Complete Legal, Financial & Compliance Blueprint for U.S. SaaS, IT & Engineering Firms
U.S. software, engineering, and consulting companies frequently establish fully owned Indian subsidiaries to hire specialized talent, build R&D capabilities, and optimize cost of execution.
This guide explains exactly how a U.S. company can incorporate a wholly-owned Indian Private Limited subsidiary, remotely, under FDI laws of India (Automatic Route) — with timelines, required documents, FEMA/RBI filings, tax implications, common pitfalls, and total cost.
All registrations, FEMA filings, payroll and tax compliance are handled by our Indian Chartered Accountants (CA) who specialize in working with U.S. engineering teams.
Why U.S. Engineering Teams Choose India Through a Subsidiary
Need
- Build a long-term engineering team
- Protect product IP
- Bill and fund R&D legally
Why subsidiary works best
- Direct hiring, lower cost, company authority
- Ownership remains with US parent
- Intercompany billing and FDI
If you’re hiring 5+ engineers (or building core product functions), subsidiary > EOR.
Cost to Register an Indian Subsidiary (U.S. Company)
| Service | Whats Included | Price |
|---|---|---|
|
Subsidiary Setup (U.S. Parent) |
Incorporation + remote bank account + FEMA filings (FDI) + post-investment reporting |
USD 1700 |
|
Monthly Accounting & Compliance |
Payroll taxes, GST/TDS filing, bookkeeping, CA review |
USD 500/month |
|
Annual Audit + Corporate Filings |
Statutory audit + corporate tax return + Form 3CEB (if applicable) |
USD 1800/year |
Subsidiary vs Branch vs EXTERNAL Vendor vs Employer-of-Record
| Feature | U.S. Subsidiary | Branch | Vendor/3rd-Party Outsourcing | Employer-of-Record |
|---|---|---|---|---|
| 100% U.S. Ownership | Yes | Yes | No control | No control |
| Can Hire Indian Employees | Yes | Yes | No | Yes |
| Can Hold IP | Yes | No | No | No |
| Can Invoice U.S. Parent | Yes | Yes | Yes | No |
| Best for | SaaS/Tech/R&D/Consulting | Liaison/Sales Offices | Short Projects | Small remote hires |
| Tax Requirements | Normal Corporate Tax | Additional RBI limits | Vendor GST/TDS | Service Fee Model |
If you want engineers as your own employees and full IP control — Subsidiary is the only correct choice.
Is 100% U.S. Ownership Allowed? (FDI Rules)
Since software and IT services fall under “Automatic Route”, a U.S. parent can own 100% shares in its Indian subsidiary without government approval.
Relevant Laws:
-
FEMA 1999
-
FDI Policy – Automatic Route (MCA + RBI)
-
Companies Act, 2013
-
OECD/Indian Transfer Pricing Rules (for billing between parent and subsidiary)
How a U.S. Company Registers an Indian Subsidiary (Step-by-Step)
Step 1: Name Reservation (SPICe+ Part A)
We align your subsidiary name with your U.S. brand and Indian MCA regulations. Digital signatures are initiated for U.S. signatories.
Step 2: Incorporation Documents (SPICe+ Part B)
We prepare:
Memorandum (MOA) & Articles (AOA)
Director consent
Registered office documentation
Shareholding & capital structure
Step 3: Director Identification (DIN) + Digital Signatures
For U.S. directors, we manage:
DIN application
Digital signature issuance (DSC)
Step 4: MCA Filing & Approval
Government approval issues:
CIN (Company Identification Number)
PAN & TAN (Tax IDs)
- Provident Fund and ESIC
Step 5: Remote Indian Bank Account Opening
We coordinate with banking partners, submit KYC, compliance docs, and shareholding proofs. No travel required.
Step 6: Capital Transfer (FDI From U.S. Parent)
Funds are received as share capital and acknowledged by the bank.
Step 7: FDI Reporting (FC-GPR Filing)
Post-investment FEMA reporting is filed after shares are allotted.
⏱ Total Timeline: 3–5 weeks
Schedule a discovery call with an Expert
Write us a mail on [email protected] and we will setup a no oblication call with an expert and address all your quesries
After Registration: Compliance for Indian Subsidiaries of U.S. Companies
Monthly Filings
- TDS Payroll tax
- GST (if applicable)
- Provident Fund
- Book Keeping
US Equivalent
- W-2 withholding
- Sales tax / VAT
- 401(k) retirement plan
- Book Keeping
Yearly Filing
- Statutory Audit
- Annual Corporate tax filing
- ROC Filings
US Equivalent
Transfer Pricing: Your Biggest Risk
If your Indian subsidiary provides engineering/software services to the U.S. parent, the billing rate must be arm’s-length under OECD rules.
You MUST have a TP Benchmarking Report, or IRS/Indian tax scrutiny can arise.
Want to Start Hiring Before Incorporation? (EOR Option)
If you want to test India or hire quickly (1–4 engineers), you can hire via our EOR service and switch to your own subsidiary later.
EOR Services We Provide (U.S. Engineering Teams)
India-compliant offer letters & IP assignment
Payroll processing + contributions (PF/ESI)
TDS payroll withholding
Full statutory benefits administration
Exit compliance & documentation
EOR Pricing (India): From $250/employee/month
📌 Most U.S. clients start with EOR for 1–4 employees and convert to a subsidiary once the team expands.
Documents Required to Register an Indian Subsidiary
📌 From the U.S. Company (All documents to be notarised and appostilled)
Certificate of Incorporation
Operating Agreement / Articles
U.S. Address Proof
Passport of Authorized Signatory
📌 From Directors
Passport
Residential Address Proof
Digital Photo
Common Mistakes U.S. Companies Make
| Mistake | Bad Result |
|---|---|
| Not filing FC-GPR after FDI | RBI penalties |
| Incorrect valuation of intercompany billing | Transfer Pricing audit |
| Using remote employees without payroll | Non-compliance + fines |
| Not appointing resident director | Registration delay |
| Delayed bank KYC | Salary/payments blocked |
| No registered office in India | SPICe+ rejection |
Company setup in India - FAQs
Can a U.S. company open an Indian bank account remotely?
Yes. We open corporate accounts remotely with our banking partners.
Do we need an Indian director?
Yes. We help appoint a compliant local director if required.
Can the U.S. parent own 100% of the Indian subsidiary?
Yes. India allows full foreign ownership in most sectors.
Does the U.S. parent get taxed in India?
No. Only the Indian subsidiary pays taxes in India.
Is transfer pricing required for SaaS and development services?
Yes. Any billing between the parent and India entity requires transfer pricing documentation.