Subsidiary Company Registration in India
We’ll get your company registered, set up the payroll, accounting and tax filing, and help open a bank account online — no need to go anywhere
Requirements and facts about company registration in India
India’s company registration process is guided by the Companies Act, 2013. This act lays out the full details of what’s required pre-incorporation, post-incorporation and other details. Below are few important requirements. Let’s take a proper look at the different essential bits.
Company Name
Your new business needs a name. Your name can’t be the similar as another existing business’s name or trademark. There are many restrictions on name registration unlike other countries
Shareholders
The parent company can be a 100% shareholder or any 2 foreign nationals can be the shareholder. Its not necessary to have a Indian resident as shareholder
Sharecapital
Unlike other countries there is no requirement of minimum capital in India. We suggest companies to keep a capital of atleast USD 5000
Directors
Minimum 2 directors are mandatory. On that atleast 1 director should be a Indian resident. We can provide you with nominee directorship services
Registered Address
A Registered address is the address of your company. It’s what goes into India’s official government records. Under the Company Ordinance, every company must have a registered address in India. We can provide you with virtual office address.
Annual General Meeting
According to the Companies Ordinance, every company in India must hold at least one general meeting per year. It should also hold 2 board meetings.
Company Secretary
It’s mandatory to file 3 secretarial returns every year. They are filed by company secretary and we assist you with the same. A statutory auditor is also appointed
Tax
The professional fees including government fees for company registration is USD 1400. Once you are incorporated you have to pay tax on profit @ 25.36%. Also GST is applicable on domestic sales. GST returns are monthly and 1 annual tax return.
Annual Complinces
India is a bit unusual when it comes to compliances. Statutory Audit is mandatory even for smallest of the companies. A statutory auditor needs to be appointed and an annual filing every year is mandatory.
Steps, documents and all the details about registering a subsidiary in India
The basic requirements to register a subsidiary company in India is as follows:
Minimum 2 Directors and of them 1 should be resident Indian (residing in India). Its not necessary that the Indian director holds any shares in the company. The director can be a name sake director without any authority.
We do provide directorship services. Our director also gives you a signed resignation letter without any date so that you can replace him any time without a need of any action from his side.
Minimum 2 Shareholders The parent company can hold 99.99% shares and 1 shares can be held by any person or company whether Indian or not.
Office address in India. If you have not short listed the office space yet you can register the company at any virtual office. We do provide this service. You can change your registered office any time within a day.
Documents Required to be submitted by a Foreign company for registration
Parent Company(should be notarized and appostiled)
- Certificate of incorporation (should have name and address)
Representative and individual shareholder ( should be notarized and appsotiled)
- Passport
- Utility bill (bank statement/electricity bill/mobile bill/gas bill – anyone)
Other documents which we will prepare and send ( should be notarised and apostilled)
- Board resolution
- Affidavits and declaration from the shareholder and directors)
Indian Director
- Pan Car
- Aadhar Card
- Utility bill (bank statement/electricity bill/mobile bill/gas bill – anyone)
Proposed registered office in India
- Electricity bill
Steps to register a subsidiary company online in India:
It usually takes 2 weeks to complete the process
The steps to register a company are:
- Name Approval – We apply for the desired name of the company through Government portal. Generally the parent company name with the word India in it is approved. For example if the name of the foreign entity is Apple Inc. the name Apple India Private Limited will be approved easily. That said you can apply any other name.
- Application for Digital signatures of Directors – We apply for the digital signature of Directors so that we can submit the form electronically.
- Preparation of charter of the company – The mOA and AOA are standard formats provided by the government. We just change the name and the object of the company and send it for your approval.
- Notarisation and Appostilisation of the documents – You should after the name is approves notarise and appsotile the documents mentioned by us and send us the scanned copies.
- Filing of forms with the government portal – We then upload the forms. Its usually takes 3-4 days for the approval.
- Issue of certificate of registration – Once approved the government issues the TAX ID that is Pan and certificate of registration electonically
Advantages of registering a Subsidiary company in India
A foreign company or a foreign national can register 3 type of companies in India. A Private Limited Company, Limited Liability Partnership or a Branch Office. But the most suitable and most used structure to setup a subsidiary is vis Private Limited Company.
The advantages of registering the Private limited company is as follows:
- The tax rate for the Private Limited company is lowest. It is 25% on profits
- Employees prefer to work for a Private Limited Company rather than a LLP or Branch office as Private Limited Company is more credible
- Its easy to transfer the shares of a Pvt Ltd company
Bank Account opening process for a foreign company in India
The Bank account of the Indian company must be opened within 30 days of incorporation. We suggest to open the account in the international banks like HSBC or DBS as the service is better. bank account can be opened remotely and you do not need to visit India. It usually takes 2-3 weeks to open the bank account in India.
All banks provide you with the internet banking option so that you can operate the bank account from anywhere.
After the bank account is opened the shareholders need to deposit the share capital in this bank account.
Hiring employees and payroll process in India
You can start hiring employees s soon as your bank account is open. We assist you with the employment contract as per the Indian laws. We also provide you with the online payroll system.
Withholding Taxes on employees salary – The company when paying a employee needs to deduct the tax and pay it to the government. The withholding tax amount depends on the salary amount and the investments made.
Medical insurance for employees – Its not mandatory but we suggest to do that. A insurance policy which covers the employee and his family is a great tool to attract and retain employees.
Other retirement benefits for the employees – Only provident fund needs to be provided to the employees. Its Rs 1800 (USD 30) per month.
Leaves – As per the labour law the employees are eligible for 18 paid leaves in a year and 9 medical leaves.
Women are eligible for a paid maternity leave of upto 26 weeks.
Apart from leaves there are 10 public holidays.
Termination of the employee – The company can terminate the employee by giving minimum 1 month notice or paying him 1 month salary.
Withholding Tax returns – these returns have to be filed every quarter
GST/VAT returns – these have to be filed every month. There is no GST on export of services. The GST rate is 18%
Income tax returns for the company – this has be filed every year. The income tax rate is 25.6% on profits
We assist you with all the tax compliances applicable to your company.
Post incorporation compliance and management of the subsidiary company
Book Keeping
We assist you with book keeping in accounting systems like Zoho books or Quickbooks. You have a dedicated accountant who will send you the monthly financial statements.
Audit and secretarial compliances
Its mandatory for every company to submit the financial statement to the government. the financial statement should be audited by the chartered accountant. Our CAs will assist you with this service.
Registration fees
Cost to register a subsidiary company in India is approx USD 1400.This includes the professional fees and government fees.
Monthly and annual Tax filing, payroll and Book keeping fees for upto 20 employees
Payroll fees for upto 20 employees start from USD 200/month
Book keeping fees starts from USD 200/month
Monthly Tax filing fees starts from USD100/month
Annual Fees
Audit and secretarial compliances start from USD 1000/annum
Transfer pricing report starts from USD 1000/annum
India, with its pro-business policies and vast market size, has emerged as an attractive destination for global businesses. The country’s laws permit foreign companies to establish subsidiaries and leverage the immense opportunities offered by the Indian market. This article provides a detailed guide on setting up a subsidiary in India, highlighting the benefits, the process, and the tax implications. Why India?
- Large, diverse consumer base with growing purchasing power
- Access to a skilled and cost-effective workforce
- Government policies promoting foreign direct investment (FDI)
- Strategic location with proximity to key Asian markets
Types of Subsidiaries in India
- Wholly-owned subsidiary: Here, the parent company owns 100% of the subsidiary’s shares. However, this type of subsidiary can only be formed in sectors that permit 100% Foreign Direct Investments (FDI). The sectors where 100% FDI allowed are almost all sectors except the below.
- Subsidiary company: In this case, the parent company owns 50% or less than 50% of the subsidiary’s shares.
The sectors where 100% FDI is not allowed are:
Defence Sector, Real Estate, Print Media, Mining, Multibrand B2C
Steps to Set Up a Subsidiary in India
Incorporating a subsidiary in India involves several steps:
- We apply for Digital Signature Certificate (DSC) online. Video verification and 2-factor authentication are needed.
- Apply for desired business name via the Registrar of Companies.
- Prepare the Memorandum and Articles of Association.
- Fill out an online incorporation application.
- Request a certificate to begin operations.
- Register for GST.
Private Limited Company
This is the most common structure preferred by 99.99% of the companies coming in India. It is the most credible structure – here
Branch Office
This is inly suitable for Banks and financial institutions. The tax rate is very high and there are restrictions on many activities.
Liason Office
This is only suitable for airline companies.
Benefits of Setting Up an India Subsidiary
- Economical cost of resources
- Less cost of compliance
- Income tax rate of only 25%
- Easy repatriation of Dividend
- Huge population that is market
- Rising per capita income
- Progressive government
Expert Consultation and Guidance from Business Setup team
- Discovery Call – 15-30 minutes video call wherein we answer all your questions regarding the Indian Setup.
- Cost estimation – Based on your requirements we give you a quotation for company registration and the yearly expenses you will incur. This helps to ease the decision-making process
- Nominee Director Service – We offer completely secure nominee director services. You have the undated, signed resignation letter of the director so that you can terminate the services anytime you want.
- Company Registration – Hassle-free company registration service. You pay only after the company is registered
- Bank Account Opening – We connect you with a banker and assist you with the bank account opening.
- Payroll, tax Filing, and Book keeping – We manage the company’s payroll, books, and tax filing.
Post-Registration Support and Compliance
With our experience of more than 15 years we ensure that all your compliances and tax filings are completed on time.
Conclusion:
Expanding your business to India can unlock new growth opportunities and enhance your global presence. By understanding the benefits, legal requirements, and registration process, and leveraging comprehensive support, foreign businesses can successfully establish a subsidiary or entity in India and tap into its vast market potential.
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
- Multi Brand Retail
- Aviation
- Railways
- Infrastructure
- Agriculture
- 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
- Opening a bank account and depositing the share capital amount.
- Issuing the share certificates
- Appointing a Auditors within 30 days of registration
- GST registration
- Shopact and PT
- Having important agreements like employment agreement, vendor agreement in place.
The labour laws in india are not that stringent:
- Professional tax of Rs 200/employee per month has to be paid
- ESIC (employee state insurance scheme) id number of employees is above 10
- PF (provident fund) is applicable if the employees is above 20
- Tax Filing
- GST filing every month
- TDS filing every quarter
- Annual income tax return filing
- Audit
- Statutory Audit annually
- Tax Audit annually
- GTs Audit annually
- 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