation

Income tax compliance is crucial for a foreign subsidiary in India. Key aspects and due dates include:

1. Tax payment: Pay Advance Tax in four installments: 15th June (15%), 15th September (45%), 15th December (75%), and 15th March (100%).
2. Filing: Submit the Income Tax Return (ITR) by November 30th each year.
3. Tax Audit: Conduct a tax audit (if required) by September 30th.
4. Transfer Pricing: Comply with transfer pricing regulations and file Form 3CEB by November 30th.

By staying informed about income tax and payroll compliances, a foreign subsidiary company can ensure smooth business operations while adhering to Indian regulations. This guide covers the essential aspects of secretarial, GST, TDS, statutory audit, SFT, Form 61, income tax, and payroll compliances, simplifying your journey through the complex world of Indian laws and regulations.