Subsidiary company in India: 2025 step-by-step guide

Setting up a subsidiary company in India lets foreign founders own 100% in most sectors, hire locally, open a bank account, invoice in INR, and repatriate profits—here’s exactly how to do it, with timelines, documents, and compliance checklists to go live smoothly. (FDI routes vary by sector; most sectors are on the automatic route.)

What is a subsidiary company in India? (separate legal entity, Pvt Ltd; typical 100% ownership subject to sector rules) State Department

A subsidiary is an Indian private limited company controlled by a foreign parent (often 100% owned, subject to sectoral FDI rules). It’s a separate legal entity—so liabilities stay ring-fenced—while enabling local operations, contracts, bank accounts, payroll, and tax registrations.

When it’s the right choice: you need hiring flexibility, recurring revenue in India, local contracts/vendor onboarding, and the option to raise India-side capital.

 Benefits vs branch/liaison office (flexibility, funding, hiring, risk ring-fencing)

  • Control & flexibility: full range of business activities (unlike liaison offices).

  • Funding & growth: easy to raise equity/convertible instruments in India.

  • Talent & compensation: standard payroll, ESOPs, and benefits are simpler.

Requirements & eligibility

    • Shareholding: foreign parent can typically own 100% (sector-wise caveats).

    • Directors: minimum 2 directors, with at least 1 resident in India. We do provide resident director services.

    • Capital: no statutory minimum (check sector-specific norms).

    • Registered office: physical address for incorporation & statutory records.

    • Core filings: name approval → charter documents (MoA/AoA) → SPICe+ (incorporation).Risk & compliance: liability protection via a separate Indian entity.

Documents checklist (parent company charter/COI, director KYC, registered office, etc.)

  • Parent company: COI/Charter, address proof, authorized signatory resolution/POA.

  • Directors/shareholders: notarized/apostilled/passport copies, address proofs, photos, DIN (if existing).

  • Registered office: lease deed/ownership proof + utility bill.

  • India business scope: objects, industry code, initial capital, share allotment details.

Step-by-step incorporation (2–3 weeks)

  • Prep & KYC

    • Collect parent company docs, director IDs/passports, proof of address.

    • Draft shareholding/board structure; pick an exact company name.

  • Digital setup

    • Obtain Digital Signatures (DSC) for proposed directors.

    • Director Identification Number (DIN) requests (if needed).

  • Name & charter

    • Reserve name; finalize MoA/AoA with the Indian business objects.

  • SPICe+ filing

    • File SPICe+ (Part A/B) with ROC; attach supporting documents.

    • Parallel AGILE-PRO-S: apply for GSTIN (if needed), EPFO/ESIC (as applicable), Profession Tax (state-dependent), and initiate bank account with partner banks (as available).

  • Certificate of Incorporation

    • Receive CIN, PAN, and TAN. Issue initial share certificates and update statutory registers.

  • Post-incorporation to “go live”

    • Open current account (KYC per bank policy).

    • File INC-20A (Commencement of Business) within the prescribed timeline.

    • Put in place inter-company agreements (services, royalty, cost-sharing).

    • Register under Shops & Establishment (state-wise) and configure payroll.

Banking & capital remittance (practical KYC notes, share allotment filings)

  • Choose a bank familiar with foreign-owned subsidiaries; pre-check KYC.

  • Bring in capital remittance from the parent; complete share allotment & filings.

  • Use a simple chart of accounts and monthly closes from day one to stay audit-ready.

Compliance calendar

  • Board & shareholder meetings: per Companies Act (relaxations may apply for small companies—confirm your category).

  • Auditor appointment & filings: ADT-1 (within statutory timelines).

  • Annual filings: AOC-4 (financials) and MGT-7 (annual return).

  • Director KYC: DIR-3 KYC annually.

  • Tax: TDS/TCS returns, advance tax, tax audit (if applicable), corporate return.

  • Indirect tax: GST registration/returns if taxable supplies or thresholds met.

  • Payroll: PF/ESI/Prof. Tax (where applicable), gratuity thresholds, and state rules.

Tax & transfer pricing basics (inter-company charges, withholding, repatriation planning)

  • Inter-company pricing: draft a Transfer Pricing policy for services, royalties, or cost allocations; maintain documentation.

  • Withholding taxes: verify rates on cross-border service/royalty/interest; apply treaty benefits where valid.

  • Indirect taxes: confirm place-of-supply and GST implications for your business model.

  • Repatriation: plan dividend/interest/royalty flows and Form filings ahead of time to avoid delays.

Timelines & cost ranges 

Common pitfalls (how to avoid them)

  • Under-specifying business objects in MoA → amending later is slower.

  • No resident director identified early → delays in filings/banking.

  • Unclear inter-company charges → TP exposure and year-end surprises.

  • Skipping INC-20A or initial statutory registers → penalties and bank friction.

  • Bank KYC mismatches → lost time; align docs across ROC, GST, and bank.

Frequently Asked Questions for subsidiary registration in India

Subsidiary company in India can be registered online. You need minimum 2 directors and 1 should be resident Indian. Minimum 2 shareholders are required. The process can be completed in 10 days. 

An incorporated entity formed and registered under the Companies Act, 2013. It is a distinct legal entity, apart from its shareholders. It has a limited liability and can have upto 200 shareholders. To register a subsidiary company minimum 2 directors are required and atleast 1 should be a Indian resident. Its not mandatory to have a Indian shareholder, so foreign national can hold 100% share holding.

The office address is mandatory to register a company in India. It can be commercial, residential or a virtual office. A utility bill of the proposed address along with the rental agreement is required.

Minimum 2 directors are required and atleast 1 should be Indian resident.
Minimum 2 shareholders are required. A company, individual, foreign company, NRI or foreign national can be shareholders in the company.

There is no minimum capital required for a company. You can register a company with as low as $100 capital.

Its not necessary to give shares to a Indian resident. 100% shares can be held by the foreigners.
But it is important to note that there should be minimum 3 shareholders. So if you want to have a subsidiary company 99.99% shares can be held by the foreign company and the remaining 0.01% can be help by any other foreign individual or a foreign company.

Yes government has restricted 100% shareholding in the following sectors

  1. Multi Brand Retail
  2. Aviation
  3. Railways
  4. Infrastructure
  5. Agriculture
  6. Media

Where can I find more details about the restriction by the government?
You can refer http://www.makeinindia.com/policy/foreign-direct-investment for more details on the FDI policy of the government

Its necessary to have a address proof that is any utility bill and a rent agreement. The company can be registered at residential address , commercial address or a virtual address. BusinessSetup can provide you with virtual addresses in all major cities in India.

No it’s a completely online process. Though you still need to courier some documents to India.

Once the company is incorporated the following steps and registrations are required

  1. Opening a bank account and depositing the share capital amount.
  2. Issuing the share certificates
  3. Appointing a Auditors within 30 days of registration
  4. GST registration
  5. Shopact and PT
  6. Having important agreements like employment agreement, vendor agreement in place.

The labour laws in india are not that stringent:

  1. Professional tax of Rs 200/employee per month has to be paid
  2. ESIC (employee state insurance scheme) id number of employees is above 10
  3. PF (provident fund) is applicable if the employees is above 20
  1. Tax Filing
    • GST filing every month
    • TDS filing every quarter
    • Annual income tax return filing
  2. Audit
    • Statutory Audit annually
    • Tax Audit annually
    • GTs Audit annually
  3. Secretarial compliances
    • 4 board meeting every year
    • Annual general meeting of shareholders
    • AOC 4 and MGT 7 filing annually

The liability of the Parent company is limited to the extent of its shareholding in the WOS. The assets of the foreign company are not subject to any attachments.

The foreign subsidiary companies are taxed at a similar rate as domestic companies. The tax rate is 26% if income in below 10 Million INR. When the company repatriates the dividend to the parent company the dividend distribution tax is 20.592%

The process to open a account in India is a bit tedious. It takes minimum 20-25 days for a foreign company to open a company in India. All the notarized and appostiled documents of a foreign nationals are required to be submitted to the bank.

The subsidiary company can transfer the fees in form of royalty, fees or dividend after paying taxes in India

A subsidiary company in India is a company that is fully or partially owned and controlled by another company, known as the parent company.

To register a subsidiary company in India, the following documents are required:

  • A Memorandum of Association and Articles of Association
  • Board Resolution of the parent company authorizing the incorporation of the subsidiary
  • Form SPICE and other relevant forms as per the Companies Act, 2013

The process for registering a subsidiary company in India includes:

  • Obtaining Director Identification Number (DIN) and Digital Signature Certificate (DSC)
  • Filing of Form SPICE and other relevant forms with the Registrar of Companies (ROC)
  • Obtaining a certificate of incorporation from the ROC

A LLC from USA can register a Subsidiary company in India. A subsidiary company is a private limited company 

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